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on Human Capital and Human Resource Management |
| By: | Joshua S. Graff Zivin; Lisa B. Kahn; Matthew J. Neidell |
| Abstract: | In this paper, we examine the impact of pay-for-performance incentives on learning-by-doing. We exploit personnel data on fruit pickers paid under two distinct compensation contracts: a standard piece rate plan and a piece rate plan with an extra one-time bonus tied to output. Under the bonus contract, we observe bunching of performance just above the bonus threshold, suggesting workers distort their behavior in response to the discrete bonus. Such bunching behavior increases as workers gain experience. At the same time, the bonus contract induces considerable learning-by-doing for workers throughout the productivity distribution, and these improvements significantly outweigh the losses to the firm from the distortionary bunching. In contrast, under the standard piece rate contract, we find minimal evidence of bunching and only small performance improvements at the bottom of the productivity distribution. Our results suggest that contract design can help foster learning on the job. This underscores the importance of dynamic considerations in principal-agent models. |
| JEL: | J33 J43 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25799&r=all |
| By: | Cziraki, Peter; Xu, Moqi |
| Abstract: | We study the role of the contractual time horizon of CEOs for CEO turnover and corporate policies. Using hand-collected data on 3,954 fixed-term CEO contracts, we show that remaining time under contract predicts CEO turnover. When contracts are close to expiration, turnover is more likely and is more sensitive to performance. We also show a positive within-CEO relation between remaining time under contract and firm risk. Our results are similar across short and long contracts and are driven neither by firm or CEO survival, nor technological cycles. They are consistent with incentives to take long-term projects with interim volatility. |
| Keywords: | risk taking; volatility; career concerns; CEO contracts; CEO turnover |
| JEL: | G34 J41 J63 |
| Date: | 2019–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100757&r=all |
| By: | Albert, Philipp; Kübler, Dorothea; Silva-Goncalves, Juliana |
| Abstract: | Ambition as the desire for personal achievement is an important driver of behavior. Using laboratory experiments, we study the role of social influence on ambition in two distinct domains of achievement, namely performance goals and task complexity. In the first case, participants set themselves a performance goal for a task they have to work on. The goal is associated with a proportional bonus that is added to a piece rate if the goal is reached. In the second case, they choose the complexity of the task, which is positively associated with the piece rate compensation and effort. In both cases we test whether observing peer choices influences own choices. We find strong evidence of peer effects on performance goals. In contrast, we find no support for peer effects on the choice of task complexity. |
| Keywords: | peer effects,ambition,goal setting,task difficulty,laboratory experiment |
| JEL: | C91 D83 D91 I24 M5 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2019202&r=all |
| By: | Babenko, Ilona (Arizona State University); Bennett, Benjamin (Ohio State University (OSU) - Department of Finance); Bizjak, John M. (Texas Christian University); Coles, Jeffrey L. (University of Utah - Department of Finance; Arizona State University (ASU) - Finance Department); Sandvik, Jason J. (University of Utah) |
| Abstract: | Panel OLS and GMM-IV estimates indicate that executives respond to the adoption of a compensation clawback provision by decreasing firm risk. The mechanisms that transmit incentives to decisions and decisions to risk appear to be more conservative investment and financial policies and preemptive management of ESG, legal, and cyberattack risks. The stock market reaction to the announcement of a clawback adoption, as well as post-adoption stock and accounting performance, are significantly and positively related to the actual and predicted reduction in firm risk. The reduction in firm risk, arising from adoption of a clawback policy, appears to benefit shareholders. |
| JEL: | G32 G34 J33 M41 M52 M55 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2019-13&r=all |
| By: | Esther Mirjam Girsberger (Economics Discipline Group, University of Technology Sydney); Matthias Krapf (University of Basel, Switzerland); Miriam Rinawi (Swiss National Bank, Switzerland) |
| Abstract: | We study how skills acquired in vocational education and training (VET) affect wages and employment dynamics in Switzerland. We present and estimate a search and matching model for workers with a VET degree who differ in their interpersonal, cognitive and manual skills. Assuming a match productivity which exhibits worker-job complementarity, we estimate how workers’ skills map into job offers, wages and unemployment. Firms value cognitive skills on average almost twice as much as interpersonal and manual skills. Moreover, they prize complementarity in cognitive and interpersonal skills. We estimate average returns to VET skills in hourly wages of 9%. Furthermore, VET improves labour market opportunities through higher job arrival rate and lower job destruction. Workers thus have large benefits from getting a VET degree. |
| Keywords: | Occupational training; labour market search; multidimensional skills. |
| JEL: | E23 J23 J24 J64 |
| Date: | 2019–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:2019/01&r=all |
| By: | Osro, Siti Aisah; Nasution, Harmein; Sadalia, Isfenti |
| Abstract: | Employee performance is the responsibility of employees to their work and the results achieved by the employees in performing the job given to them either in quantity or quality within a certain time. The goals of employee performance are to adjust employee expectation with organizational goals. Incompatibility between efforts to achieve employee performance goals with organizational goals will result in poor performance. Employee performance is influenced by internal and external factors. One of the internal factors that affect employee performance is emotional intelligence. This research analyzed the influence of emotional intelligence which consists of self-awareness, self-regulation, motivation, empathy and social skills on the performance of the Officer of Health Department of Deli Serdang Regency, North Sumatera, Indonesia. The type of this research was causal research with cross-sectional study design. The subjects of this research were Civil Servants working in the Health Department of Deli Serdang Regency who occupied operative positions or staff of 100 people. The sampling used data were collected through interviews, questionnaires distribution and literature study. The data were analyzed using a multiple linear regression model, hypothesis and testing was done by using T-test and F-test. This research was conducted at the Health Department of Deli Serdang Regency, North Sumatera Province, Indonesia. The result showed that emotional intelligence which had a significant influence on the performance of Health Service Officers of Deli Serdang Regency was motivation and social skill. The results of the T-test showed that the emotional intelligence: self-awareness, self-regulation, motivation, empathy and social skills simultaneously had a positive influence on the performance of the Health Department officers of Deli Serdang Regency. The results of the -test concluded that emotional intelligence: motivation and social skills had a positive and significant influence on the performance of the Health Department officers of Deli Serdang Regency. Emotional intelligence consisting of self-awareness, self-regulation, motivation, empathy and social skills had a positive and significant influence on the performance improvement of the Health Department officers of Deli Serdang Regency. The higher the emotional intelligence of the Health Department officers of Deli Serdang Regency, the better the employee performance, the lower the emotional intelligence, the lower the performance of the employees. |
| Keywords: | self-awareness; self-regulation; motivation; empathy; social Skills; employee Performance; |
| JEL: | G18 H11 M38 M48 P47 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92359&r=all |
| By: | Bennett, Benjamin (Ohio State University (OSU) - Department of Finance); Garvey, Gerald (Blackrock); Milbourn, Todd (Washington University in Saint Louis - Olin Business School); Wang, Zexi (University of Bern) |
| Abstract: | We study the motive of using equity-based pay in executive compensation: the risk-sharing motive versus the performance-measuring motive. The empirical design goes through the relationship between equity-based pay and stock price informativeness (SPI). We find equity-based pay decreases in SPI, which is consistent with the risk-sharing motive but inconsistent with the performance-measuring motive. The SPI effect on compensation is stronger in financially-constrained firms, more diversified firms, and firms with less product market competition. SPI increases pay efficiency through a larger proportion of option pay, fewer perquisites, and greater pay-for-skill. We address potential endogeneity concerns by investigating the changes in compensation of managers switching between firms with different SPI. |
| JEL: | G30 J33 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2019-12&r=all |
| By: | Kaitong Hu (CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique); Zhenjie Ren (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Junjian Yang (Fakultät für Mathematik und Geoinformation [Wien] - TU Wien - Technische Universität Wien) |
| Abstract: | We consider a moral hazard problem with multiple principals in a continuous-time model. The agent can only work exclusively for one principal at a given time, so faces an optimal switching problem. Using a randomized formulation, we manage to represent the agent's value function and his optimal effort by an Itô process. This representation further helps to solve the principals' problem in case we have infinite number of principals in the sense of mean field game. Finally the mean field formulation is justified by an argument of propagation of chaos. |
| Keywords: | Moral hazard,contract theory,backward SDE,optimal switching,mean field games,propagation of chaos |
| Date: | 2019–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02088486&r=all |
| By: | Arntz, Melanie; Ben Yahmed, Sarra; Berlingieri, Francesco |
| Abstract: | Working from home (WfH) has become much more common since the early 2000s. We exploit the German Socio-Economic Panel between 1997 and 2014 to investigate how such a work arrangement affects labour market outcomes and life satisfaction. We find that childless employees work an extra hour per week of unpaid overtime and report higher satisfaction after taking up WfH. Among parents, WfH reduces the gender gap in working hours and monthly earnings, as contractual hours increase more among mothers. Hourly wages, however, increase with WfH take-up among fathers, but not among mothers unless they change employer. This points to poorer bargaining outcomes for women compared to men when staying with the same employer. Controlling for selection into paid employment due to changes in unobserved characteristics or preferences does not affect the magnitude of the effects. |
| Keywords: | working from home,working hours,wages,gender,flexible work arrangements. |
| JEL: | J2 J31 O33 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19015&r=all |