nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒01‒14
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Do Workers Value Flexible Jobs? A Field Experiment on Compensating Differentials By Haoran He; David Neumark; Qian Weng
  2. Competition and Fatigue At Work By Angelova, Vera; Giebe, Thomas; Ivanova-Stenzel, Radosveta
  3. Overburdened judges By Ludivine Roussey; Raphaël Soubeyran
  4. Overconfidence and Bailouts By Gietl, Daniel
  5. Using Goals to Motivate College Students: Theory and Evidence from Field Experiments By Clark, Damon; Gill, David; Prowse, Victoria; Rush, Mark
  6. Leadership Styles and Job Satisfaction By Asghar, Saima; Oino, Isaiah
  7. Do More Productive Firms Pay Workers More? Evidence from Egypt By Caroline Krafft; Ragui Assaad
  8. Performance under Pressure on the Court: Evidence from Professional Volleyball By Viktor Bozhinov; Nora Grote

  1. By: Haoran He; David Neumark; Qian Weng
    Abstract: We explore compensating differentials for job flexibility, using a field experiment conducted on a Chinese job board. Our job ads differ randomly regarding when one works (time flexibility) and where one works (place flexibility). We find strong evidence that workers value job flexibility – especially regarding place of work. Application rates are higher to flexible jobs, conditional on the salary offered. Additional survey evidence indicates that workers are willing to take lower pay for more flexible jobs. Non-experimental job board data do not indicate that workers value job flexibility, reinforcing the difficulty of estimating compensating differentials from observational data.
    JEL: J01
    Date: 2019–01
  2. By: Angelova, Vera (TU Berlin); Giebe, Thomas (Linnaeus University); Ivanova-Stenzel, Radosveta (TU Berlin)
    Abstract: We study theoretically and experimentally the role of fatigue and recovery within a competitive work environment. At work, agents usually make their effort choice in response to competition and monetary incentives. At the same time, they have to take into account fatigue, which accumulates over time if there is insufficient recovery. We model a sequence of work periods as tournaments that are linked through fatigue spillovers, inducing a non-time-separable decision problem. We also allow for variations in incentives in one work period, in order to analyze spillover effects to the work periods \"before\" and \"after\". Making recovery harder should, generally, reduce effort. This theoretical prediction is supported by the experimental data. A short-term increase in incentives in one period should lead to higher effort in that period, and, due to fatigue, to strategic resting before and after. Our experimental results confirm the former, whereas we do not find sufficient evidence for the latter. Even in the presence of fatigue, total effort should positively respond to higher-powered incentives. This is not supported by our data. Removing fatigue, we find the expected increase in total effort. For work environments, this may imply that the link between monetary incentives and effort provision becomes weaker in the presence of fatigue or insufficient recovery between work periods.
    Keywords: fatigue; recovery; incentives; experiment; tournament;
    JEL: C72 C91 J22 J33 M52
    Date: 2018–12–20
  3. By: Ludivine Roussey (LIRAES - EA 4470 - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPD5 - Université Paris Descartes - Paris 5, UPD5 - Université Paris Descartes - Paris 5, USPC - Université Sorbonne Paris Cité); Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: We develop a double-sided moral hazard model in which the production of justice depends on two tasks (jurisdictional and administrative). The jurisdictional task can be provided only by a judge (the agent) while the administrative task can be provided either by the government (the principal) and/or by the judge. However, the judge performs the administrative task at a higher unit cost. First, we show that the rst-best situation is such that the judge exerts no effort to provide the administrative task. Second, we show that two forms of (second-best) optimal contract can emerge when neither the government's effort nor the judge's effort is contractible: either the incentives are shared between the government and the judge and the judge exerts no effort to provide the administrative task, or the judge faces high-powered incentives which induce her to exert effort to provide both tasks. Our model proposes a rationale for judges work overload observed in many countries.
    Keywords: production of judicial services,double-sided moral hazard,judicial organization,task misallocation
    Date: 2018
  4. By: Gietl, Daniel (LMU Munich)
    Abstract: Empirical evidence suggests that managerial overconfidence and government guarantees contribute substantially to excessive risk-taking in the banking industry. This paper incorporates managerial overconfidence and limited bank liability into a principal-agent model, where the bank manager unobservably chooses effort and risk. An overconfident manager overestimates the returns to effort and risk. We find that managerial overconfidence necessitates an intervention into banker pay. This is due to the bank\'s exploitation of the manager\'s overvaluation of bonuses, which causes excessive risk-taking in equilibrium. Moreover, we show that the optimal bonus tax rises in overconfidence, if risk-shifting incentives are sufficiently large. Finally, the model indicates that overconfident managers are more likely to be found in banks with large government guarantees, low bonus taxes, and lax capital requirements.
    Keywords: overconfidence; bailouts; banking regulation; bonus taxes;
    JEL: H20 H30 G28
    Date: 2018–12–20
  5. By: Clark, Damon (Department of Economics, UC Irvine and NBER); Gill, David (Department of Economics, Purdue University); Prowse, Victoria (Department of Economics, Purdue University); Rush, Mark (Department of Economics, University of Florida)
    Abstract: Will college students who set goals for themselves work harder and achieve better outcomes? In theory, setting goals can help present-biased students to mitigate their self-control problem. In practice, there is little credible evidence on the causal effects of goal setting for college students. We report the results of two field experiments that involved almost four thousand college students in total. One experiment asked treated students to set goals for performance in the course; the other asked treated students to set goals for a particular task (completing online practice exams). Task-based goals had robust positive effects on the level of task completion, and task-based goals also increased course performance. We also find that performance-based goals had positive but small effects on course performance. We use a theoretical framework that builds on present bias and loss aversion to interpret our results. Since task-based goal setting is low-cost, scalable and logistically simple, we conclude that our findings have important implications for educational practice and future research.
    Keywords: Goal; Goal setting; Higher education; Field experiment; Self-control; Present bias; Time inconsistency; Commitment device; Loss aversion; Reference point; Task-based goal; Performance-based goal; Self-set goal; Performance uncertainty; Overconfidence; Student effort; Student performance; Educational attainment. JEL Classification: I23, C93
    Date: 2018
  6. By: Asghar, Saima; Oino, Isaiah
    Abstract: Low compensation in the retail sector is adversely affecting employee satisfaction and turnover. Leadership style is important for motivating employees and increasing their satisfaction level. This study has examined the effect of transformational and transactional leadership styles on job satisfaction in selected retail outlets of Slough, United Kingdom. The adapted questionnaire was administered to the employees of the retail outlets. The sample size was 270 and the response rate was 85%. The study found that transformational leadership style has a positive effect on job satisfaction, whereas transactional leadership style has an insignificant effect on job satisfaction. Therefore, it can be argued that the transformational leadership style is more effective in the retail sector of Slough, United Kingdom.
    Keywords: Transformational leadership, transactional leadership, job satisfaction
    JEL: C00 C12 D23 J28 L81 M12 M59
    Date: 2017–10–02
  7. By: Caroline Krafft (St. Catherine University); Ragui Assaad
    Abstract: Theoretically, in perfectly competitive markets with full information, marginal productivity of labor and workers’ wages should be equalized across firms and wages should not be linked to the productivity of a firm. Empirically examining the relationship between wages and productivity across various types of firms can reveal important deviations from perfect competition and full information. This paper investigates the wage-productivity relationship in the case of Egypt. We find that wages are related to firm productivity, even after accounting for worker quality. The relationship between wages, productivity, and firm characteristics suggests that the association is due in part to imperfect competition and in part to the use of efficiency wages by employers.
    Date: 2018–09–18
  8. By: Viktor Bozhinov (Johannes Gutenberg University); Nora Grote (Johannes Gutenberg University)
    Abstract: This study analyzes how psychological pressure affects performance. It refers to the discussion on differences between choking, i.e., an acute performance decline under pressure and underperformance under pressure. When performance outcomes are not defined binary even slight performance decrements can have huge consequences for future career. To study the consequences of psychological pressure on performance, we employ data on the serving performance of 213 professional volleyball athletes in 226 matches. We do not find any evidence for the existence of severe performance decrements under pressure (i.e. choking). However, athletes serve less effectively under pressure, i.e., they serve less direct points and less good serves. In consequence, we find that these subtler performance changes of serving players negatively affect overall team performance. Thus, we show that even if choking in the sense of an acute failure does not occur, performance decrements harming team production exist. This might be explained by single team members trying to avoid being held responsible for failure. Strengthening group cohesion to reduce psychological pressure on single group members might be a fruitful strategy to cope with similar problems in other working environments.
    Keywords: performance; psychological pressure; choking; underperformance; volleyball
    JEL: D91 J24 L83
    Date: 2018–12–20

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