nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒03‒12
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Effectiveness of Incentive Schemes in the Presence of Implicit Effort Costs By Goerg, Sebastian J.; Kube, Sebastian; Radbruch, Jonas
  2. Ceding Control: An Experimental Analysis of Participatory Management By Mellizo, Philip; Carpenter, Jeffrey P.; Matthews, Peter Hans
  3. The "Sales Agent" Problem: Effort Choice under Performance Pay as Behavior toward Risk By Zubanov, Nick; Cadsby, Bram; Song, Fei
  4. Promotion Incentives in the Public Sector: Evidence from Chinese Schools By Karachiwalla, Naureen; Park, Albert
  5. More Effort with Less Pay: On Information Avoidance, Belief Design, and Performance By Szech, Nora; Huck, Steffen; Wenner, Lukas
  6. Escaping the Holocaust: human and health capital of refugees to the US, 1940-42 By Blum, Matthias; Rei, Claudia
  7. Strikes, Employee Workplace Representation, Unionism, and Trust: Evidence from Cross-Country Data By Addison, John T.; Teixeira, Paulino
  8. Gender and Peer Effects in Social Networks By Beugnot, Julie; Fortin, Bernard; Lacroix, Guy; Villeval, Marie Claire
  9. Men and Women Are Equally Effective Leaders By Timko, Krisztina
  10. Statistical Discrimination and the Efficiency of Quotas By J. Ignacio Conde-Ruiz; Juan-José Ganuza; Paola Profeta

  1. By: Goerg, Sebastian J. (Florida State University); Kube, Sebastian (University of Bonn); Radbruch, Jonas (IZA)
    Abstract: Agents' decisions to exert effort depends on the provided incentives as well as the potential costs for doing so. So far most of the attention has been on the incentive side. However, our lab experiments underline that both the incentive and cost side can be used separately to shape work performance. In our experiment, subjects work on a real-effort task. Between treatments, we vary the incentive scheme used for compensating workers. Additionally, by varying the available outside options, we explore the role of implicit costs of effort in determining workers' performance. We observe that incentive contracts and implicit costs interact in a non-trivial manner. Performance reacts significantly to changes in implicit effort costs under low-powered piece-rate and target-based bonus contracts, but not under a high piece rate contract. In addition, comparisons between the incentive schemes depend crucially on the implicit costs.
    Keywords: workers' performance, work environments, implicit cost, opportunity costs, incentive schemes
    JEL: C91 D01 D03 D24 J22 J24 J33 L23 M52
    Date: 2017–02
  2. By: Mellizo, Philip (College of Wooster); Carpenter, Jeffrey P. (Middlebury College); Matthews, Peter Hans (Middlebury College)
    Abstract: We use an experiment to evaluate the effects of participatory management on firm performance. Participants are randomly assigned roles as managers or workers in firms that generate output via real effort. To identify the causal effect of participation on effort, workers are exogenously assigned to one of two treatments: one in which the manager implements a compensation scheme unilaterally or another in which the manager cedes control over compensation to the workers who vote to implement a scheme. We find that output is between seven and twelve percentage points higher in participatory firms.
    Keywords: voice, control, intrinsic motivation, participatory management, real effort, experiment
    JEL: C92 J33 J53 J54 M50
    Date: 2017–02
  3. By: Zubanov, Nick (University of Konstanz); Cadsby, Bram (University of Guelph); Song, Fei (Ryerson University)
    Abstract: We present a model and an experiment that show, in a very general setting, that effort choice under a given linear pay-for-performance contract depends on how the financial risk associated with the scheme interacts with effort. We find that, under a given contract, if risk increases with effort, risk-averse (loving) individuals exert less (more) effort. In contrast, when risk is independent of effort, risk preferences do not affect effort choice. Our findings complement the larger literature on selection into incentive pay by showing that lower effort exerted by the risk-averse under a given incentive contract is another type of behaviour toward risk.
    Keywords: incentives, effort, risk aversion
    JEL: M52
    Date: 2017–02
  4. By: Karachiwalla, Naureen (IFPRI, International Food Policy Research Institute); Park, Albert (Hong Kong University of Science & Technology)
    Abstract: We provide evidence that promotion incentives influence the effort of public employees by studying China's system of promotions for teachers. Predictions from a tournament model of promotion are tested using retrospective panel data on primary and middle school teachers. Consistent with theory, high wage increases for promotion are associated with better performance, teachers increase effort in years leading up to promotion eligibility, and reduce effort if they are repeatedly passed over for promotion. Evaluation scores are positively associated with teacher time use and with student test scores, diminishing concerns that evaluations are manipulated.
    Keywords: teacher incentives, promotions, China
    JEL: J31 J33 J45 M51
    Date: 2017–02
  5. By: Szech, Nora; Huck, Steffen; Wenner, Lukas
    Abstract: In a tedious real effort task, subjects know that their piece rate is either low or ten times higher. When subjects are informed about their piece rate realization, they adapt their performance. One third of subjects nevertheless forego this instrumental information when given the choice — and perform stunningly well. Agents who are uninformed regarding their piece rate tend to outperform all others, even those who know that their piece rate is high. This also holds for enforced instead of self-selected information avoidance. All our findings can be captured by a model of optimally distorted expectations following Brunnermeier and Parker (2005).
    JEL: D83 D84 J31
    Date: 2016
  6. By: Blum, Matthias; Rei, Claudia
    Abstract: The large-scale persecution of Jews during World War II generated massive refugee movements. Using data from 20,441 predominantly Jewish passengers from 19 countries traveling from Lisbon to New York between 1940 and 1942, we analyze the last wave of refugees escaping the Holocaust and verify the validity of height as a proxy for human and health capital. We further show this episode of European migration displays wellknown features of migrant self-selection: early migrants were taller than late migrants; a large migrant stock reduces migrant selectivity; and economic barriers to migration apply. Our Öndings show that Europe experienced substantial losses in human and health capital while the US beneÖtted from the immigration of European refugees.
    JEL: N34 F22 J24
    Date: 2016
  7. By: Addison, John T. (University of South Carolina); Teixeira, Paulino (University of Coimbra)
    Abstract: This paper investigates the determinants of industrial conflict in companies, using a multi-country workplace inquiry for 2009 and 2013 and various measures of strike activity. The principal goal is to address the effect of formal workplace representation on strikes, distinguishing in the first instance between works councils on the one hand and broadly equivalent trade union based entities on the other. The role of unionism is also central to this inquiry, not only with respect to the degree to which workplace representation is union dominated but also and more familiarly perhaps through workplace union density and the level at which collective bargaining is conducted. Attention is also paid to the quality of industrial relations, as reflected in dissonance, namely divergent assessments of managers and employee workplace representatives as to the state of industrial relations. Although country effects do matter, it is reported that works councils are associated with reduced strike activity. However, any such effect is sensitive in particular to the union status of work councilors and time. There is also some indication that collective bargaining at levels higher than the company can exacerbate strike activity but this effect does not persist, possibly because of decentralization and the development of hybrid bargaining structures. For its part, good industrial relations appears key to strike reduction, independent of workplace representation.
    Keywords: works councils, employee representation, union density, collective bargaining, industrial relations quality, strikes, trust
    JEL: J51 J52 J53 J83
    Date: 2017–02
  8. By: Beugnot, Julie (Université de Franche Comté); Fortin, Bernard (Université Laval); Lacroix, Guy (Université Laval); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate whether peer effects at work differ by gender and whether the gender difference in peer effects – if any – depends on work organization, precisely the structure of social networks. We develop a social network model with gender heterogeneity that we test by means of a real-effort laboratory experiment. We compare sequential networks in which information on peers flows exclusively downward (from peers to the worker) and simultaneous networks where it disseminates bi-directionally along an undirected line (from peers to the worker and from the worker to peers). We identify strong gender differences in peer effects, as males' effort increases with peers' performance in both types of network, whereas females behave conditionally. While they are influenced by peers in sequential networks, females disregard their peers' performance when information flows in both directions. We reject that the difference between networks is driven by having one's performance observed by others or by the presence of peers in the same session in simultaneous networks. We interpret the gender difference in terms of perception of a higher competitiveness of the environment in simultaneous than in sequential networks because of the bi-directional flow of information.
    Keywords: gender, peer effects, social networks, work effort, experiment
    JEL: C91 J16 J24 J31 M52
    Date: 2017–02
  9. By: Timko, Krisztina
    Abstract: We study gender differences in the behavior and effectiveness of randomly selected leaders in a laboratory experiment using the minimum effort coordination game. Leaders can send non‐binding numeric messages to try to convince followers to coordinate on the Pareto‐efficient equilibrium. The treatment variations consist of the gender of the leader, and whether participants know or do not know the gender of the leader in their group. We find that female leaders choose more often to send a riskier high message in the beginning of the game, which hurts their effectiveness especially if gender is not revealed. However, if gender is revealed, both male and female leaders make more careful choices, and thus we do not observe any significant gender difference in leader effectiveness.
    Keywords: gender differences; leadership; leader effectiveness; coordination
    JEL: C92 J16 M14 M54
    Date: 2017–02–16
  10. By: J. Ignacio Conde-Ruiz; Juan-José Ganuza; Paola Profeta
    Abstract: We develop a statistical discrimination model a la Cornel and Welch (1996) where groups of workers (males-females) differ in the observability of their productivity signals. We assume that the informativeness of the productivity signals depends on the match between the potential worker and the interviewer: when both parties have similar backgrounds, the signal is likely to be more informative. Under this “homo-accuracy” bias, the group that is most represented in the evaluation committee generates more accurate signals, and, consequently, has a greater incentive to invest in human capital. This generates a discrimination trap. If, for some exogenous reason, one group is initially poorly evaluated (less represented into the evaluation committee), this translates into lower investment in human capital of individuals of such group, which leads to lower representation in the evaluation committee in the future, generating a persistent discrimination process. We explore this dynamic process and show that quotas may be effective to deal with this discrimination trap. In particular, we show that introducing a quota allows to reach a steady state equilibrium with a higher welfare than the one obtained in the decentralized equilibrium in which talented workers of the discriminated group decide not to invest in human capital.
    Date: 2017–03

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