nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒02‒19
twelve papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Firm Performance and the Volatility of Worker Earnings By Chinhui Juhn; Kristin McCue; Holly Monti; Brooks Pierce
  2. Managers, Training, and Internal Labor Markets By Friebel, Guido; Raith, Michael
  3. Pledging, Praising and Shaming: Experimental Labour Markets in Ghana By Davies, Elwyn; Fafchamps, Marcel
  4. Gender differences in motivational crowding out of work perfomance By Benndorf, Volker; Rau, Holger A.; Sölch, Christian
  5. Mobile information and communication technologies, flexible work organization and labor productivity: Firm-level evidence By Viete, Steffen; Erdsiek, Daniel
  6. Fire in the Belly? Employee Motives and Innovative Performance in Startups versus Established Firms By Henry Sauermann
  7. When No Bad Deed Goes Punished: Relational Contracting in Ghana versus the UK By Elwyn Davies; Marcel Fafchamps
  8. Gender differences in competitive positions: Experimental evidence on job promotion By Peterlé, Emmanuel; Rau, Holger A.
  9. Stay-at-Work/Return-to-Work: Key Facts, Critical Information Gaps, and Current Practices and Proposals By Yonatan Ben-Shalom; Steve Bruns; Kara Contreary; David Stapleton
  10. The Relative Returns to Education, Experience, and Attractiveness for Young Workers By Beam, Emily A.; Hyman, Joshua; Theoharides, Caroline
  11. Adoption of Management Practices in the Public Sector of Bangladesh By Arimoto, Yutaka; Kurata, Masamitsu
  12. How do Quasi-Random Option Grants Affect CEO Risk-Taking? By Kelly Shue; Richard Townsend

  1. By: Chinhui Juhn; Kristin McCue; Holly Monti; Brooks Pierce
    Abstract: Using linked employer-employee data for the U.S., we examine whether shocks to firm revenues are transmitted to the earnings of continuing employees. While full insurance is rejected, the elasticity of worker earnings with respect to persistent shocks in firm revenues is small and consistent with the notion that firms insulate workers from idiosyncratic shocks. Exploring heterogeneity of effects, we find the largest elasticity in professional services, among employees in the top 5% of their employers’ earnings distribution, suggesting that in certain jobs performance pay may be a countervailing force to wage insurance.
    JEL: J01 J3
    Date: 2017–01
  2. By: Friebel, Guido; Raith, Michael
    Abstract: We propose a theory that emphasizes the role of managers for the production and allocation of human capital in firms. Managers invest time to train junior employees, and acquire information about the juniors' abilities that is valuable for job assignments. This dual role of managers matters especially in a multidivisional firm, whose internal labor market may be structured in two distinct ways. In a "silo", junior workers are eligible only for a transfer or promotion in the division they currently work in; in a "lattice", they can also be assigned to another division. The prospect of losing a good worker to another division undermines a managerís training incentives, and may encourage her to misrepresent the information she provides about her workers. We show that because of these agency problems, implementing a lattice to achieve better job assignments also leads to higher wage costs for the firm. As a result, either silos or a lattice can be optimal. Our comparative-statics analysis suggests that the recent trend for firms to facilitate cross-divisional mobility may be caused by product market competition, a tight managerial labor market, and skill-biased technological change.
    JEL: D21 L23 M53
    Date: 2016
  3. By: Davies, Elwyn (University of Oxford); Fafchamps, Marcel (Stanford University)
    Abstract: Firm surveys have shown that labour management in developing countries is often problematic. Earlier experimental research (Davies & Fafchamps, 2017) has shown that managers in Ghana are reluctant to use monetary incentives to motivate workers. This paper presents the results from a gift-exchange game experiment in Ghana in which the worker can make a promise to the employer before a contract is offered (ex ante communication) and in which the employer can send negative or positive feedback to the worker after the worker has chosen effort (ex post communication). The results indicate that feedback can help sustain cooperate behaviour (high effort provision), but only if the wage offered is high enough. Feedback reinforces reciprocity concerns on the behalf of the worker. In particular positive messages (praising) leads to higher effort provision, no significant relation between negative feedback and effort can be found. Promises are related to higher effort, but do not necessarily lead to higher wages.
    Keywords: worker incentives, gift exchange, effort, worker criticism, communication
    JEL: C71 D2 D86 E24 O16
    Date: 2017–01
  4. By: Benndorf, Volker; Rau, Holger A.; Sölch, Christian
    Abstract: This paper studies motivational crowding-out effects after financial incentives are lowered. In a real-effort setting, workers receive a piece rate before financial incentives are substituted by a one-time payment. Under the fixed payment, effort is significantly lower only when preceded by piece-rate incentives. The decrease is driven by a fraction of men who reduce their effort by 12%, whereas women constantly perform well. We find that this motivational crowding-out effect disappears when men do not have prior experience of a piece rate. In a series of control treatments, we discard all alternative explanations besides from motivational crowding out.
    Keywords: gender differences,incentives,motivational crowding out,real-effort task
    JEL: C91 J16 M54
    Date: 2017
  5. By: Viete, Steffen; Erdsiek, Daniel
    Abstract: Mobile information and communication technologies (ICT) have started to diffuse rapidly in the business sector. This study tests for the complementarity between the use of mobile ICT and organizational practices providing workplace flexibility. We hypothesize that mobile ICT can create value if organizational practices grant employees appropriate autonomy over when, where and how to perform work-related tasks. Our data set comprises 1132 German service firms and provides information on the share of employees that have been equipped with mobile devices which allow for wireless internet access, such as notebooks, tablets and smartphones. Workplace flexibility is measured in terms of firms’ use of working from home arrangements, working time accounts, and trust-based working time. Within a production function framework, we find that the use of mobile ICT is associated with a productivity premium only in firms granting workplace flexibility by means of trust-based working time. Robustness checks suggest that our results are not driven by ICT-skill complementarity or by complementarity of mobile ICT with multiple alternative modern management practices.
    JEL: D22 L22 O33
    Date: 2016
  6. By: Henry Sauermann
    Abstract: We examine whether startups attract employees with different pecuniary and non-pecuniary motives than small or large established firms. We then explore whether such differences in employee motives lead to differences in innovative performance across firm types. Using data on over 10,000 U.S. R&D employees, we find that startup employees place lower importance on job security and salary but greater importance on independence and responsibility. Startup employees have higher patent output than employees in small and large established firms, and this difference is partly mediated by employee motives – especially startup employees’ greater willingness to bear risk. We discuss implications for research as well as for managers and policy makers concerned with the supply of human capital to entrepreneurship and innovation.
    JEL: J24 O31 O32
    Date: 2017–01
  7. By: Elwyn Davies; Marcel Fafchamps
    Abstract: In relational contracting the threat of punishment in future periods provides an incentive not to cheat. But to what extent do people actually carry out this punishment? We compare relational contracting patterns in Ghana and the United Kingdom by conducting a repeated principal agent lab experiment, framed in a labour market setting. Each period, employers make offers to workers, who can choose to accept or reject this offer and, after accepting and being paid, what effort to exert. The employers and workers interact repeatedly over several periods. In the UK, subjects behave in line with theoretical predictions and previous experiments: high effort is rewarded and low effort punished. However, we do not find evidence for the use of such incentives in Ghana. As a result, employers fail to discipline a subgroup of “selfish” workers, resulting in a low average effort and low employers’ earnings. Set identification of Fehr-Schmidt preferences of the Ghanaian and British workers also shows that the share of “selfish” workers in our experiment in Ghana is not substantially different from the UK. Introducing competition for workers or a reputation mechanism do not significantly improve workers’ effort.
    JEL: D2 J41 O12
    Date: 2017–02
  8. By: Peterlé, Emmanuel; Rau, Holger A.
    Abstract: This paper analyzes gender differences in access to competitive positions. We implement an experiment where workers can apply for a job promotion by sending a signal to their employer. We control for gender differences in anticipation of discrimination in a treatment where a computer randomly recruits. Discriminatory behavior by the employer is isolated in a treatment where workers cannot send signals. We find that gender disparity among promoted workers is highest when workers can apply for promotion and employers recruit. Strikingly, the gender composition in competitive position is balanced in the absence of a signaling institution. When signaling is possible, we observe that female workers who do not request a promotion are discriminated against.
    Keywords: experiment,discrimination,gender differences,real effort
    JEL: C9 J24 J70
    Date: 2017
  9. By: Yonatan Ben-Shalom; Steve Bruns; Kara Contreary; David Stapleton
    Abstract: Key insights for federal and state policymakers interested in piloting stay-at-work/return-to-work interventions.
    Keywords: disability, employment, job retention, early intervention
    JEL: I J
  10. By: Beam, Emily A. (University of Vermont); Hyman, Joshua (University of Connecticut); Theoharides, Caroline (Amherst College)
    Abstract: Understanding employer preferences for characteristics of young workers is crucial to designing effective policies to reduce youth unemployment in developing countries. We conduct a randomized resume audit study, simultaneously examining the returns to education, experience, and physical attractiveness among young workers applying for entry-level jobs in a developing country context. Employers do not value college experience without a degree. Postsecondary vocational training increases the likelihood of a callback, but only for blue-collar occupations typically offered only to male workers. Work experience is valued across most occupations; however, among service-sector jobs with in-person customer interactions, attractive applicants receive 23 percent more callbacks, swamping the returns to experience. Our results can guide policymakers in the design of labor market programs to reduce youth unemployment as well as help young workers make optimal choices to ease their school-to-work transition.
    Keywords: returns to education, school-to-work transition, audit study, labor demand, returns to experience, attractiveness
    JEL: J23 J24 J70 C93
    Date: 2017–01
  11. By: Arimoto, Yutaka; Kurata, Masamitsu
    Abstract: Improving public service delivery remains a key issue in the public sector of developing countries. The emerging literature reveals a positive correlation between the adoption of management practices and public service delivery. However, potential factors associated with the adoption of management practices are less known. We collected data concerning awareness of management concepts and the adoption of management practices in over 1,600 subdistrict offices of public departments in Bangladesh. We show that awareness of management concepts (e.g., Plan-Do-Check-Act, Total Quality Management, and Kaizen) is associated with a higher degree of adoption of management practices and more collaboration with stakeholders. The association is particularly sizable for practices related to process management, such as planning, improvement, and standardization. Financial and physical resources are not associated with adoption. The results are consistent with a previous finding in the private sector that lack of knowledge is a key barrier to the implementation of management practices. Offering simple management training about concrete methods and practices may improve the adoption of management practices.
    Keywords: management practices, public service delivery, public sector, Bangladesh
    Date: 2017–01
  12. By: Kelly Shue; Richard Townsend
    Abstract: We examine how an increase in stock option grants affects CEO risk-taking. The overall net effect of option grants is theoretically ambiguous for risk-averse CEOs. To overcome the endogeneity of option grants, we exploit institutional features of multi-year compensation plans, which generate two distinct types of variation in the timing of when large increases in new at-the-money options are granted. We find that, given average grant levels during our sample period, a 10 percent increase in new options granted leads to a 2.8–4.2 percent increase in equity volatility. This increase in risk is driven largely by increased leverage.
    JEL: G3 J3 M12 M52
    Date: 2017–01

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