nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒07‒16
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Productivity and Wage Effects of Firm-Level Collective Agreements: Evidence from Belgian Linked Panel Data By Garnero, Andrea; Rycx, Francois; Terraz, Isabelle
  2. Workers' Replacements and Firms' Innovation Dynamics: New Evidence from Italian Matched Longitudinal Data By Elena Grinza; Francesco Quatraro
  3. Information Feedback in Relative Grading: Evidence from a Field Experiment By Shinya Kajitani
  4. Dynamic optimal contract under parameter uncertainty with risk averse agent and principal By Kerem Ugurlu
  5. Aggregate Information and Organizational Structures By Celik, Gorkem; Shin, Dongsoo; Strausz, Roland
  6. Information sharing is not always the right option when it comes to CPR extraction management: experimental findings. By Dimitri Dubois; Stefano Farolfi; Phu Nguyen-Van; Juliette Rouchier
  7. Meritocracy, Public-Sector Pay and Human Capital Accumulation By Andri Chassamboulli; Pedro Gomes
  8. Earnings Management and Managerial Compensation By Kremena Bachmann; Thorsten Hens

  1. By: Garnero, Andrea (OECD); Rycx, Francois (Free University of Brussels); Terraz, Isabelle (Université de Strasbourg)
    Abstract: How do firm-level collective agreements affect firm performance in a multi-level bargaining system? Using detailed Belgian linked employer-employee panel data, our findings show that firm agreements increase both wage costs and productivity (with respect to sector-level agreements). Relying on a recent approach developed by Bartolucci (2014), they also indicate that firm agreements exert a stronger impact on wages than on productivity, so that profitability is hampered. However, this rent-sharing effect only holds in manufacturing. In private sector services, the raw wage premium associated to firm agreements is entirely driven by compositional effects. Furthermore, estimates show that firm agreements lead to significantly more rent-sharing among firms operating in less competitive environments. Firm agreements are thus mainly found to raise wages beyond productivity when the rents to be shared between workers and firms are relatively big. Overall, this suggests that firm-level agreements benefit to both employers and employees – through higher productivity and wages – without being very detrimental to firms' performance.
    Keywords: collective bargaining, productivity, labour costs, linked panel data
    JEL: C33 J24 J31
    Date: 2018–05
  2. By: Elena Grinza; Francesco Quatraro
    Abstract: In this paper, we explore the impact of a firm's workers' replacements on innovation performance, by using rich matched employer-employee panel data for the Veneto region of Italy. We take the well-known resource-based theory of the firm as our departure point, and develop a set of hypotheses which we test empirically with negative binomial regressions. Coherently with our theoretical framework, we find that workers' replacements significantly dampen innovation performance, because they generate losses in the tacit knowledge base of the firm. We also nd that workers' replacements are especially detrimental to large and young rms, because large companies have more hierarchical rigidities and innovative capabilities in young rms are mostly dependent on specific human capital. Finally, our results show that firms' localization in industrial districts significantly mitigates the negative impact of workers' replacements, and that a similar picture emerges when firms are more exposed to knowledge spillovers, particularly of related knowledge.
    Keywords: Workers' replacements, excess worker turnover, innovation performance, tacit knowledge, knowledge spillovers, employer-employee matched longitudinal data.
    JEL: J63 O30
    Date: 2018
  3. By: Shinya Kajitani
    Abstract: The impact of relative performance information feedback could vary according to each student's previous examination performance. Binary grade environments enable us to identify the heterogeneous impacts of this feedback. Conducting a randomized control trial employing a compulsory course in economics at a Japanese university, we show the heterogeneous impacts of relative performance information feedback attributable to the students' earlier examination scores under a binary grade environment. Our experimental results prove that previous performance information feedback improves the performance of students with only intermediate scores but worsens the performance of high-scoring students in their next examination.
    Keywords: Education, experiments, relative performance information feedback, relative grading
    JEL: D81 I21
  4. By: Kerem Ugurlu
    Abstract: We consider a continuous time Principal-Agent model on a finite time horizon, where we look for the existence of an optimal contract both parties agreed on. Contrary to the main stream, where the principal is modelled as risk-neutral, we assume that both the principal and the agent have exponential utility, and are risk averse with same risk awareness level. Moreover, the agent's quality is unknown and modelled as a filtering term in the problem, which is revealed as time passes by. The principal can not observe the agent's real action, but can only recommend action levels to the agent. Hence, we have a \textit{moral hazard} problem. In this setting, we give an explicit solution to the optimal contract problem.
    Date: 2018–06
  5. By: Celik, Gorkem (ESSEC Business School); Shin, Dongsoo (Santa Clara University); Strausz, Roland (Humboldt Universität zu Berlin)
    Abstract: We study an organization with a top management (principal) and multiple subunits (agents) with private information that determine the organization\'s aggregate efficiency. Under centralization, eliciting the agents\' private information may induce the principal to manipulate aggregate information, which obstructs an effective use of information for the organization. Under delegation, the principal concedes more information rent, but is able to use the agents\' information more effectively. The trade-off between the organizational structures depends on the likelihood that the agents are efficient. Centralization is optimal when such likelihood is low. Delegation, by contrast, is optimal when it is high.
    Keywords: agency; aggregate information; organization design;
    JEL: D82 D86
    Date: 2018–06–27
  6. By: Dimitri Dubois; Stefano Farolfi; Phu Nguyen-Van; Juliette Rouchier
    Abstract: We experimentally investigate the impact of information sharing in a common pool resource game. More precisely, we test whether the voluntary disclosure of the decision by a player has a positive impact on the extraction level exhibited by the group compared to the level observed when decisions are compulsory disclosed. We design an experiment composed by three treatments: a mandatory disclosure treatment and two treatments where players are free to choose whether or not to disclose their decisions. The latter differ by the degree of freedom given to players. In the treatment "Voluntary Free Disclosure" players are also free to choose the extraction level that is displayed, while in the treatment "Voluntary Binary Disclosure" if the player discloses h(is)er decision the value displayed is the effective extraction level. We observe that the voluntary disclosure has a positive effect in the social dilemma, measured by lower average extraction levels. However the disclosure mechanism should not allow to self-declare extraction: here it reveals a large tendency to lie leading to an increase in extraction.
    Keywords: Common pool resource; information sharing; voluntary disclosure; lying; experiment.
    JEL: C91 D90 Q57
    Date: 2018
  7. By: Andri Chassamboulli; Pedro Gomes
    Abstract: We set up a model with search and matching frictions to understand the effects of employment and wage policies, as well as non-meritocratic hiring in the public sector, on unemployment, rent seeking and education decisions. Wages and employment of skilled and unskilled public-sector workers affect educational attainment; the extent of that effect depends on the structure of the labor market and how non-meritocratic public-sector hiring is. Conditional on inefficiently high public-sector wages, less-meritocratic hiring in the public sector lowers the unemployment rate and might raise welfare because it limits the size of queues for public-sector jobs. Public-sector wage and employment policies impose an endogenous constraint on the number of workers the government can hire through connections.
    Keywords: Public-sector employment; meritocracy; public-sector wages; unemployment; skilled workers; human capital accumulation
    JEL: E24 J31 J45 J64
    Date: 2018–07
  8. By: Kremena Bachmann (University of Zurich); Thorsten Hens (University of Zurich, Norwegian School of Economics and Business Administration (NHH), and Swiss Finance Institute)
    Abstract: This paper studies the earnings management behavior of a manager in a strategic game in which the manager may have incentives to avoid earnings below the analysts’ consensus forecast and the analysts aiming to provide accurate forecasts behave as rational Bayesians. Our analysis reveals the existence of equilibria in which the manager who is compensated with stocks manipulates earnings to meet the consensus forecasts and the earnings manipulation is not detected. When the manager holds stock options, these non-revealing equilibria do not exist. The manager exhausts his reporting discretion as earnings manipulation becomes costless once the price of firm’s shares falls below the exercise price of the options. Our model provides a set of implications for observing opportunistic earnings management in dependence of managerial compensation and investors’ aversion to negative earnings surprises. In addition, the model’s predictions regarding the relationship between earnings management and executive compensation are consistent with empirical observations.
    Keywords: earnings management, disclosure policy, loss aversion
    JEL: G38 J33 M41
    Date: 2017–12

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.