nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒11‒12
fifteen papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Delegating performance evaluation By Igor Letina; Shuo Liu; Nick Netzer
  2. An Offer You Can't Refuse? Incentives Change What We Believe By Sandro Ambuehl
  3. How Do Employers Use Compensation History?: Evidence from a Field Experiment By Moshe A. Barach; John Horton
  4. I (Don't) Like You! But Who Cares? Gender Differences in Same Sex and Mixed Sex Teams By Leonie Gerhards; Michael Kosfeld
  5. Measuring success in education: the role of effort on the test itself By Uri Gneezy; John List; Jeffrey Livingston; Xiangdong Qin; Sally Sadoff; Yang Xu
  6. Serving the Public Interest in Several Ways: Theory and Empirics By Dur, Robert; van Lent, Max
  7. Education, signaling and the allocation of entrepreneurial skills By Arozamena, Leandro; Ruffo, Hernán
  8. The Cross-Section of Labor Leverage and Equity Returns By Donangelo, Andres; Gourio, Francois; Kehrig, Matthias; Palacios, Miguel
  9. Contracting with Word-of-Mouth Management By Yuichiro Kamada; Aniko Ory
  10. Common Ownership, Competition, and Top Management Incentives By Miguel Antón; Florian Ederer; Mireia Giné; Martin Schmalz
  11. Who Moves Up the Job Ladder?* By John Haltiwanger; Henry Hyatt; Erika McEntarfer
  12. Happiness at work By Jan-Emmanuel De Neve; George Ward
  13. Citizenship behavior and turnover intention : The role of public service motivation and career commitments By Birhane, Lakew Alemu
  14. Antecedents of Overtime Work: The Case of Junior Academics By Frei, Irina; Grund, Christian
  15. New Hires’ Job Satisfaction Time Trajectory By Ralf Bebenroth; Jose O.L. Berengueres

  1. By: Igor Letina; Shuo Liu; Nick Netzer
    Abstract: We study optimal incentive contracts with multiple agents when performance evaluation is delegated to a reviewer. The reviewer may be biased in favor of the agents, but the degree of the bias is unknown to the principal. We show that a contest, which is a contract in which the principal determines a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer’s potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap, and it can also be implemented by a nested Tullock contest. Our analysis has implications for applications as diverse as the design of worker compensation, the awarding of research grants, and the allocation of foreign aid.
    Keywords: Performance evaluation, delegation, optimality of contests
    JEL: D02 D82 M52
    Date: 2017–10
  2. By: Sandro Ambuehl
    Abstract: Much of economics assumes that higher incentives increase participation in a transaction only because they exceed more people’s reservation price. This paper shows theoretically and experimentally that when information about the consequences is costly, higher incentives also change reservation prices to further increase participation. A higher incentive makes people gather information in a way that is more favorable to participation—as if they were persuading themselves to participate. Hence, incentives change not only what people choose, but also what they believe their choices entail. This result informs the debate about laws around the world that severely restrict incentives for transactions such as organ donation, surrogate motherhood, human egg donation, and medical trial participation. It helps bridge a gap between economists on the one hand and the policy makers and ethicists on the other.
    Keywords: incentives, repugnant transactions, information acquisition, inattention, experiment
    JEL: D03 D04 D84
    Date: 2017
  3. By: Moshe A. Barach; John Horton
    Abstract: We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants, and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 7% lower past average wages and hired workers with 16% lower past average wages. Conditional upon bargaining, workers hired by treated employers struck better wage bargains for themselves. Using a structural model of bidding and hiring, we find that the selection effects we observe would also occur in equilibrium.
    Keywords: field experiments, compensation, search and screening
    JEL: J01 J30 M50 M51
    Date: 2017
  4. By: Leonie Gerhards; Michael Kosfeld
    Abstract: We study the effect of likability on female and male team behavior in a lab experiment. Extending a two-player public goods game and a minimum effort game by an additional pre-play stage that informs team members about their mutual likability we find that female teams lower their contribution to the public good in case of low likability, while male teams achieve high levels of cooperation irrespective of the level of mutual likability. In mixed sex teams, both females’ and males’ contributions depend on mutual likability. Similar results are found in the minimum effort game. Our results offer a new perspective on gender differences in labor market outcomes: mutual dislikability impedes team behavior, except in all-male teams.
    Keywords: gender differences, likability, experiment, team behavior
    JEL: C90 J16
    Date: 2017
  5. By: Uri Gneezy; John List; Jeffrey Livingston; Xiangdong Qin; Sally Sadoff; Yang Xu
    Abstract: Tests measuring and comparing educational achievement are an important policy tool. We experimentally show that offering students extrinsic incentives to put forth effort on such achievement tests has differential effects across cultures. Offering incentives to U.S. students, who generally perform poorly on assessments, improved performance substantially. In contrast, Shanghai students, who are top performers on assessments, were not affected by incentives. Our findings suggest that in the absence of extrinsic incentives, ranking countries based on low-stakes assessments is problematic because test scores reflect differences in intrinsic motivation to perform well on the test itself, and not just differences in ability.
    Date: 2017
  6. By: Dur, Robert (Erasmus University Rotterdam); van Lent, Max (Leiden University)
    Abstract: We develop a model where people differ in their altruistic preferences and can serve the public interest in two ways: by making donations to charity and by taking a public service job and exerting effort on the job. Our theory predicts that people who are more altruistic are more likely to take a public service job and, for a given job, make higher donations to charity. Comparing equally altruistic workers, those with a regular job make higher donations to charity than those with a public service job by a simple substitution argument. We subsequently test these predictions using cross-sectional data from Germany on self-reported altruism, sector of employment, and donations to charity. In addition, we use panel data from the Netherlands on volunteering and sector of employment. We find support for most of our predictions.
    Keywords: altruism, charitable donations, volunteering, public service motivation, public sector employment, self-selection
    JEL: D64 H11 J45 M50
    Date: 2017–10
  7. By: Arozamena, Leandro; Ruffo, Hernán
    Abstract: We assess the allocative importance of education when workers can choose to self-employ. To do so, we build a model combining educational choices with the labor market and selfemployment. Education can increase workers' human capital and may signal their ability as well. Both roles can be more important for working in a firm than for self-employment. We show that when education performs worse its signaling role, firms cannot distinguish high and low productivity workers, and there is a higher proportion of workers that allocate in less productive activities as self-employed. This option further reduces incentives to educate, given that education is less valuable for a worker if self-employed. Lowering the cost of education increases the number of educated workers, but does not solve the signaling problem, and could generate stronger misallocation.
    Keywords: Educación, Economía, Emprendimiento, Investigación socioeconómica, Productividad, Sector privado, Sector productivo, Trabajo y protección social, Habilidades y destrezas,
    Date: 2017
  8. By: Donangelo, Andres (University of Texas at Austin); Gourio, Francois (Federal Reserve Bank of Chicago); Kehrig, Matthias (Duke University); Palacios, Miguel (Federal Reserve Bank of Chicago)
    Abstract: Using a standard production model, we demonstrate theoretically that, even if labor is fully flexible, it generates a form of operating leverage if (a) wages are smoother than productivity and (b) the capital-labor elasticity of substitution is strictly less than one. Our model supports using labor share–the ratio of labor expenses to value added–as a proxy for labor leverage. We show evidence for conditions (a) and (b), and we demonstrate the economic significance of labor leverage: High labor-share firms have operating profits that are more sensitive to shocks, and they have higher expected asset returns.
    Keywords: Labor leverage; labor mobility; labor supply; wage; productivity
    JEL: J20 J22 J24 J62
    Date: 2017–09–04
  9. By: Yuichiro Kamada (Haas School of Business, University of California Berkeley); Aniko Ory (Cowles Foundation, Yale University)
    Abstract: We incorporate word of mouth (WoM) in a classic Maskin-Riley contracting problem, allowing for referral rewards to senders of WoM. Current customers’ incentives to engage in WoM can affect the contracting problem of a firm in the presence of positive externalities of users. We fully characterize the optimal contract scheme and provide comparative statics. In particular, we show that offering a free contract is optimal only if the fraction of premium users in the population is small. The reason is that by offering a free product, the firm can incentivize senders to talk by increasing expected externalities that they receive and this is effective only if there are many free users. This result is consistent with the observation that companies that successfully offer freemium contracts oftentimes have a high percentage of free users.
    Keywords: Word-of-mouth, referral rewards, freemium, contract theory
    JEL: D82 L21 M3
    Date: 2016–07
  10. By: Miguel Antón (IESE Business School, Universidad de Navarra); Florian Ederer (Cowles Foundation, Yale University); Mireia Giné (IESE Business School, Universidad de Navarra); Martin Schmalz (University of Michigan)
    Abstract: We show theoretically and empirically that managers have steeper financial incentives to expend effort and reduce costs when an industry’s firms tend to be controlled by shareholders with concentrated stakes in the firm, and relatively few holdings in competitors. A side effect of steep incentives is more aggressive competition. These findings inform a debate about the objective function of the firm.
    JEL: D21 G30 G32 J31 J41
    Date: 2016–07
  11. By: John Haltiwanger; Henry Hyatt; Erika McEntarfer
    Abstract: In this paper, we use linked employer-employee data to study the reallocation of heterogeneous workers between heterogeneous firms. We build on recent evidence of a cyclical job ladder that reallocates workers from low productivity to high productivity firms through job-to-job moves. In this paper we turn to the question of who moves up this job ladder, and the implications for worker sorting across firms. Not surprisingly, we find that job-to-job moves reallocate younger workers disproportionately from less productive to more productive firms. More surprisingly, especially in the context of the recent literature on assortative matching with on-the-job search, we find that job-to- job moves disproportionately reallocate less-educated workers up the job ladder. This finding holds even though we find that more educated workers are more likely to work with more productive firms. We find that while highly educated workers are less likely to match to low productivity firms, they are also less likely to separate from them, with less-educated workers both more likely to separate to a better employer in expansions and to be shaken off the ladder (separate to nonemployment) in contractions. Our findings underscore the cyclical role job-to-job moves play in matching workers to better paying employers.
    Date: 2017–01
  12. By: Jan-Emmanuel De Neve; George Ward
    Abstract: Work-life balance is a particularly strong predictor of people's happiness. High degrees of job satisfaction can hide low levels of engagement at work. Happiness helps to shape job market outcomes, productivity and firm performance. And people in blue-collar jobs report lower happiness everywhere in the world. These are among the findings of research on the roles played by work, employment and joblessness in shaping our happiness.
    Keywords: subjective wellbeing, employment, job type, job characteristics
    Date: 2017–10
  13. By: Birhane, Lakew Alemu (Tilburg University, School of Economics and Management)
    Abstract: This dissertation sought to examine the mechanisms for how public service motivation (PSM) in general, individual PSM dimensions, and career commitments influence organizational citizenship behavior, which, in turn, is shown to be related to the turnover intention of public employees. The dissertation is compiled in three empirical studies. The first empirical work examines how career orientations directly and indirectly relate to the two distinct types of organizational citizenship behaviors (OCBO and OCBI). Towards this end, the study (i) reveals that career orientations influence OCBs differently, largely in line with the differences in employees’ professional and organizational values; (ii) suggests that PSM as an institutional level variable motivates public employees to serve the common good through public institutions; and (iii) contributes to public service motivation and organization research by illustrating individuals’ motivation to serve the public interest as a mechanism that links career orientation and citizenship behavior. By disaggregating PSM into its classic dimensions, the second empirical work emphasizes the relations between PSM dimensions and organizational citizenship behaviors. It contributes to PSM theory and evidence by demonstrating the analytical utility of separately defining the PSM dimensions and their relevance and distinctiveness in order to show differential patterns of relations as salient predictors of the various outcomes of employee behavior. The third empirical chapter seeks to synthesize the relations among PSM, OCB, and turnover intention (TI), thereby shedding some light and enhancing our understanding about the relative importance of the PSM dimensions and career orientations of public employees in determining TI directly and indirectly through OCB. Toward this end, the study (i) emphasizes that differences in public service orientations affect employees’ turnover intentions differently; (ii) suggests that the relation between career orientations and turnover intention depends on the congruence between employees’ values and characteristics of their work environment; and (iii) confirms the mediation effect of OCB between the PSM dimensions, career orientations, and TI of public servants.
    Date: 2017
  14. By: Frei, Irina (RWTH Aachen University); Grund, Christian (RWTH Aachen University)
    Abstract: Despite the ongoing public debate about precarious working conditions in academia, there is only little evidence on working hours and overtime work for the group of (non-tenured) junior academics. By using unique longitudinal survey data on the occupational situation and careers of doctoral students and doctorate holders in STEM fields in Germany, we explore potential antecedents of overtime. We find that overtime hours are less pronounced among firm employees holding a doctorate and among postdocs than they are among doctoral students. This result holds in the cross-section and also when examining status changes (from doctoral student to postdoc or to firm employee holding a doctorate) in difference-in-differences estimations. In contrast to firm employees, overtime hours are considerably positively associated with part-time contracts for doctoral students. Furthermore, our results reveal that individuals' career orientation is positively associated with extra hours. In contrast, individuals with family responsibilities and a stronger preference for leisure time spend significantly fewer hours at work.
    Keywords: working time, overtime, part-time employment, academia
    JEL: I23 J22 M51
    Date: 2017–10
  15. By: Ralf Bebenroth (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Jose O.L. Berengueres (College of Information Technology, United Arab Emirates University, UAE)
    Abstract: This study is aimed at quantifying the job satisfaction trajectory of new hires. The authors compared job satisfaction of 815 new hires to 1,925 remaining (non-new) employees, asking all participating employees a simple question daily for ten months: “How happy are you today at work?” With a full sample of 177.000 data points, we found high heterogeneity in job satisfaction among employees from 12 different companies that participated in our study. Also, supporting previous research, new hires started with very high levels of satisfaction compared to the remaining employees. The level of job satisfaction kept on decreasing (until 64th day), continuing at a slower pace, gradually bottoming out around the middle of the 7th month (195th day), when job satisfaction began an upward trend.
    Keywords: Language, Job satisfaction time trajectory, New hires, Acculturation theory
    Date: 2017–10

This nep-hrm issue is ©2017 by Patrick Kampkötter. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.