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on Human Capital and Human Resource Management |
| By: | Alex Edmans; Xavier Gabaix; Dirk Jenter |
| Abstract: | This paper reviews the theoretical and empirical literature on executive compensation. We start by presenting data on the level of CEO and other top executive pay over time and across firms, the changing composition of pay; and the strength of executive incentives. We compare pay in U.S. public firms to private and non-U.S. firms. We then critically analyze three non-exclusive explanations for what drives executive pay -- shareholder value maximization by boards, rent extraction by executives, and institutional factors such as regulation, taxation, and accounting policy. We confront each hypothesis with the evidence. While shareholder value maximization is consistent with many practices that initially seem inefficient, no single explanation can account for all facts and historical trends; we highlight major gaps for future research. We discuss evidence on the effects of executive pay, highlighting recent identification strategies, and suggest policy implications grounded in theoretical and empirical research. Our survey has two main goals. First, we aim to tightly link the theoretical literature to the empirical evidence, and combine the insights contributed by all three views on the drivers of pay. Second, we aim to provide a user-friendly guide to executive compensation, presenting shareholder value theories using a simple unifying model, and discussing the challenges and methodological issues with empirical research. |
| JEL: | D31 D86 G34 M12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23596&r=hrm |
| By: | Simona, Comi; Mara, Grasseni; Federica, Origo; Laura, Pagani; |
| Abstract: | We study the effect of corporate board gender quotas on firm performance in Belgium, France, Italy and Spain. The empirical analysis is based on accounting panel data from Bureau Van Dijk’s Amadeus. Our identification strategy relies on both double and triple difference estimators with ex-ante matching. We find that gender quotas had either a negative or an insignificant effect on firm performance in the countries considered with the exception of Italy, where we find a positive impact on productivity. We then focus on Italy and offer possible explanations for the positive effect of gender quotas using detailed information on board members’ characteristics. |
| Keywords: | Gender quotas, corporate governance, firm performance, productivity |
| JEL: | G30 G38 J3 |
| Date: | 2017–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:367&r=hrm |
| By: | Christian Groth (Department of Economics, University of Copenhagen); Jakub Growiec (SGH Warsaw School of Economics) |
| Abstract: | We study the links between the Mincerian wage equation (the crosssectional relationship between wages and years of schooling) and the human capital production function (the causal effect of schooling on labor productivity). Based on a stylized Mincerian general equilibrium model with imperfect substitutability across skill types and ex ante identical workers, we demonstrate that the mechanism of compensating wage differentials renders the Mincerian wage equation uninformative for the human capital production function. Proper identification of the human capital production function should take into account the equilibrium allocation of individuals across skill types. |
| Keywords: | Mincerian wage equation, human capital production function, skill distribution, compensating wage differentials, golden rule of skill formation |
| JEL: | E24 I26 J24 |
| Date: | 2017–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1712&r=hrm |
| By: | Bagues, Manuel; Campa, Pamela |
| Abstract: | We provide a comprehensive analysis of the short- and medium-term effects of gender quotas in candidate lists using evidence from Spain, where quotas were introduced in 2007 in municipalities with more than 5,000 inhabitants, and were extended in 2011 to municipalities with more than 3,000 inhabitants. Using a Regression Discontinuity Design, we find that quotas raise the share of women among council members but they do not affect the quality of politicians, as measured by their education attainment and by the number of votes obtained. Moreover, within three rounds of elections, women fail to reach powerful positions such as party leader or mayor, and we do not observe any statistically or economically significant changes in the size and composition of public finances. |
| Keywords: | gender quotas in candidate lists; regression discontinuity design |
| JEL: | D72 H72 J16 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12149&r=hrm |
| By: | Sule Alan (University of Essex); Seda Ertac (Koc University) |
| Abstract: | We show that optimistic beliefs regarding the role of effort in success, while leading to success, diminish the individual’s sympathy toward the unsuccessful. We generate random variation in the degree of optimism about the productivity of effort via an effective educational intervention. We find that treated children, holding significantly more optimistic beliefs, are no less likely than control to give to unlucky recipients, but significantly less likely to give to those who failed at a real effort task despite an opportunity to build skill. The results highlight possible unintended social effects of effort-focused optimism and have implications for political economy. |
| Keywords: | redistributive preferences, prosocial behavior, altruism, beliefs, fairness, field experiments |
| JEL: | D31 D64 I24 I28 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-053&r=hrm |
| By: | Francesco Giffoni (CSIL); Matteo Gomellini (Bank of Italy); Dario Pellegrino (Bank of Italy) |
| Abstract: | This paper analyses the contribution of human capital, measured using the share of residents holding a college degree, to urban growth, gauged by the growth in employment, between 1981 and 2001. According to our estimates, starting with a ten per cent higher share of college-educated residents was associated with a higher growth in employment in the 0.5-2.2 per cent range. These results hold when considering both the municipal and the local labour market (LLM) levels, and they are robust to a wide set of urban characteristics. Our findings are confirmed using a measure of education dating back to 1931 as an instrument for human capital. Furthermore, we exploit a spatial localization model with human capital premiums to disentangle the estimated effect into two components related to productivity and life quality respectively. We find that productivity contributed to more than 60 per cent of the effect of human capital on urban growth at municipal level, and to over 90 per cent at the wider LLM level. |
| Keywords: | urban growth, human capital |
| JEL: | R11 N94 J24 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1127_17&r=hrm |
| By: | Glen W. Harrison (Georgia State University); Morten I. Lau (Copenhagen Business School); Hong Il Yoo (Durham Business School) |
| Abstract: | Abstract. Longitudinal experiments allow one to evaluate the temporal stability of latent preferences, but raise concerns about sample selection and attrition that may confound inferences about temporal stability. We evaluate the hypothesis of temporal stability in risk preferences using a remarkable data set that combines socio-demographic information from the Danish Civil Registry with information on risk attitudes from a longitudinal field experiment. Our experimental design builds in explicit randomization on the incentives for participation. The results show that the use of different participation incentives can affect sample response rates and help one identify the effects of selection. Correcting for endogenous sample selection and panel attrition changes inferences about risk preferences in an economically and statistically significant manner. We draw mixed conclusions on temporal stability of risk preferences that depend on which aspect of temporal stability one is interested in. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2017_07&r=hrm |