nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒12‒04
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Women on Board and Performance of Family Firms: Evidence from India By Jayati Sarkar; Ekta Selarka
  2. Employee organisational commitment : The role of HRM practices, public service motivation, and job satisfaction By Itansa, Merga Mekuria
  3. Self-Selecting Random or Cumulative Pay? A Bargaining Experiment By Arianna Galliera
  4. The optimal contract under adverse selection in a moral-hazard model with a risk-averse agent By Lionel Thomas
  5. A Tale of Two C(...)s: Competence and Complementarity By Simeon Alder
  6. The U-shape of Over-education? Human Capital Dynamics & Occupational Mobility over the Lifecycle. By Ammar Farooq
  7. On the interpretation of non-cognitive skills – what is being measured and why it matters By John Eric Humphries; Fabian Kosse
  8. Recruiting for Small Business Growth: Micro-level Evidence By Gidehag, Anton; Lodefalk, Magnus
  9. Cognitive Aging and Ability to Work By Anek Belbase; Geoffrey T. Sanzenbacher
  10. Worker Personality: Another Skill Bias beyond Education in the Digital Age By Eckhardt Bode; Stephan Brunow; Ingrid Ott; Alina Sorgner

  1. By: Jayati Sarkar (Madras School of Economics); Ekta Selarka (Assistant Professor, Madras School of Economics)
    Abstract: This paper provides evidence on the effect of women directors on the performance of family firms with a case study of India. Existing literature on the subject has primarily focused on widely held firms, notably in the US. Given that ownership structure and governance environment of family firms are distinctly different from those of non-family firms, the evidence on the relationship between women on board and firm performance in the context of widely held firms may not apply in the context of family firms. India provides an ideal setting for analyzing this question as the presence of family firms is pervasive and since 2013 India has instituted gender quotas on corporate boards. Using a data-set of 10218 firm year observations over a ten year period from 2005 to 2014 which spans the pre-quota and post-quota years, we find robust evidence that women directors on corporate boards positively impact firm value and that this effect increases with the number of women directors on board. However, we find that the positive effect of gender diversity on firm performance weakens with the extent to which the family exerts control through occupying key management positions on the board. In addition, women directors affiliated to the family have no significant effect on firm value, whereas - independent women directors do. Our results with respect to profitability are somewhat different; while as in the case of market value, women directors positively impact profitability with the positive effect driven by independent women directors, the effect does not vary with the extent of family control. Taken together, our results suggest that though gender diversity on corporate boards may positively impact firm performance in family firms in general, the extent of family control can have a significant bearing on this relationship. The findings from this study could be instructive for emerging economies like India in promoting gender-based quotas on corporate boards.
    Keywords: Board of Directors, gender diversity, promoter control, ownership, regulationClassification-JEL: G32, G34, G38
    Date: 2015–10
  2. By: Itansa, Merga Mekuria (Tilburg University, School of Economics and Management)
    Abstract: This dissertation is a compilation of three empirical studies on employee organizational commitment in the Ethiopian health care sector. The main purpose of the study was to investigate the chain of factors that lead into commitment of the health workforce. The first empirical study is about the mechanisms through which HRM practices influence employee organizational commitment. In this part of the dissertation, testing unveiled an indirect path from HRM practices to employee organizational commitment going through job satisfaction. The second study aimed to resolve the skepticism regarding the link between HRM practices and employee well-being/job satisfaction by integrating PSM as a moderating variable. This moderation analysis made it possible to shed light on why HRM practices may not have a statistically significant influence on employee well-being. Thus, for workers with a higher PSM level there is a strong positive association between HRM practices and employee well-being/job satisfaction. In the third and last part of the dissertation, emphasis was given to the role of PSM in enhancing employee organizational commitment. Towards this end, the mediation role of job satisfaction was confirmed. The mechanism through which employees with a higher level of PSM would exhibit a greater level of commitment is identified as job satisfaction.
    Date: 2016
  3. By: Arianna Galliera
    Abstract: The incentive scheme in a multi-task experiment might trigger different types of behavior in participants. This experimental study allows participants to decide between being paid for a random task or the average across all tasks. In a bargaining game buyer and seller have partly conflicting interests and are asymmetrically informed. Participants choose the incentive scheme based on past experience where we also control for individual characteristics. Although payment method is likely correlated to risk preferences it also might be influenced by egodefensive concerns. Will, for example, participants avoid cumulative payment which reveals, more reliably, own performance? So far little research is devoted to the analysis of self-selected Random Lottery Incentives and Cumulative Scheme both on individual and social results. This paper aims to fill the gap.
    Keywords: bargaining, experiment, gender, payment scheme.
    JEL: C78 C91 D82 J16 J33
    Date: 2016–09
  4. By: Lionel Thomas (CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté, UBFC - Université Bourgogne Franche-Comté)
    Abstract: This paper studies the optimal contract offered by a risk-neutral principal to a risk-averse agent when the agent’s hidden efficiency and action both improve the probability of the project being successful. We show that if the agent is sufficiently prudent and efficient, the principal induces a higher probability of success than under moral hazard, despite the costly informational rent given up. Moreover, the conditions to avoid pooling are difficult to satisfy because of the different kinds of incentives to be managed and the overall trade-off between rent extraction, insurance, and efficiency involved.
    Keywords: Adverse selection, moral hazard, risk aversion, prudence.
    Date: 2016–09–20
  5. By: Simeon Alder (University of Notre Dame)
    Abstract: We build a tractable assignment model to characterize the matching and separation patterns of CEOs and their employers. Managers learn about their own type by observing a sequence of public signals. The sorting is ex ante perfect across managers of a given cohort whose most recent assignment is the same, but is not typically so ex post. Moreover, if matching is costless, perfect \textit{ex ante} sorting occurs across managers of a given cohort regardless of their assignment history. We calibrate the model to match empirical targets from a large matched employer-employee dataset covering the Danish labor force between 2000 and 2009. We exploit the non-monotonicity of executive compensation in the employer type - the firm's productivity, that is - to parameterize the model. We have a particular interest in the degree of complementarity between the characteristics of the manager and those of the firm in the production function and our results fill a gap in the literature on the aggregate effects of a particular form of misallocation, namely mismatch, which depend critically on this elasticity. What's more, our theory is a natural building block for a dynamic theory of entrepreneurship.
    Date: 2016
  6. By: Ammar Farooq
    Abstract: This paper analyzes the relationship between age and the skill requirements of jobs performed by workers. I document that the proportion of college degree holders working in occupations that do not require a college degree is U-shaped over the life cycle and that there is a rise in transitions to non-college jobs among prime age college workers. The downward trend at initial stages of the life cycle is consistent with workhorse models of labor mobility, however, the rising trend at middle stages of the career is not. Such movements down the occupation ladder are also accompanied by average wage losses of 10% from the previous year. I develop an equilibrium model of frictional occupation matching featuring skill accumulation and depreciation along with worker and firm heterogeneity that can match the life cycle profile of downward occupational mobility. The model shows that skill depreciation is the key driver of transitions to low skill jobs with age. Using the model, I simulate the impact of different types of structural change in the labor market and find that the welfare consequences of long term changes depend on the interaction of the life cycle and human capital investment dimension.
    JEL: E24 J24 J31 J62
    Date: 2016–11–23
  7. By: John Eric Humphries (University of Chicago, Department of Economics); Fabian Kosse (University of Bonn)
    Abstract: Across academic sub-fields such as labor, education, and behavioral economics, the measurement and interpretation of non-cognitive skills varies widely. As a result, it is difficult to compare results on the importance of non-cognitive skills across literatures. Drawing from these literatures, this paper systematically relates various prototypical non-cognitive measures within one data set. Specifically, we estimate and compare several different strategies for measuring non-cognitive skills. For each, we compare their relative effectiveness at predicting educational success and decompose what is being measured into underlying personality traits and economic preferences. We demonstrate that the construction of the non-cognitive factor greatly influences what is actually measured and what conclusions are reached about the role of non-cognitive skills in life outcomes such as educational attainment. Furthermore, we demonstrate that, while sometimes difficult to interpret, factors extracted from self-reported behaviors can have predictive power similar to well established taxonomies, such as the Big Five.
    Keywords: non-cognitive skills, personality, preferences, educational success
    JEL: J24 I20 D03 D90
    Date: 2016–11
  8. By: Gidehag, Anton (Örebro University School of Business); Lodefalk, Magnus (Örebro University School of Business)
    Abstract: We examine the link between new employees in leading positions and subsequent productivity in small- and medium-sized (SME) enterprises. Managers and professionals are likely to possess important tacit knowledge. They are also in a position to influence the employing firm. Exploiting rich and comprehensive panel data for Sweden in the 2001-2010 period and employing semi-parametric and quasi-experimental estimation techniques, we find that newly recruited leading personnel have a positive and statistically significant impact on the productivity of the hiring SME. Interestingly, our results suggest that professionals with experience from international firms and enterprise groups contribute the most to total factor productivity. Overall, the findings suggest the importance of mobility of leading personnel for productivity-enhancing knowledge spillovers to SMEs.
    Keywords: recruitment; knowledge spillovers; firm growth; productivity; SME
    JEL: D22 D24 D83 J24 J62
    Date: 2016–10–31
  9. By: Anek Belbase; Geoffrey T. Sanzenbacher
    Abstract: Working longer is an effective way to boost individuals’ retirement security. Thus, understanding who can work longer and who may struggle is a key issue for researchers and policymakers. Some studies find that age-related declines in physical abilities can limit those in physically demanding jobs from working into their late 60s. But the effects of changes in cognitive abilities on work have received less attention. At first glance, it appears that a decline in “fluid” intelligence – the capacity to process new information – and an apparent relationship between fluid intelligence and job achievement could pose a barrier to working longer. However, “crystallized” intelligence – accumulated knowledge – increases with age, and cognitive reserves can offer spare capacity against declining fluid intelligence. As a result, studies comparing the productivity of young and old workers find that age is a crude and unreliable predictor of performance. This brief – the second in a series of three – reviews the research literature to assess how cognitive aging affects the ability to work during ages 50-70. The first brief provided a primer on cognitive aging and the third brief will examine how it affects retirees’ ability to manage their money from ages 70-90. The discussion proceeds as follows. The first section documents that age is not generally related to productivity across a variety of occupations. The second section explains why declining fluid intelligence tends not to impede work ability. The third section looks at the minority of workers who may struggle to remain productive and why. The final section concludes that experience helps many workers in skilled jobs stay productive and workers in less skilled jobs might have more fluid intelligence than their job requires. However, two groups are vulnerable to age-related decline: those in jobs where accumulated knowledge cannot offset demand for fluid intelligence and those who experience cognitive impairment.
    Date: 2016–11
  10. By: Eckhardt Bode; Stephan Brunow; Ingrid Ott; Alina Sorgner
    Abstract: We present empirical evidence suggesting that technological progress in the digital age will be biased not only with respect to skills acquired through education but also with respect to noncognitive skills (personality). We measure the direction of technological change by estimated future digitalization probabilities of occupations, and noncognitive skills by the Big Five personality traits from several German worker surveys. Even though we control extensively for education and experience, we find that workers characterized by strong openness and emotional stability tend to be less susceptible to digitalization. Traditional indicators of human capital thus measure workers’ skill endowments only imperfectly.
    Keywords: Worker personality, Noncognitive skills, Digital transformation, Direction of technical change, Germany
    JEL: C25 J24 O33
    Date: 2016

This nep-hrm issue is ©2016 by Patrick Kampkötter. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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