nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒03‒18
six papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Does Schooling Cause Structural Transformation? By Porzio, T.; Santangelo, G.
  2. The Role of Headhunters in Wage Inequality: It's All about Matching By Gorn, A.
  3. Employee Wellbeing, Productivity and Firm Performance By Jan-Emmanuel De Neve; Christian Krekel; George Ward
  4. The shape of luck and competition in tournaments By Mikhail Drugov; Dmitry Ryvkin
  5. Tournament Rewards and Heavy Tails By Mikhail Drugov; Dmitry Ryvkin
  6. Occupational Characteristics and the Gender Pay Gap By Aline Zucco

  1. By: Porzio, T.; Santangelo, G.
    Abstract: We study how the global schooling increase during the 20th century affected structural transformation by changing the supply of agricultural labor. We develop an analytical model of frictional labor reallocation out of agriculture to infer changes in birth-cohort characteristics from observed data on agricultural employment. Bringing the model to microdata from 52 countries, we find that the increase in schooling was accompanied by a large shift of the labor force’s comparative advantage away from agriculture. We bring empirical evidence to suggest this relationship was causal. With fixed prices, the resulting decrease in the supply of agricultural workers can account for almost half of the observed reallocation out of agriculture. However, in general equilibrium, the net effect is ambiguous.
    Keywords: Development, Education, Human Capital, Skills, Occupational Choice, Labor Force Demographics, Schooling, Skill Biased, Labor Mobility, Cross Country Development, Structural Transformation, Agriculture
    JEL: E23 E24 I25 J21 J23 J24 J62 O11 O12 O15 Q11
    Date: 2019–02–24
  2. By: Gorn, A.
    Abstract: This study relates the increase in the U.S. top wages to the increasing prominence of headhunters. Headhunters improve the matching between firms and employees via two channels: screening of candidates and passive on-the-job search. I incorporate headhunters in the labor market framework of random search with two-sided heterogeneity. The calibrated model shows that headhunters can account for 35% of the increase in the top 1% wage share and 69% of the increase in the top 10% wage share in the U.S. from 1970 to 2010. I provide supporting cross-country evidence on headhunter hires/fees and top income growth, as well as micro evidence for CEO compensation.
    Keywords: wage distribution, top incomes, sorting, on-the-job search, headhunters
    JEL: E24 D83 C78 J24 J62 J63
    Date: 2019–03–07
  3. By: Jan-Emmanuel De Neve; Christian Krekel; George Ward
    Abstract: Does higher employee wellbeing lead to higher productivity, and, ultimately, to tangible benefits to the bottom line of businesses? We survey the evidence and study this question in a meta-analysis of 339 independent research studies, including the wellbeing of 1,882,131 employees and the performance of 82,248 business units, originating from 230 independent organisations across 49 industries in the Gallup client database. We find a significant, strong positive correlation between employees' satisfaction with their company and employee productivity and customer loyalty, and a strong negative correlation with staff turnover. Ultimately, higher wellbeing at work is positively correlated with more business-unit level profitability.
    Keywords: employee satisfaction, engagement, employee productivity, firm performance, wellbeing, meta-analysis
    JEL: I31 J24
    Date: 2019–03
  4. By: Mikhail Drugov (New Economic School and CEPR); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: Tournaments are settings where agents' performance is determined jointly by effort and luck, and top performers are rewarded. We study the impact of the \shape of luck" { the details of the distribution of performance shocks { on incentives in tournaments. The focus is on the effect of competition, defined as the number of rivals an agent faces, which can be deterministic or stochastic. We show that individual and aggregate effort in tournaments are affected by an increase in competition in ways that depend critically on the shape of the density and failure (hazard) rate of shocks. When shocks have heavy tails, aggregate effort can decrease with stronger competition.
    Keywords: tournament, competition, heavy tails, stochastic number of players, unimodality, log-supermodularity, failure rate
    JEL: C72 D72 D82
    Date: 2019–01
  5. By: Mikhail Drugov (New Economic School and CEPR); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: Heavy-tailed fluctuations are common in many environments, such as sales of creative and innovative products or the financial sector. We study how the presence of heavy tails in the distribution of shocks affects the optimal allocation of prizes in rank-order tournaments. While a winner-take-all prize schedule maximizes aggregate effort for light-tailed shocks, prize sharing becomes optimal when shocks acquire heavy tails, increasingly so following a skewness order. Extreme prize sharing { rewarding all ranks but the very last { is optimal when shocks have a decreasing failure rate, such as power laws. Hence, under heavy-tailed uncertainty, typically associated with strong inequality in the distribution of gains, providing incentives and reducing inequality go hand in hand.
    Keywords: heavy tails, power law, tournament, optimal allocation of prizes, failure rate
    JEL: C72 D86 M52
    Date: 2018–10
  6. By: Aline Zucco
    Abstract: Germany has a large persistent Gender Pay Gap of 21 %; although this gap is not constant across occupations. The question arises why some occupations have large Gender Pay Gaps while others have only small gaps. Using data from the Structural Earnings Study merged with occupational task information provided by the Federal Labor Office, this paper aims to uncover the relationship between occupational characteristics and the Gender Pay Gap. To do so, I apply a two-step approach, where the first step uses individual characteristics to estimate the adjusted occupation-specific Gender Pay Gaps. In the second step, these gaps are regressed on occupational characteristics. I find that wage differences between men and women are lower in occupations with linear earnings and in occupations with a large share of public firms. Moreover, we observe that an increasing share of persons with supervisory power is linked to larger wage differences between men and women, which indicates the presence of a glass ceiling. Finally, the Gender Pay Gap is higher in occupations with routine tasks. Moreover, the findings suggest that the more that employees can be substituted with other employees, the lower is the Gender Pay Gap. Hence, this study extends previous findings on occupation-specific Gender Pay Gaps by linking them to occupational characteristics on a more general level.
    Keywords: Gender pay gap, segregation, discrimination, wage differentials, occupations
    JEL: J3 J31 J24 J16
    Date: 2019

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