nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒02‒26
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Optimal Allocation of Decision-Making Authority and the Provision of Incentives under Uncertainty By Schöttner, Anja; Rohlfing-Bastian, Anna
  2. Morale, Relationships, and Wages: An Experimental Study By Englmaier, Florian; Segal, Carmit
  3. Self-Employment Dynamics and the Returns to Entrepreneurship By Eleanor W. Dillon; Christopher T. Stanton
  4. Because of you I did not give up - How peers affect perseverance By Gerhards, Leonie; Gravert, Christina
  5. Working Hours, Promotion and the Gender Gap in the Workplace By Kato, Takao; Ogawa, Hiromasa; Owan, Hideo
  6. Wage Posting as a Positive Selection Device: Theory and Empirical Evidence By Gartner, Hermann; Holzner, Christian
  7. Pooling hawks and doves: Interim-efficient labor contracts for other-regarding agents By Daske, Thomas
  8. Working Time Accounts and Turnover By Launov, Andrey; Wälde, Klaus
  9. The impact of psychological traits on performance in sequential tournaments: Evidence from a tennis field experiment. By Christoph Bühren; Philip J. Steinberg
  10. Workplaces, Low Pay and the Gender Earnings Gap in Britain By Butcher, Tim; Mumford, Karen A.; Smith, Peter N.

  1. By: Schöttner, Anja; Rohlfing-Bastian, Anna
    Abstract: Incentives for managers are often provided by offering them performance-based compensation schemes. The efficiency of such monetary compensations, however, depends on several factors, among them the quality of the employed performance measures, the information available for contracting purposes, and the allocation of decision-making authority which translates into either more centralized or more decentralized organizational structures. This article investigates a firm's decision whether to delegate or retain the authority to decide on a specific job design in a moral hazard environment with asymmetric information on effort costs. It provides conditions under which decentralization is the preferred organizational form. Moreover, it derives the result that the relation between incentives and the delegation of decision-making authority is not univocal, but depends on the quality of the employed performance measure. In this regard, it contributes to explaining the mixed empirical evidence on the relation between incentives and decision-rights.
    JEL: M52 M55 M54
    Date: 2016
  2. By: Englmaier, Florian; Segal, Carmit
    Abstract: Many labor relations are characterized by the possibility of repeated interaction without long term contracts and with discretionary pay components. We implement such a structure in the lab by allowing workers and firms to interact repeatedly for many periods absent a pre-announced final period. In this setting persistent and different human resource practices emerge endogenously: we find (long-term) relationships characterized by generous surplus sharing and spot-interactions with little to no rent for the workers. Efficiency, i.e. exerted effort, is comparable across these two institutions. Hence, spot-interactions are at least as profitable for firms engaging in such relationships. In control treatments, we show that neither limited firm commitment nor structural unemployment alone is sufficient to generate these patterns. Analyzing individual level data, we document that firm and worker behavior are individually rational and that individual histories play a significant role in explaining the observed behavior.
    JEL: C91 D21 M50
    Date: 2016
  3. By: Eleanor W. Dillon; Christopher T. Stanton
    Abstract: Small business owners and others in self-employment have the option to transition to paid work. If there is initial uncertainty about entrepreneurial earnings, this option increases the expected lifetime value of self-employment relative to pay in a single year. This paper first documents that moves between paid work and self-employment are common and consistent with experimentation to learn about earnings. This pattern motivates estimating the expected returns to entrepreneurship within a dynamic lifecycle model that allows for non-random selection and gradual learning about the entrepreneurial earnings process. The model accurately fits entry patterns into self-employment by age. The option value of returning to paid work is found to constitute a substantial portion of the monetary value of entrepreneurship. The model is then used to evaluate policies that change incentives for entry into self-employment.
    JEL: J24 J31 J62 L26 M50
    Date: 2017–02
  4. By: Gerhards, Leonie; Gravert, Christina
    Abstract: Various empirical paper have shown that peers affect productivity and behavior in the workplace. However, the mechanisms through which peers influence each other are still largely unknown. In this laboratory experiment we study a situation in which individuals might look at their peers' behavior to motivate themselves to endure in a task that requires perseverance. We test the impact of unidirectional peer effects under individual monetary incentives, controlling for ability and tactics. We find that peers significantly increase their observers' perseverance, while knowing about being observed does not significantly affect behavior. In a second experiment we investigate the motives to self-select into the role of an observing or an observant subject and what kind of peers individuals deliberately choose. Our findings from this treatment provide first insights on the perception of peer situations by individuals and new empirical evidence on how peer groups emerge.
    JEL: C91 M50 J24
    Date: 2016
  5. By: Kato, Takao (Colgate University); Ogawa, Hiromasa (National Graduate Institute for Policy Studies Japan); Owan, Hideo (University of Tokyo)
    Abstract: This paper presents a novel model of promotion within the firm which sheds new light on the interplay between working hours and the odds of subsequent promotion. The model's key feature is the coexistence of two different sources of asymmetric information: (i) the worker's cost of long working hours: and (ii) the worker's OJT ability (the worker's ability to accumulate valuable human capital on the job through learning by doing). The worker's cost of working long hours is known only to the worker, while the worker's OJT ability is accurately assessed only by the firm observing him/her on the job. Long working hours signal the worker's commitment to the firm, which determines the surplus produced when the worker is promoted. Thus, the firm provides the worker with managerial training only after observing the employee's hours worked, a signal of his/her commitment to the firm or lack thereof. The firm's decision to provide training also depends on its private information about the worker's OJT ability, which affects his/her future productivity if and when the worker gets promoted. Upon completion of training, the firm then promotes the worker. The model illuminates under what conditions, it is efficient for the firm to adopt the information revelation strategy – reveal its private information on the worker's OJT ability to him/her before the worker decides on whether to work long hours and signal his/her commitment. Using the model, we show that under a reasonable set of conditions, the firm may find it optimal to adopt the information revelation strategy for women but not for men, and derive an empirical testable hypothesis that the correlation between working hours and subsequent promotion will be stronger for women than for men. We analyze longitudinal personnel data from a large Japanese manufacturing firm and provide rigorous econometric evidence in support of the hypothesis.
    Keywords: working hours, promotion, rat race, adverse selection, and the gender gap
    JEL: M51 J16
    Date: 2016–12
  6. By: Gartner, Hermann; Holzner, Christian
    Abstract: We use the German Job Vacancy Survey to investigate whether firms are able to attract more suitable applicants by offering bargain wages rather than posting fixed wages. Contrary to the theoretical predictions provided by the literature, we find that the offer to bargain over pay decreases the share of suitable applicants. To explain these findings we develop a directed search model with asymmetric information about workers' types and incomplete contracts, which allows firms to condition their hiring decision on the match quality revealed at the job interview. We show that wage-posting and wage-bargaining firms coexist if pooling workers with different expected match quality is too costly for wage-posting firms and if the bargaining power is not too far away from satisfying the Hosios condition. In such an equilibrium wage-posting firms hire only workers with a high match quality and wage-bargaining firms hire workers with a high and a medium match quality.
    JEL: J63 M51 J64
    Date: 2016
  7. By: Daske, Thomas
    Abstract: Behavioral contract theory typically argues that agents who differ in their intrinsic motivations to collaborate or to compete would be screened by principals or self-sort in labor market equilibrium. This view contrasts with the empirical observation that workers' perceived support from coworkers is a key factor for labor turnover. The present study considers a principal-multiple agents model with independent efforts. Agents are privately informed about their more or less pronounced altruistic (spiteful) preferences. It is shown that the interim-efficient labor contract is a pooling contract that ex interim Pareto-dominates any allocation that could be achieved under complete information. Hence, all parties prefer the composition of social types to be random. The distributive effects of interim-efficient contracting are closely related to the hawk-dove game, with workers suffering from less altruistic coworkers. The results indicate that corporate culture has a random component associated with workers' intrinsic motivations to collaborate or to compete.
    JEL: D82 D86 M50
    Date: 2016
  8. By: Launov, Andrey (University of Kent); Wälde, Klaus (University of Mainz)
    Abstract: Working time accounts allow firms to smooth their demand for hours employed. Descriptive literature suggests that this reduces turnover and inhibits increase in unemployment during recessions. We model theoretically the optimal choice of hours by a firm with a working time account. We show that working time accounts do not necessarily guarantee lower turnover. Turnover may be inhibited or catalyzed depending on whether a firm meets economic downturn with surplus or deficit of hours and on how productive this firm is. Adjustment pattern in Germany during the Great Recession implies that working time accounts have contributed positively.
    Keywords: working time accounts, turnover, Great Recession, Germany
    JEL: J23 J63 J64
    Date: 2016–12
  9. By: Christoph Bühren (University of Kassel); Philip J. Steinberg (University of Wuppertal)
    Abstract: In order to analyze if heterogeneity in psychological traits affects individual performance in sequential tournaments, we conducted a tennis field experiment. In the experiment, we also varied the payment schemes (individual, team, competition) to control for moderating effects of different incentives. Team incentives, risk taking, and self-esteem reduced performance whereas a preference towards competition enhanced it. On average, we observe a second mover advantage. However, individuals’ psychological traits, such as self-esteem or self-efficacy, can turn a second mover into a first mover advantage. Our results shed new light on the discussion of first vs. second mover advantages and performance under pressure. Study findings have implications for psychological requirements of competitive and team tasks in business settings.
    Keywords: Performance under pressure; experiment; psychological traits; second mover advantage; tennis; sequential tournaments
    JEL: C93 D81 Z20 M52
    Date: 2017
  10. By: Butcher, Tim (Low Pay Commission, UK); Mumford, Karen A. (University of York); Smith, Peter N. (University of York)
    Abstract: This study provides a robust assessment of the importance of a number of determinants of the gaps in earnings between the four groups of employees who make up the British workforce; males and females who work full and part-time. The analysis considers the contribution of individual employee characteristics as well as occupation, industry, region and other workplace specific characteristics. The results are compared with previous findings for 2004 (Mumford and Smith, 2009) and with alternative data from the ASHE series for 2004, 2011 and 2015.
    Keywords: gender pay gap, low pay
    JEL: J01 J70 J78
    Date: 2016–12

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