|
on Human Capital and Human Resource Management |
| By: | Ellul, Andrew; Pagano, Marco; Scognamiglio, Annalisa |
| Abstract: | We establish that the labor market helps discipline asset managers via the impact of fund liquidations on their careers. Using hand-collected data on 1,948 professionals, we find that top managers working for funds liquidated after persistently poor relative performance suffer demotion coupled with a significant loss in imputed compensation. Scarring effects are absent when liquidations are preceded by normal relative performance or involve mid-level employees. Seen through the lens of a model with moral hazard and adverse selection, these results can be ascribed to reputation loss rather than bad luck. The findings suggest that performance-induced liquidations supplement compensation-based incentives. |
| Keywords: | careers,hedge funds,asset managers,market discipline,scarring effects |
| JEL: | G20 G23 J24 J62 J63 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:602&r=hrm |
| By: | Englmaier, Florian; Grimm, Stefan; Schindler, David; Schudy, Simeon |
| Abstract: | Despite the prevalence of non-routine analytical team tasks in modern economies, little is known about how incentives influence performance in these tasks. In a field experiment with more than 3000 participants, we document a positive effect of bonus incentives on the probability of completion of such a task. Bonus incentives increase performance due to the reward rather than the reference point (performance threshold) they provide. The framing of bonuses (as gains or losses) plays a minor role. Incentives improve performance also in an additional sample of presumably less motivated workers. However, incentives reduce these workers' willingness to "explore" original solutions. |
| Keywords: | bonus; exploration; gain; incentives; loss; non-routine; team work |
| JEL: | C92 C93 D03 J33 M52 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13226&r=hrm |
| By: | Englmaier, Florian; Fahn, Matthias; Schwarz, Marco |
| Abstract: | We analyze how agents' present bias affects optimal contracting in an infinite-horizon employment setting. The principal maximizes profits by offering a menu of contracts to naive agents: a "virtual" contract - which agents plan to choose in the future - and a "real" contract which they end up choosing. This virtual contract motivates the agent and allows the principal to keep the agent below his outside option. Moreover, under limited liability, implemented effort can be inefficiently high. With a finite time horizon, the degree of exploitation of agents decreases over the life-cycle. While the baseline model abstracts from moral hazard, we show that the result persists also when allowing for non-contractible effort. |
| Keywords: | Dynamic Contracting; employment relations; present bias |
| JEL: | D03 D21 J31 M52 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13227&r=hrm |
| By: | Pagano, Marco; Picariello, Luca |
| Abstract: | In talent-intensive jobs, workers' quality is revealed by their performance. This enhances productivity and earnings, but also increases layoff risk. Firms cannot insure workers against this risk if they compete fiercely for talent. In this case, the more risk-averse workers will choose less quality-revealing jobs. This lowers expected productivity and salaries. Public unemployment insurance corrects this inefficiency, enhancing employment in talent-sensitive industries, consistently with international evidence. Unemployment insurance dominates legal restrictions on firms' dismissals, which penalize more talent-sensitive firms and thus depress expected productivity. Finally, unemployment insurance fosters education, by encouraging investment in risky human capital that enhances talent discovery. |
| Keywords: | talent,learning,layoff risk,unemployment insurance |
| JEL: | D61 D83 I20 J24 J63 J65 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:603&r=hrm |
| By: | Belot, Michele; Kircher, Philipp; Muller, Paul |
| Abstract: | We study how job seekers respond to wage announcements by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. High wage vacancies attract more interest, in contrast with much of the evidence based on observational data. Some applicants only show interest in the low wage vacancy even when they were exposed to both. Both findings are core predictions of theories of directed/competitive search where workers trade off the wage with the perceived competition for the job. A calibrated model with multiple applications and on-the-job search induces magnitudes broadly in line with the empirical findings. |
| Keywords: | directed search; field experiments; Online job search; wage competition |
| JEL: | C93 J31 J63 J64 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13286&r=hrm |
| By: | Nezih Guner (CEMFI, Centro de Estudios Monetarios y Financieros); Andrii Parkhomenko (Universitat Autònoma de Barcelona & Barcelona GSE); Gustavo Ventura (Arizona State University) |
| Abstract: | We document that for a group of high-income countries (i) mean earnings of managers tend to grow faster than for non managers over the life cycle; (ii) the earnings growth of managers relative to non managers over the life cycle is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We parameterize this model with U.S. observations on managerial earnings, the size-distribution of plants and macroeconomic aggregates. We then quantify the relative importance of exogenous productivity differences, and the size-dependent distortions emphasized in the misallocation literature. Our fi?ndings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Thus, observations on the relative earnings growth of managers become natural targets to discipline the level of distortions. Distortions that halve the growth of relative managerial earnings (a move from the U.S. to Italy in our data), lead to a reduction in managerial quality of 27% and to a reduction in output of about 7% ? more than half of the observed gap between the U.S. and Italy. We ?find that cross-country variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S. |
| Keywords: | Cross-country income differences, managers, distortions, management practices, size distribution, skill investment. |
| JEL: | E23 E24 J24 M11 O43 O47 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2017_1710&r=hrm |
| By: | José Tavares; João Amador; Sharmin Sazedj |
| Abstract: | A firm’s optimal choice of a CEO involves a trade-off between hiring newcomers – who take time to profit from learning by doing – and avoiding CEO turnover or opting for internal successions – risking that the old guard fall prey to an experience trap, repeating the same old business practices. When firms are hit by an aggregate economic shock, exogenous, unexpected, and unprecedented in nature, reach, magnitude and persistence, conducting ‘business as usual’ no longer applies and having in office a newcomer – a CEO hired recently from another firm – may turn out to be particularly valuable to efficiently abandon old management practices. We use a unique matched firm-employee dataset for Portuguese firms in the wake of the last economic crisis, to estimate the value of a newcomer CEO, who is by nature prone to avoid the experience trap. During the crisis, firms run by newcomer CEOs outperform those run by high tenured and/or internally promoted CEOs in terms of both value added (GVA) and sales. We estimate a performance gap of approximately 18%, and confirm that no such gap exists prior to the crisis. Firms managed by newcomers are also less likely to fail during the crisis. Propensity Score matching confirms our difference-in-differences results. Our findings are robust to different measures of firm performance, across different samples and specifications, and to the inclusion of several CEO and firm controls, including fixed effects. Finally, we show that newcomer CEOs make different decisions in terms of personnel, expenditure, investment and international trade, attaining higher productivity levels. |
| JEL: | G34 J24 L25 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201821&r=hrm |
| By: | Kettemann, Andreas; Mueller, Andreas; Zweimüller, Josef |
| Abstract: | This paper explores the relationship between the duration of a vacancy and the starting wage of a new job, using unusually informative data comprising detailed information on vacancies, the establishments posting the vacancies, and the workers eventually filling the vacancies. We find that vacancy durations are negatively correlated with the starting wage and that this negative association is particularly strong with the establishment component of the starting wage. We also confirm previous findings that growing establishments fill their vacancies faster. To understand the relationship between establishment growth, vacancy filling and entry wages, we calibrate a model with directed search and ex-ante heterogeneous workers and firms. We find a strong tension between matching the sharp increase in vacancy filling for growing firms and the response of vacancy filling to firm-level wages. We discuss the implications of this finding as well as potential resolutions. |
| Keywords: | Recruiting; search; Vacancy Duration; Vacancy Posting; wages |
| JEL: | E24 J31 J63 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13249&r=hrm |
| By: | Sandvik, Jason; Saouma, Richard; Seegert, Nathan; Stanton, Christopher |
| Abstract: | Firms rarely cut compensation, so little is known about the after-effects when compensation reductions do occur. We use commission reductions at a sales firm to estimate how work effort and turnover change. In response to an 18% decline in sales commissions, corresponding to a 7% decline in median take-home pay, we find turnover increases for the most productive workers. We detect limited effort responses. Turnover and effort responses do not differ based on workers' survey replies regarding expectations of firm fairness or future promotion. The findings indicate that adverse selection concerns on the extensive margin of retaining workers drive the empirical regularity that firms rarely reduce compensation. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13242&r=hrm |