nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒08‒20
eleven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Flexible Work Organization and Employer Provided Training: Evidence from German Linked Employer-Employee Data By Campaner, Annika; Heywood, John S.; Jirjahn, Uwe
  2. Job Tasks and the Gender Wage Gap among College Graduates By Todd R. Stinebrickner; Ralph Stinebrickner; Paul J. Sullivan
  3. How Much Does Your Boss Make? The Effects of Salary Comparisons By Zoë Cullen; Ricardo Perez-Truglia
  4. Bank Bonus Pay as a Risk Sharing Contract By Efing, Matthias; Hau, Harald; Kampkötter, Patrick; Rochet, Jean-Charles
  5. Do CEOs Know Best? Evidence from China By Nicholas Bloom; Hong Cheng; Mark Duggan; Hongbin Li; Franklin Qian
  6. Agency Conflicts and Short- vs Long-Termism in Corporate Policies By Sebastian Gryglewicz; Simon Mayer; Erwan Morellec
  7. Earnings Dynamics: the Role of Learning, Human Capital, and Performance Incentives By Braz Camargo; Elena Pastorino; Fabian Lange
  8. The Influence of Spirituality Workplace to Motivation, Job Satisfaction and Organizational Commitment By Rolland Epafras Fanggidae
  9. The Potential Output Gains from Using Optimal Teacher Incentives: An Illustrative Calibration of a Hidden Action Model By Mehta, Nirav
  10. Termination Risk and Agency Problems: Evidence from the NBA By Alma Cohen; Nadav Levy; Roy Sasson
  11. Measuring costly effort using the slider task By Gill, David; Prowse, Victoria

  1. By: Campaner, Annika; Heywood, John S.; Jirjahn, Uwe
    Abstract: We examine the hypothesis that flexible work organization involves greater skill requirements and, hence, an increased likelihood of receiving employer provided training. Using unique linked employer-employee data from Germany, we confirm that employees are more likely to receive training when their jobs are characterized by greater decision-making autonomy and task variety, two essential elements of flexibility. Critically, the training associated with workplace flexibility does not simply reflect technology. Skill-biased organizational change plays its own role. Moreover, we show that the training associated with workplace flexibility is disproportionately oriented toward employees with a greater formal education. Our results also provide modest evidence of an age bias of workplace flexibility. However, the link between workplace flexibility and training does not appear to differ by gender.
    Keywords: Delegation,Multitasking,Skill-Biased Organizational Change,Training
    JEL: J24 L00 M53
    Date: 2018
  2. By: Todd R. Stinebrickner; Ralph Stinebrickner; Paul J. Sullivan
    Abstract: Gender differences in current and past job tasks may be crucial for understanding the gender wage gap. We use novel task data to address well-known measurement concerns, including that standard task measures assume away within-occupation gender differences in tasks. We find that unique measures of task-specific experience, in particular high-skilled information experience, are of particular importance for understanding the substantial widening of the wage gap early in the career. Highlighting the importance of these measures, traditional work-related proxies for gender differences in human capital accumulation are not informative because general work experience is similar by gender for our recent graduates.
    JEL: J01 J16
    Date: 2018–07
  3. By: Zoë Cullen; Ricardo Perez-Truglia
    Abstract: We study how employees learn about the salaries of their peers and managers and how their beliefs about those salaries affect their own behavior. We conducted a field experiment with a sample of 2,060 employees from a multi-billion dollar corporation. We combine rich data from surveys and administrative records with data from the experiment, which provided some employees with accurate information about the salaries of others. First, we document large misperceptions about salaries and identify some of their sources. Second, we find that perceived peer and manager salaries have a significant causal effect on employee behavior. These effects are different for horizontal and vertical comparisons. While higher perceived peer salary decreases effort, output, and retention, higher perceived manager salary has a positive effect on those same outcomes. We provide suggestive evidence for the underlying mechanisms. We conclude by discussing implications for pay inequality and pay transparency.
    JEL: J31 J38 M12 M52 Z13
    Date: 2018–07
  4. By: Efing, Matthias; Hau, Harald; Kampkötter, Patrick; Rochet, Jean-Charles
    Abstract: We show that banker bonuses cannot be understood exclusively as incentive contracts, but also incorporate a significant risk sharing dimension between bank shareholders and bank employees. This contrasts with the conventional view whereby diversified shareholders fully insure risk averse employees. However, financial frictions imply that shareholder value is concave in a bank's cash reserves---making shareholders effectively risk averse. The optimal contract between shareholders and employees then involves some degree of risk sharing. Using extensive payroll data on 1.26 million bank employee years in the Austrian, German, and Swiss banking sectors, we show that the structure of bonus pay within and across banks is compatible with an economically significant risk sharing motive, but difficult to rationalize based on incentive theories of bonus pay only.
    Keywords: Bank compensation; risk sharing; bank risk; operating leverage
    JEL: D22 G20 G21
    Date: 2018–06–26
  5. By: Nicholas Bloom; Hong Cheng; Mark Duggan; Hongbin Li; Franklin Qian
    Abstract: We analyze a new management survey for around 1,000 firms and 10,000 employees across two large provinces in China. The unique aspect of this survey is it collected management data from the CEO, a random sample of senior managers and workers. We document four main results. First, management scores, much like productivity, have a wide spread with a long left-tail of poorly managed firms. This distribution of management scores is similar for CEOs, senior managers and workers management, and appears broadly reasonably compared to US scores for similar questions. Moreover, for all groups these scores correlate with firm performance, suggesting all employees within the firm are (at least partly) aware of the their firms’ managerial abilities. Second, the scores across the groups are significantly cross-correlated, but far from completely. This suggests that while different levels of the firm have similar views on the firms’ management capabilities, they do not fully agree. Third, we find that the CEO’s management scores are the most predictive of firm performance, followed by the senior managers and then the workers. Hence, CEOs do appear to know best about their firms management strengths and weaknesses. Fourth, within-firm management score dispersion is negatively correlated with investment and R&D intensity, suggesting long-run planning is linked with greater consistency in management across levels in firms.
    JEL: J0
    Date: 2018–06
  6. By: Sebastian Gryglewicz (Erasmus University Rotterdam); Simon Mayer (Erasmus University Rotterdam); Erwan Morellec (Ecole Polytechnique Fédérale de Lausanne and Swiss Finance Institute)
    Abstract: We develop a dynamic agency model in which the agent controls both current earnings via short-term effort and firm growth via long-term effort. Under the optimal contract, agency conflicts can induce both over- and underinvestment in short- and long-term efforts, leading to short- or long-termism in corporate policies. The paper shows how firm characteristics shape the optimal contract and the horizon of corporate policies, thereby generating a number of novel empirical predictions on the optimality of short- vs. long-termism. It also demonstrates that combining short- and long-term agency conflicts naturally leads to asymmetric pay-for-performance in managerial contracts, rationalizing the asymmetric benchmarking observed in the data.
    Keywords: Agency conflicts, Multi-tasking, Optimal short- and long-termism
    Date: 2017–12
  7. By: Braz Camargo (Sao Paulo School of Economics - FGV); Elena Pastorino (Stanford University); Fabian Lange (McGill University)
    Abstract: Using both public individual survey data and proprietary firm personnel records, we document that the importance of performance pay declines at the end of a career. This evidence is at odds with the implication of models of implicit and explicit performance incentives that have attempted to explain the life-cycle profile of the variable component of wages. We provide a novel model that integrates uncertainty and learning about ability, human capital acquisition, and performance incentives to account for the life-cycle profile of individual wages and provide a rationale for the declining importance of the pay-for-performance component of wages with experience. We analytically characterize the equilibrium wage contract in this environment, derive its qualitative properties, and decompose the pay-for-performance component of the equilibrium wage into different terms. These terms capture the standard trade-off between risk and incentives arising in contexts of moral hazard, the desire to hedge against the risk inherent in learning about ability, and the changing strength of reputational and human capital investment motives over time. We prove the model is identified based on a panel of wages. We derive estimators of the model's primitive parameters, estimate the model, and use the estimated parameters to measure the relative contribution of the three sources of wage dynamics we nest---learning, human capital acquisition, and performance incentives---to the life-cycle profile of total wages and their variable component. According to our preliminary estimates, performance incentives seem to be qualitatively and quantitatively key to explaining the life-cycle profile of wages and variable pay, despite the declining importance of variable pay relative to fixed pay over time.
    Date: 2018
  8. By: Rolland Epafras Fanggidae (Nusa Cendana University, Indonesia. Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective – Competition between organizations, demanded that any organization can provide quality service and quality for stakeholders. One important aspect which will also determine the achievement of college performance, namely the lecturers. The relationship between the individual commitment to the organization shows the relationship between motivation and job satisfaction can improve the quality of university. While a basic understanding of the meaning of work is closely related to spiritual values that are owned by the individual in his work. This awareness can also be pursued by university through the fulfilment of the needs of both psychological and spiritual faculty, thus creating a conducive work environment. This research is descriptive, so that verification and explanatory research method used was a survey of 320 professors in the region of East Nusa Tenggara, Indonesia. Methodology/Technique – Tests in this study using structural equation modeling (SEM) based variants or components, namely the Analysis of Moment Structure (AMOS). Findings – The test results showed that (1) Spirituality in the workplace has an influence on the motivation. (2) Spirituality in the workplace does not have an influence on job satisfaction. (3) Spirituality in the workplace has an influence on organizational commitment. Based on the research results obtained by this research Novelty – Novelty where spirituality in the workplace and motivation generate positive motivation for the members of the organization. This shows that the spiritual values inherent in individuals produce more meaning to work, where the work is not for material gain alone."
    Keywords: Workplace in the spirituality; Spirituality Workplace; Motivation; Job Satisfaction; Organizational commitment.
    JEL: J24 J28
    Date: 2017–07–14
  9. By: Mehta, Nirav
    Abstract: This paper examines the potential output gains from the implementation of optimal teacher incentive pay schemes, by calibrating the H¨olmstrom and Milgrom (1987) hidden action model using data from Muralidharan and Sundararaman (2011), a teacher incentive pay experiment implemented in Andhra Pradesh, India. Findings suggest that the introduction of optimal individual incentive-pay schemes could result in very large increases in output, about six times the size of the (significant) results obtained in the experiment.
    Keywords: empirical contracts,teacher incentive schemes
    JEL: I2 J3 J4
    Date: 2018
  10. By: Alma Cohen; Nadav Levy; Roy Sasson
    Abstract: When organizational structures and contractual arrangements face agents with a significant risk of termination in the short term, such agents may under-invest in projects whose results would be realized only in the long term. We use NBA data to study how risk of termination in the short term affects the decision of coaches. Because letting a rookie play produces long-term benefits on which coaches with a shorter investment horizon might place lower weight, we hypothesize that higher termination risk might lead to lower rookie participation. Consistent with this hypothesis, we find that, during the period of the NBA’s 1999 collective bargaining agreement (CBA) and controlling for the characteristics of rookies and their teams, higher termination risk was associated with lower rookie participation and that this association was driven by important games. We also find that the association does not exist for second-year players and that the identified association disappeared when the 2005 CBA gave team owners stronger incentives to monitor the performance of rookies and preclude their underuse.
    JEL: D20 J44 K00 L83
    Date: 2018–06
  11. By: Gill, David (Department of Economics, Purdue University); Prowse, Victoria (Department of Economics, Purdue University)
    Abstract: Using real effort to implement costly activities increases the likelihood that the motivations that drive effort provision in real life carry over to the laboratory. However, unobserved differences between subjects in the cost of real effort make quantitative prediction problematic. In this paper we present the slider task, which was designed by us to overcome the drawbacks of real-effort tasks. The slider task allows the researcher to collect precise and repeated observations of effort provision from the same subjects in a short time frame. The resulting high-quality panel data allow sophisticated statistical analysis. We illustrate these advantages in two ways. First, we show how to use panel data from the slider task to improve precision by controlling for persistent unobserved heterogeneity. Second, we show how to estimate effort costs at the subject level by exploiting within-subject variation in incentives across repetitions of the slider task. We also provide z-Tree code and practical guidance to help researchers implement the slider task.
    Keywords: Experimental methodology ; real effort ; effort provision ; cost of effort ; slider task ; design of laboratory experiments ; unobserved heterogeneity JEL Classification: C91 ; C13
    Date: 2018

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.
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