nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒08‒13
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Paying for what kind of Performance? Performance Pay and Multitasking in Mission-Oriented Jobs By Daniel Jones; Mirco Tonin; Michael Vlassopoulos
  2. Are Bureaucrats Really Paid Like Bureaucrats? By Enikolopov, Ruben
  3. A microeconomic model of worker motivation based on monetary and non-monetary incentives By Petrick, Martin
  4. Gender Bias in Job Referrals: An Experimental Test By Beugnot, Julie; Peterlé, Emmanuel
  5. Can a Bonus Overcome Moral Hazard? Experimental Evidence from Markets for Expert Services By Vera Angelova; Tobias Regner
  6. When Does Advice Impact Startup Performance? By Aaron Chatterji; Solène Delecourt; Sharique Hasan; Rembrand M. Koning
  7. Managers as Knowledge Carriers - Explaining Firms' Internationalization Success with Manager Mobility By Philipp Meinen; Pierpaolo Parrotta; Davide Sala; Erdal Yalcin
  8. Job Market Signaling through Occupational Licensing By Peter Q. Blair; Bobby W. Chung
  9. The Importance of Network Recommendations in the Director Labor Market By Rüdiger Fahlenbrach; Hyemin Kim; Angie Low
  10. Are professors worth it? The value-added and costs of tutorial instructors By Jan Feld; Nicolás Salamanca; Ulf Zölitz

  1. By: Daniel Jones; Mirco Tonin; Michael Vlassopoulos
    Abstract: How does pay-for-performance (P4P) impact productivity, multitasking, and the composition of workers in mission-oriented jobs? These are central issues in sectors like education or healthcare. We conduct a laboratory experiment, manipulating compensation and mission, to answer these questions. We find that P4P has positive effects on productivity on the incentivized dimension of effort and negative effects on the non-incentivized dimension for workers in non-mission-oriented treatments. In mission-oriented treatments, P4P generates minimal change on either dimension. Participants in the non-mission sector – but not in the mission-oriented treatments – sort on ability, with lower ability workers opting out of the P4P scheme.
    Keywords: prosocial motivation, performance pay, multitasking, sorting
    JEL: C91 M52 J45
    Date: 2018
  2. By: Enikolopov, Ruben
    Abstract: Abstract Traditionally, bureaucrats are viewed as a stereotypical example of employees with flat pay schedules and low-powered incentive schemes. This paper provides evidence that the wages of a particular group of senior bureaucrats - city managers in US cities - are tightly connected to city outcomes. City outcomes affect city managers' wages not only in the city in which they are currently employed, but also in the city in which they work afterwards. At the same time, the salaries of city managers do not react to observable exogenous shocks to city outcomes. These results suggest that the relationship between city outcomes and the wages of city managers reflects a reward for performance, rather than rent extraction, and that the power of these incentives is sufficiently strong.
    Keywords: bureaucrats; city managers; incentives of politicians; pay for performance
    JEL: H7 J3
    Date: 2018–07
  3. By: Petrick, Martin
    Abstract: By focusing on direct monetary incentives, the traditional literature on motivating workers predicts that high-effort outcomes are unlikely unless workers become residual claimants of profit. However, real world employment contracts typically display a low incidence of profit sharing. In this paper, I extend the canonical model of a revenue sharing contract by integrating two more options for incentivising workers. The literature to date has discussed these strategies in isolation from each other. First, I assume that workers derive utility from following a work norm. The manager can influence workers' identification with a high-effort work norm at a cost. Second, workers risk being fired if they are observed shirking. Depending on the rigidity of their employment contract, this threat of termination induces them to increase effort. Key drivers of the optimal employment contract are then the variance of output, the costs of inducing worker's identification with high-effort norms and the rigidity of the labour market.
    Date: 2018
  4. By: Beugnot, Julie; Peterlé, Emmanuel
    Abstract: Employee referral programs, while efficient for the employer, have been shown to amplify sex-based occupational segregation in the labour markets. We present evidence from a laboratory experiment designed to shed light on same-gender bias in job referrals within gender-balanced networks. Our data suggest that women tend to favor women in their referral choice, whereas men do not attach much importance to the gender of potential candidates. Our experimental design allows us to disentangle between statistical discrimination, preferences, and pure same-gender bias. Our findings add to the existing literature by highlighting that gendered networks alone do not explain the observed gender homophily in referred-referrer pairs.
    Keywords: Same-gender bias, job referral, laboratory experiment
    JEL: C91 J16 J21 J71 M51
    Date: 2018–05
  5. By: Vera Angelova (Technische Universität Berlin, Department of Economics and Management); Tobias Regner (FSU Jena)
    Abstract: Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor competition and identifiability, we add the possibility for clients to make a voluntary payment, a bonus, after observing advice quality. While the combination of competition and reputation concerns achieves the highest rate of truthful advice, we observe a similar effect, when the bonus is combined with one of them. Thus, our results suggest that a voluntary component can act as a substitute for either competition or reputation, decreasing moral hazard.
    Keywords: asymmetric information, principal-agent, expert services, deception game, sender-receiver game, reciprocity, reputation, experiments, voluntary payment, competition
    JEL: C91 D03 D82 G20 I11
    Date: 2018–07–26
  6. By: Aaron Chatterji; Solène Delecourt; Sharique Hasan; Rembrand M. Koning
    Abstract: Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about people management influences their firm's performance. We conducted a randomized field experiment in India with 100 high-growth technology firms whose founders received in-person advice from other entrepreneurs who varied in their managerial style. We find that entrepreneurs who received advice from peers with an active approach to managing people–instituting regular meetings, setting goals consistently, and providing frequent feedback to employees–grew 28% larger and were 10 percentage points less likely to fail than those who got advice from peers with a passive people-management approach two years after our intervention. Entrepreneurs with MBAs or accelerator experience did not respond to this intervention, suggesting that formal training can limit the spread of peer advice.
    JEL: M1 M12 M13 O32
    Date: 2018–07
  7. By: Philipp Meinen; Pierpaolo Parrotta; Davide Sala; Erdal Yalcin
    Abstract: How does “what managers know” affect firm performance on international markets? This question is of considerable importance in the international economic literature. Answering it will be key for comprehending the way firms’ varying performance on international markets is shaped by the human factor. This paper proposes managerial mobility as an integral part of such an answer. Catering products to an international customer base entails a learning process, which, to a large degree, stems from the experience of doing it. Therefore, different employers immensely contend for managers’ highly valuable export experience. As managers can accept better and better positions from several offers, they may become highly mobile, thus having a notable impact on possibly multiple firms’ internationalization. Exploiting a rich panel data set, the paper thoroughly tests this idea by discriminating between knowledge ascribable to managers’ former job experience and that attributable to their personal background. The paper uses a novel identification strategy grounded in on-the-job search theory to correct estimates for the presence of self-selected mobility flows. A core finding of the paper is that the maximum return to expertise acquisition is realized for those managers with previous experience in commercializing differentiated products in specific markets.
    Keywords: management, mobility, experience, export
    JEL: F14 F16 F23 M12
    Date: 2018
  8. By: Peter Q. Blair; Bobby W. Chung
    Abstract: A large literature demonstrates that occupational licensing is a labor market friction that distorts labor supply allocation and prices. We show that an occupational license serves as a job market signal, similar to education. In the presence of occupational licensing, we find evidence that firms rely less on observable characteristics such as race and gender in determining employee wages. As a result, licensed minorities and women experience smaller wage gaps than their unlicensed peers.
    JEL: D21 D82 D86 J24 J31 J70 K23 K31 L51
    Date: 2018–07
  9. By: Rüdiger Fahlenbrach (Ecole Polytechnique Fédérale de Lausanne); Hyemin Kim (Nanyang Technological University); Angie Low (Nanyang Technological University)
    Abstract: Directors are more likely to obtain additional directorships or be promoted if the CEO and peer directors of their current board are well-connected. The impact of CEO and peer director connections is stronger for additional appointments and promotions at firms in the CEO’s and peer directors’ networks. CEO connections are particularly important for directors with a weaker labor market. There is no evidence that the appointments of referred directors are less well-received by the market than other appointments. Overall, connections are important in the director labor market. Access to additional networks provides strong incentives for directors to join corporate boards.
    Keywords: board of directors, social connections, director labor market
    JEL: G30 G34
    Date: 2018–03
  10. By: Jan Feld; Nicolás Salamanca; Ulf Zölitz
    Abstract: A substantial share of university instruction happens in tutorial sessions—small group instruction given parallel to lectures. In this paper, we study whether instructors with a higher academic rank teach tutorials more effectively in a setting where students are randomly assigned to tutorial groups. We find this to be largely not the case. Academic rank is unrelated to students’ current and future performance and only weakly positively related to students’ course evaluations. Building on these results, we discuss different staffing scenarios that show that universities can substantially reduce costs by increasingly relying on lower-ranked instructors for tutorial teaching.
    Keywords: Teacher value-added, teaching effectiveness, higher education
    JEL: I21 I24 J24
    Date: 2018–07

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