nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒09‒03
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 Jones, Daniel; Tonin, Mirco; Vlassopoulos, Michael
  2. Working Hours and Top Management Appointments: Evidence from Linked Employer-Employee Data By Frederiksen, Anders; Kato, Takao; Smith, Nina
  3. Do women ask for lower salaries? The supply side of the gender pay gap By Martín González Rozada; Eduardo Levy Yeyati
  4. Choking under pressure -- Evidence of the causal effect of audience size on performance By René Böheim; Dominik Grübl; Mario Lackner
  5. A microeconomic model of worker motivation based on monetary and non-monetary incentives By Petrick, Martin
  6. Hiring Expert Talent in a Recession: Targeted Labor Pool Sourcing and Firm Performance By Mawdsley, John Kenneth; Chauradia, Amit; Brymer, Rhett
  7. Teacher Performance and Accountability Incentives By Hugh Macartney; Robert McMillan; Uros Petronijevic
  8. Worker Mobility and the Diffusion of Knowledge By Kyle Herkenhoff; Gordon Phillips; Jeremy Lise; guido menzio
  9. LPP - Linked Personnel Panel 1617 : Arbeitsqualität und wirtschaftlicher Erfolg: Längsschnittstudie in deutschen Betrieben (Datendokumentation der dritten Welle) By Mackeben, Jan; Ruf, Kevin; Grunau, Philipp; Wolter, Stefanie
  10. Establishment Size and Wage Inequality: The Roles of Performance Pay and Rent Sharing By Sang-yoon Song

  1. By: Jones, Daniel (University of Pittsburgh); Tonin, Mirco (Free University of Bozen/Bolzano); Vlassopoulos, Michael (University of Southampton)
    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: 2018–07
  2. By: Frederiksen, Anders (Aarhus University); Kato, Takao (Colgate University); Smith, Nina (Aarhus University)
    Abstract: By combining Danish registry data covering the population of Danish workers with the Danish Labor Force Survey (DLFS) which provides detailed data on working hours, we provide fresh evidence and insights on a potentially important role that career concerns/considerations play in accounting for the incidence of long working hours. First, we obtain new and robust evidence with external validity on a positive association between working hours and career success (measured by top management appointments). Second, we illuminate that the observed positive association between working hours and career success is consistent with three distinct theories: (i) human capital; (ii) rat race; and (iii) tournament. Third, guided by each theory, we go beyond a simple association between the quantity of working hours and career success, and explore what kinds of working hours are more beneficial for career advancement. Specifically we find: (i) for managers, working long hours will help them increase their odds of top management appointments in the same firm, while not in a different firm, while for non-managerial professionals and other workers, both internal and external hours will help them raise their odds of career success; (ii) the odds of top management appointments will rise significantly by becoming the longest working hour person among the peers; (iii) working nonstandard hours (evening/night) will be beneficial for career advancement; and (iv) workers with high desired hours will enjoy greater odds of top management appointments even after controlling for actual hours. We interpret each finding from the three theoretical perspectives.
    Keywords: working hours, top management appointments, promotions, human capital, job assignment, rat race, adverse selection, tournament
    JEL: M5
    Date: 2018–07
  3. By: Martín González Rozada; Eduardo Levy Yeyati
    Abstract: The gender gap usually denotes observable differences between men and women that are influenced by the social environment. In the workplace, it refers to systematic differences in job opportunities and salaries (controlling for the characteristics of the job and the employee). Statistics have shown that men often earn more for the same work than women, a difference that may reflect that men work more hours (an aspect compounded by the fact that they work highly-paid overtime) or tend to work relatively more in high-pay activities (horizontal gap), to prevail in top positions within a company (vertical gap), or to be offered lower pay for the same work. Most of these analyses are based on outcomes (actual wages being paid), as it is usually assumed that the gap is driven by a demand bias: for a number or reasons, a male society is willing to pay less for a woman than for a man doing the same task. But is it not possible that the gender gap is already embedded in the labor supply? To what extent the gender pay gap reflects an “ask gap”? More specifically: do women ask for less, for the same exact job? Many factors can determine gender-driven differences in labor supply. For starters, men and women may exhibit gender differences in preferences or self-assessments regarding specific occupational choices. Cortes & Pan (2017) based on features described in the BLS’s Occupational Information Network (or O*NET), document that the female-to-male-ratio (FMR) increases for occupations in a softer competitive environment, exhibiting a larger social contribution, or enjoying greater flexibility and a lower intensity in physical effort; and that more competitive and inflexible environments are associated with a larger gender gap. Kleinjans, Krassel & Dukes (2017) argue that women display a preference for jobs with “occupational prestige” and high social standing (at the expense of a lower wage). Finally, Correll (2001) reports that occupational choices are gender determined: males are perceived (by males and females) as better equipped for math (despite weak supporting empirical evidence in this regard), which in turn may determine performance self-assessment and, ultimately, occupational choices. In addition, it has been pointed out that women prefer to work in female-friendly environments. For example, Lordan and Pischke (2016) find a strong positive relationship between female satisfaction and the female-to-male-ratio, both in the occupation and in the firm, while males either like or are indifferent to the share of males in an occupation. Barbulescu and Bidwell (2013) find that women prefer jobs with better anticipated work-life balance and lower identification with stereotypically masculine jobs, which results in lower expectations of job offer success in male dominated jobs. Another aspect highlighted by the literature relates to women´s relative propensity to wage bargain. On this front, the evidence is mixed. Early studies find that women are less likely than men to initiate negotiations (Babcock & Laschever 2003; Babcock et al 2007), and experimental research has shown that women choose competitive pay-offs to a lesser extent than men (as Datta Gupta et al, 2006 suggests, because of higher risk aversion; see also Niederle & Vesterlund, 2005). However, Artz, Goodhall & Oswald (2016) finds no evidence that women are less prone to requesting wage raises than men, while Kaschner, Kugler, Reif & Brodbeck (2013), based on a meta-analysis of 24 studies that explore gender differences related to wage negotiations, conclude that women have a lower, albeit minor, propensity to negotiate, and Freund, Hüffmeier, Mazei & Stuhlmacher (2014), in another meta-analysis of 51 studies of negotiation outcomes, find that men tend to reach better economic outcomes than women but the difference narrows for women with negotiation experience, or when negotiation ranges are explicitly communicated (a result also reported by Leibbrandt & List (2012). Existing studies on the supply-side determinants of the gender gap based quantitative data on actual asked wages are relatively scarce and yield mixed results. Based on survey where recent social science graduates in Sweden are asked to report their respective bids “for the initial job they got in their field of major”, Save-Soderbergh (2007) finds that women “consistently submit lower wage bids than men do” (due to “lack of incentives to safe promote”). Alternatively, Galperin, Cruces and Greppi (2017), based on a field experiment where 2800 frelancers were asked to apply for a job using an online platform for short-term contracts in Spain (Nubelo), find that “women don´t ask for less”.
    Date: 2018–07
  4. By: René Böheim; Dominik Grübl; Mario Lackner
    Abstract: We analyze performance under pressure and estimate the causal effect of audience size on the success of free throws in top-level professional basketball. We use data from the National Basketball Association (NBA) for the seasons 2007/08 through 2015/16. We exploit the exogenous variation in weather conditions on game day to establish a causal link between attendance size and performance. Our results confirm a sizeable and strong negative effect of the number of spectators on performance. Home teams in (non-critical) situations at the beginning of games perform worse when the audience is larger. This result is consistent with the theory of a home choke rather than a home field advantage. Our results have potentially large implications for general questions of workplace design and help to further understand how the social environment affects performance. We demonstrate that the amount of support, i.e. positive feedback, from a friendly audience does affect performance.
    Keywords: performance under pressure; choking; social pressure
    JEL: D03 J24 M54
    Date: 2018–08
  5. 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.
    Keywords: Labor and Human Capital
    Date: 2018
  6. By: Mawdsley, John Kenneth; Chauradia, Amit; Brymer, Rhett
    Abstract: Extant research suggests that hiring experts during economic downturns can improve firm financial performance. However, recessionary labor markets deepen the challenges facing hiring firms, calling to question both the firm-level benefits and the tactics of acquiring talent when demand for a firm’s business is declining. We theorize and find that hiring expert talent during a recession actually weakens firm performance in the context of knowledge-based services. Notably though, we find firms can effectively attenuate the negative hiring effect by targeting particular labor pools, underlining the significance of gaining human capital advantages through focused sourcing. We test our hypotheses using a longitudinal sample of large U.S. corporate law firms between 2002 and 2010.
    Keywords: human capital; firm performance; knowledge workers; labor pools; economic recession
    JEL: L10
    Date: 2017–04–27
  7. By: Hugh Macartney; Robert McMillan; Uros Petronijevic
    Abstract: This paper documents a new empirical regularity: teacher value-added increases within-teacher when accountability incentives are strengthened. That finding motivates a strategy to separate value-added into incentive-varying teacher effort and incentive-invariant teacher ability, combining rich longitudinal data with exogenous incentive-policy variation. Our estimates indicate that teacher effort and ability both raise current and future test scores, with ability having stronger effects. These estimates feed into a framework for comparing the cost-effectiveness of alternative education policies. For illustration, we show incentive-oriented reforms can outperform policies targeting teacher ability, given their potential to influence all teachers rather than a subset.
    JEL: I21 J24 M52
    Date: 2018–06
  8. By: Kyle Herkenhoff (University of Minnesota); Gordon Phillips (Dartmouth College); Jeremy Lise (University of Minnesota); guido menzio (University of Pennsylvania)
    Abstract: We develop a theory of teams to measure the way knowledge diffuses across workers. We extend the sequential auctions framework to allow for workers to influence each other's knowledge. Workers can search on-the-job and leave their team to start a new team, carrying some of their knowledge with them. In contrast to standard sorting models, a firm's type is no longer exogenous; it is coworker human capital. Using a new methodology, we estimate the knowledge diffusion process and the degree of worker complementarities in production with micro wage data and job mobility patterns from the LEHD. Our estimated parameters imply both positive peer effects and strong production complementarities.
    Date: 2018
  9. By: Mackeben, Jan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Ruf, Kevin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Grunau, Philipp (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wolter, Stefanie (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This data report describes the third wave of the Linked Personnel Panel (LPP 1617). The LPP is a linked-employer-employee data set on human resources (HR) work, corporate culture and management instruments in German establishments that evolved within the framework of the project ‘Quality of work and economic success’. The three survey waves contain information from 1,219 companies, 7,508 employees (wave 1), 771 companies and 7,282 employees (wave 2) as well as 846 companies and 6779 employees (wave 3). The LPP is representative for German private sector establishments with at least 50 employees subject to social security. The linkage with the IAB Establishment Panel yields a data product that enables longitudinal analyses regarding HR strategies and quality of work in Germany." (Author's abstract, IAB-Doku) ((en)) Additional Information Auszählungen
    Keywords: IAB-Datensatz Linked Personnel Panel, Datensatzbeschreibung, Datenqualität, Betriebsbefragung, Mitarbeiterbefragung, Datenanonymisierung, Stichprobe, Datenorganisation
    Date: 2018–08–16
  10. By: Sang-yoon Song (Economic Research Institute, The Bank of Korea)
    Abstract: This study provides new evidence on the large contribution of performance pay to wage inequality among employers via heterogeneous rent-sharing behaviors, focusing on industry affiliation and employer size. Using comprehensive Korean worker-level data, I first show that wage betweeninequality at the industry-size level has substantially contributed to a growing wage inequality trend since 1994 even after controlling for observed andunobserved worker characteristics and factoring in sorting effects; this phenomenon is dominated by the employer size-wage effect. The size-wage effect is mainly due to the differences in performance pay between employer sizes, while the effects of performance pay on within-inequality are limited. I then show the sources of the rising wage between-inequality in terms of firm-side factors using firm-level balance sheet data merged with worker-level data at the industry-size-year level. I find that changes in the estimated rentsharing parameters and the prices of capital-to-labor ratio are the main factors in the increasing dispersal of between-inequality and that they became more positively correlated with wages between 2009 and 2015 than they were before 2009. This positive correlation is observed even more clearly when performance pay is included in wages. These findings show that employers exhibit rent-sharing behavior and compensate for capital dependency using performance pay, and differentials of performance pay among employers are translated into increased between-inequality of wages.
    Keywords: Foreign investors, Institutional investors, Price impact, Investor heterogeneity, Treasury bond liquidity
    JEL: E23 J21 J31
    Date: 2018–02–08

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