nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒04‒23
four papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. How Changes in Payment Schemes Influence Provision Behavior By Wang, Jian; Iversen, Tor; Hennig-Schmidt, Heike; Godager, Geir
  2. Earning to Give: Occupational Choice for Effective Altruists By Jonathan Morduch; Ariane Szafarz
  3. Corporate scientists as the triggers of transitions towards firms' exploration research strategies By Barge-Gil, Andres; D'Este, Pablo; Herrera, Liliana
  4. Hospital Competition under Pay-for-Performance: Quality, Mortality and Readmissions By Domenico Lisi; Luigi Siciliani; Odd Rune Straume

  1. By: Wang, Jian (Department of Health Management and Health Economics); Iversen, Tor (Department of Health Management and Health Economics); Hennig-Schmidt, Heike (Department of Health Management and Health Economics); Godager, Geir (Department of Health Management and Health Economics)
    Abstract: When implementing a payment reform, policy makers face the challenge of assessing the effects on health care providers’ behavior. Empirical evidence most often relies on field studies, register- or survey data characterized by the absence of a control group. In this paper, we conduct a controlled laboratory experiment to assess the effect of a change in the payment system using the parameters of Hennig-Schmidt, Selten, and Wiesen (2011). We focus on the two payment systems fee-forservice (ffs) and capitation (cap). Participants are either practicing medical doctors or medical students. They are confronted with two different payment mechanisms, transitioning either from ffs to cap or vice versa. We also analyze whether the effect of financial incentives is dependent on cultural context by comparing German and Chinese medical students’ provision behavior. In line with previous evidence, both doctors and medical students provide fewer medical services under cap than under ffs. Patient benefit deviates significantly from the patient optimum under both payment systems, even though subjects do not maximize their profits. Whether cap or ffs is beneficial for the patient depends on the patient type. We find that doctors provide less patient benefit and less frequently choose benefit-maximizing treatments. We find that the sequence of payment schemes affects physician provision behavior. Under cap, more benefit is provided when cap follows ffs as compared to the opposite order. Under ffs, we observe no such effect. The interpretation is that provider behavior under a payment schemes can depend not only on the current payment scheme, but also on the payment scheme that was implemented in the past. Comparing medical students from Germany and China, we do not find any difference in behaviour under the same payment scheme.
    Keywords: health care providers; payment system; payment mechanisms; fee-forservice; capitation
    JEL: C91 H40 I11 J33
    Date: 2017–10–23
  2. By: Jonathan Morduch; Ariane Szafarz
    Abstract: Effective altruists wish to do good while optimizing the social performance they deliver. We apply this principle to the labor market. We determine the optimal occupational choice of a socially motivated worker who has two mutually exclusive options: a job with a for-profit firm and a lower-paid job with a nonprofit. We construct a model in which a worker motivated only by pure altruism will work at a relatively high wage for the for-profit firm and then make charitable contributions to the nonprofit; this represents the “earning to give” option. By contrast, the occupational choice of a worker sensitive to warm glow (“impure altruism”) depends on her income level. While the presence of “warm glow” feelings would seem to clearly benefit charitable organizations, we show that impure altruism can create distortions in labor market choices. In some cases, warm glow feelings may push the worker to take a job with the nonprofit,even when it is not optimal for the nonprofit.
    Keywords: altruism; occupation choice; nonprofit; warm glow; social performance; donation
    JEL: J24 L31 J31 D64 J44
    Date: 2018–04–13
  3. By: Barge-Gil, Andres; D'Este, Pablo; Herrera, Liliana
    Abstract: Exploration-oriented research strategies represent a critical factor for firms’ innovation performance and long term survival since they influence the capacity of these organizations to develop breakthrough innovations and move up the quality ladder of product development. However, setting in motion and sustaining exploratory research strategies are not straightforward. In this study, we contend that the availability of corporate scientists (i.e. personnel with PhD qualifications in R&D units) is a triggering factor for two critical transitions in firms’ R&D strategies: i) initiation of exploration-oriented research activities (exploration-enacting strategy); and ii) increased commitment to exploration-oriented research activities (exploration-deepening strategy). We conduct our analysis on a large sample of Spanish manufacturing firms. We address endogeneity concerns by using the exogenous supply of PhD graduates as an instrumental variable. Our results show that firms recruiting doctoral graduates (PhDs) to their R&D units increase the likelihood of initiating and strengthening exploration-oriented research strategies. The implications of these findings for innovation management and policy are discussed.
    Keywords: Scientists, exploration research, R&D strategies, PhDs, instrumental variables.
    JEL: M54 O31 O32
    Date: 2018
  4. By: Domenico Lisi; Luigi Siciliani; Odd Rune Straume
    Abstract: Health outcomes, such as mortality and readmission rates, are commonly used as indicators of hospital quality and as a basis to design pay-for-performance (P4P) incentive schemes. We propose a model of hospital behaviour under P4P where patients differ in severity and can choose hospital based on quality. We assume that risk-adjustment is not fully accounted for and that unobserved dimensions of severity remain. We show that the introduction of P4P which rewards lower mortality and/or readmission rates can weaken or strengthen hospitals’ incentive to provide quality. Since patients with higher severity have a different probability of exercising patient choice when quality varies, this introduces a selection bias (patient composition effect) which in turn alters quality incentives. We also show that this composition effect increases with the degree of competition. Critically, readmission rates suffer from one additional source of selection bias through mortality rates since quality affects the distribution of survived patients. This implies that the scope for counterproductive effects of P4P is larger when financial rewards are linked to readmission rates rather than mortality rates. We also show that our results are robust in the presence of public reporting, and discuss welfare implications.
    Keywords: quality; pay-for-performance; health outcomes; performance indicators; heterogeneous severity; selection bias.
    JEL: I12 I18
    Date: 2018–04

This nep-hrm issue is ©2018 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.