nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒01‒22
seven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Commuting and Sickness Absence By Goerke, Laszlo; Lorenz, Olga
  2. Changes across Cohorts in Wage Returns to Schooling and Early Work Experiences By Jared Ashworth; V. Joseph Hotz; Arnaud Maurel; Tyler Ransom
  3. Are School-Provided Skills Useful at Work? Results of the Wiles Test By Liwiński, Jacek; Pastore, Francesco
  4. When Corporate Social Responsibility Backfires: Theory and Evidence from a Natural Field Experiment By John A. List; Fatemeh Momeni
  5. Human Capital, Signaling, and Employer Learning: What Insights Do We Gain from Regression Discontinuity Designs? By Graetz, Georg
  6. Optimal contracts under competition when uncertainty from adverse selection and moral hazard are present By N. Packham
  7. Size Matters - \'Over\'investments in a Relational Contracting Setting By Englmaier, Florian; Fahn, Matthias

  1. By: Goerke, Laszlo (IAAEU, University of Trier); Lorenz, Olga (IAAEU, University of Trier)
    Abstract: We investigate the causal effect of commuting on sickness absence from work using German panel data. To address reverse causation, we use changes in commuting distance for employees who stay with the same employer and who have the same residence during the period of observation. In contrast to previous papers, we do not observe that commuting distances are associated with higher sickness absence, in general. Only employees who commute long distances are absent about 20% more than employees with no commutes. We explore various explanations for the effect of long distance commutes to work and can find no evidence that it is due to working hours mismatch, lower work effort, reduced leisure time or differences in health status.
    Keywords: sickness absence, absenteeism, commuting, health, labour supply
    JEL: I10 J22 R2 R40
    Date: 2017–11
  2. By: Jared Ashworth; V. Joseph Hotz; Arnaud Maurel; Tyler Ransom
    Abstract: This paper investigates the wage returns to schooling and actual early work experiences, and how these returns have changed over the past twenty years. Using the NLSY surveys, we develop and estimate a dynamic model of the joint schooling and work decisions that young men make in early adulthood, and quantify how they affect wages using a generalized Mincerian specification. Our results highlight the need to account for dynamic selection and changes in composition when analyzing changes in wage returns. In particular, we find that ignoring the selectivity of accumulated work experiences results in overstatement of the returns to education.
    JEL: C33 I21 J22 J24
    Date: 2017–12
  3. By: Liwiński, Jacek (University of Warsaw); Pastore, Francesco (Università della Campania Luigi Vanvitelli)
    Abstract: We test for the signalling hypothesis versus human capital theory using the Wiles test (1974) in a country which has experienced a dramatic increase in the supply of skills. For this purpose, we construct a job match index based on the usefulness of the school-provided skills and the relevance of the job performed to the field of study. Then we regress the first earnings of graduates on this index using OLS and Heckit to control for omitted heterogeneity of the employed. The data we use come from a representative tracer survey of Poles who left secondary schools or graduated from HEIs over the period of 1998-2005. We find that only the HEI graduates obtain a wage premium from skills acquired in the course of formal education. This finding is robust to a large number of robustness checks with different indicators of the educational mismatch and instrumental variables.
    Keywords: education, skills, signalling, job matching, wages, Heckman correction
    JEL: J24 J31
    Date: 2017–11
  4. By: John A. List; Fatemeh Momeni
    Abstract: Corporate Social Responsibility (CSR) has become a cornerstone of modern business practice, developing from a “why” in the 1960s to a “must” today. Early empirical evidence on both the demand and supply sides has largely confirmed CSR's efficacy. This paper combines theory with a large-scale natural field experiment to connect CSR to an important but often neglected behavior: employee misconduct and shirking. Through employing more than 3000 workers, we find that our usage of CSR increases employee misbehavior - 20% more employees act detrimentally toward our firm by shirking on their primary job duty when we introduce CSR. Complementary treatments suggest that “moral licensing” is at work, in that the “doing good” nature of CSR induces workers to misbehave on another dimension that hurts the firm. In this way, our data highlight a potential dark cloud of CSR, and serve to forewarn that such business practices should not be blindly applied.
    JEL: C93 D03
    Date: 2017–12
  5. By: Graetz, Georg (Uppsala University)
    Abstract: Several recent papers employ the regression discontinuity design (RDD) to estimate the causal effect of a diploma (or similar credentials) on wages. Using a simple model of asymmetric information, I show that RDD estimates the information value of a diploma. A positive information value arises if employers, unable to observe the test score that determines diploma receipt, infer that workers with a diploma have higher average productivity than those without. Crucially, a diploma can have information value regardless of whether workers' productivity is solely determined by acquisition of knowledge and skills through studying (the pure human capital model) or whether studying has no effect on productivity (the pure signaling model). Thus, while RDD estimates of diploma effects are evidence for information frictions and statistical discrimination, they do not help to distinguish between human capital and signaling. However, with longitudinal data, RDD can be used to estimate the speed of employer learning, since RDD coefficients are direct estimates of (differences in) expectation errors.
    Keywords: statistical discrimination, employer learning, signaling, human capital, regression discontinuity design
    JEL: C2 D8 J2
    Date: 2017–11
  6. By: N. Packham
    Abstract: In a continuous-time setting where a risk-averse agent controls the drift of an output process driven by a Brownian motion, optimal contracts are linear in the terminal output; this result is well-known in a setting with moral hazard and -under stronger assumptions - adverse selection. We show that this result continues to hold when in addition reservation utilities are type-dependent. This type of problem occurs in the study of optimal compensation problems involving competing principals.
    Date: 2018–01
  7. By: Englmaier, Florian (LMU Munich); Fahn, Matthias (JKU Linz)
    Abstract: The corporate finance literature documents that managers tend to over-invest in their companies. A number of theoretical contributions have aimed at explaining this stylized fact, most of them focusing on a fundamental agency problem between shareholders and managers. The present paper shows that over-investments are not necessarily the (negative) consequence of agency problems between shareholders and managers, but instead might be a second-best optimal response to address problems of limited commitment and limited liquidity. If a firm has to rely on relational contracts to motivate its workforce, and if it faces a volatile environment, investments into general, non-relationship-specific, capital can increase the efficiency of a firm\'s labor relations.
    Keywords: relational contracts; corporate finance; capital investments;
    JEL: C73 D21 D86 G32
    Date: 2018–01–08

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