nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒10‒29
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Worker separation under performance pay : Empirical evidence from Finland By Jones, Derek C.; Kalmi, Panu; Kato, Takao; Mäkinen, Mikko
  2. Subjective Performance Evaluation of Employees with Biased Beliefs By FOSCHI, Matteo; SANTOS-PINTO, Luís Pedro
  3. The Economics of Scale-Up By Jonathan M.V. Davis; Jonathan Guryan; Kelly Hallberg; Jens Ludwig
  4. Leveraging Technology to Engage Parents at Scale: Evidence from a Randomized Controlled Trial By Peter Leopold S. Bergman; Eric W. Chan
  5. Optimal Tournaments By Drugov, Mikhail; Ryvkin, Dmitry
  6. The Origins of the Italian Regional Divide: Evidence from Real Wages, 1861-1913 By Federico, Giovanni; Nuvolari, Alessandro; Vasta, Michelangelo
  7. Can Subsidising Job-Related Training Reduce Inequality? By Konstantinos Angelopoulos; Andrea Benecchi; Jim Malley
  8. The Human Capital Legacy of a Trade Embargo By Abhishek Chakravarty; Matthias Parey; Greg C. Wright
  9. Jobs at Risk!? Effects of Automation of Jobs on Occupational Mobility By Sorgner, Alina
  10. Changes in Subjective Well-Being Over Time in Germnay By Ana I. Moro Egido; Maria Navarro; Ángeles Sánchez-Domínguez

  1. By: Jones, Derek C.; Kalmi, Panu; Kato, Takao; Mäkinen, Mikko
    Abstract: This paper investigates the role of individual incentive (II) and group incentive (GI) pay as determinants of worker separation. We use a large linked employer-employee panel data set for full-time male manufacturing workers during 1997-2006 from Finland. We follow actual job spells and switches of individual employees and define separation as worker exit from his current employer. The key finding for white-collar workers is that group incentive pay is associated significantly with increased probability of separation and hence diminished employment stability, but in large firms only. For blue-collar workers our results consistently indicate that individual incentive pay is associated with a decreased probability of separation and hence enhanced employment stability, both in small and large firms. Our finding that group incentive pay increases the risk of separation for white-collar workers is more consistent with theoretical work such as Lazear (2000) and Fehr and Gaechter (2000), while uncovering that individual incentive pay decreases employment stability for blue-collar workers supports theoretical work such as Parent (1999) and Paarsch and Shearer (2000).
    JEL: J33 M52 J31 J62 J63
    Date: 2017–10–19
  2. By: FOSCHI, Matteo; SANTOS-PINTO, Luís Pedro
    Abstract: This paper analyses how worker optimism (and pessimism) affects subjective performance evaluation (SPE) contracts. We let an optimistic (pessimistic) worker overestimate (underestimate) the probability of observing an acceptable performance. The firm is better informed about performance than the worker and knows the worker's bias. We show that optimism (and pessimism): i) changes the optimal incentive scheme under SPE, ii) lowers the deadweight loss associated with SPE contracts, iii) can lead to a Pareto improvement by simultaneously lowering the firm's expected wage cost and raising the worker's expected compensation. In addition, we show that worker pessimism can lead to SPE contracts without a deadweight loss, in contrast to the standard case in the literature.
    Keywords: Optimism, Overconfidence, Contract, Moral Hazard, Biased Beliefs, Mechanism Design.
    JEL: D82 D84 D86 J41 J7
    Date: 2017
  3. By: Jonathan M.V. Davis; Jonathan Guryan; Kelly Hallberg; Jens Ludwig
    Abstract: Most randomized controlled trials (RCT) of social programs test interventions at modest scale. While the hope is that promising programs will be scaled up, we have few successful examples of this scale-up process in practice. Ideally we would like to know which programs will work at large scale before we invest the resources to take them to scale. But it would seem that the only way to tell whether a program works at scale is to test it at scale. Our goal in this paper is to propose a way out of this Catch-22. We first develop a simple model that helps clarify the type of scale-up challenge for which our method is most relevant. Most social programs rely on labor as a key input (teachers, nurses, social workers, etc.). We know people vary greatly in their skill at these jobs. So social programs, like firms, confront a search problem in the labor market that can lead to inelastically-supplied human capital. The result is that as programs scale, either average costs must increase if program quality is to be held constant, or else program quality will decline if average costs are held fixed. Our proposed method for reducing the costs of estimating program impacts at large scale combines the fact that hiring inherently involves ranking inputs with the most powerful element of the social science toolkit: randomization. We show that it is possible to operate a program at modest scale n but learn about the input supply curves facing the firm at much larger scale (S × n) by randomly sampling the inputs the provider would have hired if they operated at scale (S × n). We build a simple two-period model of social-program decision making and use a model of Bayesian learning to develop heuristics for when scale-up experiments of the sort we propose are likely to be particularly valuable. We also present a series of results to illustrate the method, including one application to a real-world tutoring program that highlights an interesting observation: The noisier the program provider’s prediction of input quality, the less pronounced is the scale-up problem.
    JEL: D24 I2 J2 L25 L38 M5
    Date: 2017–10
  4. By: Peter Leopold S. Bergman; Eric W. Chan
    Abstract: While leveraging parents has the potential to increase student performance, programs that do so are often costly to implement or they target younger children. We partner text-messaging technology with school information systems to automate the gathering and provision of information to parents at scale. In a field experiment across 22 middle and high schools, we used this technology to send automated text-message alerts to parents about their child’s missed assignments, grades and class absences. We pre-specified five primary outcomes. The intervention reduces course failures by 38% and increases class attendance by 17%. Students are more likely to be retained in the district. The positive effects are particularly large for students with below-average GPA and students in high school. There are no effects on standardized test scores however. We randomly chose either the mother or the father to receive the alerts, but there were no differential effects across these subgroups. As in previous research, the intervention appears to change parents’ beliefs about their child’s performance and increases parent monitoring. Our results show that this type of automated technology can improve student effort relatively cheaply and at scale.
    Keywords: education, information, experiments
    JEL: I20 I21 I24 I28
    Date: 2017
  5. By: Drugov, Mikhail; Ryvkin, Dmitry
    Abstract: We study the optimal allocation of prizes and comparative statics of multi-prize rank-order tournaments. For a principal allocating a fixed budget, we show that the winner-take-all (WTA) prize schedule is optimal when the distribution of noise has an increasing failure rate (IFR). For noise distributions with unimodal failure rates the optimal prize allocation moves closer to WTA as the noise distribution becomes smaller in the convex transform order. We also identify a natural ordering of prize schedules by how closely they approximate the WTA schedule and show that for log-concave noise distributions the equilibrium effort is monotone in this order. The impact of noise intensity on equilibrium effort is captured by the dispersive order.
    Keywords: comparative statics; convex transform order; dispersive order; failure rate; optimal allocation of prizes; tournament; unimodality
    JEL: C72 D72 D82
    Date: 2017–10
  6. By: Federico, Giovanni; Nuvolari, Alessandro; Vasta, Michelangelo
    Abstract: The origins of the Italian North-South divide have always been controversial. We fill this gap by estimating a new data-set of real wages (Allen 2001) from the Unification (1861) to WWI. Italy was very poor throughout the period, with a modest improvement since the late 19th century. This improvement started in the North-West industrializing regions, while real wages in other macro-areas remained stagnant. The gap North-West/South widened until the end of the period. Focusing on the drivers of the different regional trends, we find that human capital formation exerted strong positive effect on the growth of real wages.
    Keywords: 19th century; Italy; real wages; regional divide
    JEL: N01 N13 N33
    Date: 2017–10
  7. By: Konstantinos Angelopoulos; Andrea Benecchi; Jim Malley
    Abstract: A well-established stylised fact is that employer provided job-related training raises productivity and wages. Using UK data, we further find that job-related training is positively related to subsidies aimed at reducing training costs for employers. We also find that there is a positive, albeit quantitatively small, relationship between wage inequality and training inequality in the UK. Motivated by the above, we explore whether policies to subsidise firms’ monetary cost of training can improve earnings for the lower skilled and reduce inequality. We achieve this by developing a dynamic general equilibrium model, featuring skilled and unskilled labour, capital-skill complementarity in production and an endogenous training allocation. Our results suggest that training subsidies for the unskilled have a significant impact on the labour income of unskilled workers. These subsides also increase earnings for skilled workers and raise aggregate income with implied lifetime multipliers exceeding unity. Finally, the positive spill over effects to skilled workers imply that training subsidies are not very effective in reducing inequality, measured as the distance between skilled and unskilled wages and incomes.
    Keywords: job-related training, wage and earning inequality, training subsidies
    JEL: E24 J24 J31
    Date: 2017
  8. By: Abhishek Chakravarty; Matthias Parey; Greg C. Wright
    Abstract: We estimate the effects of in-utero exposure to a trade embargo on survival and human capital in an import-dependent developing country. Using a sharp regression discontinuity design, we show that a nearly comprehensive embargo imposed by India on Nepal in 1989 led to a close to 30 percent decrease in reported live births the month after it began. Adult survivors of exposure have more education and earn 30% higher monthly income compared to unexposed cohorts. The regional variation in post-embargo income is consistent with a model that combines internal and external trade costs with non-homothetic preferences.
    JEL: I15 O11 O15
    Date: 2017–10–24
  9. By: Sorgner, Alina
    Abstract: The paper investigates the relationship between the risk of automation of jobs and individual-level occupational mobility using a representative German household survey. The results suggest that expected occupational changes such as losing a job and demotion at the current place of employment, among others, are likely to be driven by the high occupation-specific risk of automation. However, switches to self-employment are more likely to occur from occupations with low risk of automation.
    JEL: J24 J62 L26
    Date: 2017
  10. By: Ana I. Moro Egido (Department of Economic Theory and Economic History, University of Granada.); Maria Navarro (Department of Economic Theory and Economic History, University of Granada.); Ángeles Sánchez-Domínguez (Departament of Applied Economics, University of Granada, Spain.)
    Abstract: Using data from the German Socio-Economic Panel, we study the evolution of subjective well-being from 1999 to 2014. More specifically, we analyze the main determinants of changes in subjective well-being once we determine the main factors of predicted changes of subjective well-being. Moreover, we test whether these determinants exert a differential effect when considering ups and downs in subjective well-being. Our main findings indicate that, social, cultural and psychological capital predict the largest changes in subjective well-being. We also observe that absolute income has effects on changes in subjective well-being, but is not relevant at level. Additionally, adaptation is always complete except when we focus on specific changes, that is, when we distinguish between ups and downs in subjective well-being, adaptation affects the positive changes. In general, our evidence shows that all factors except bridging social capital, worries and risk have a different effect on the level and changes in subjective well-being.
    Keywords: subjective well-being evolution, social comparisons, social capital, cultural capital, psychological capital.
    Date: 2017–10–24

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