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on Human Capital and Human Resource Management |
| By: | Yiming Cao (Boston University); Raymond Fisman (Boston University and NBER); Hui Lin (Nanjing University); Yongxiang Wang (University of Southern California) |
| Abstract: | We study the consequences of month-end lending incentives for Chinese bank managers. Using data from two banks, one state-owned and the other partially privatized, we show a clear increase in lending in the final days of each month, resulting from both more loan issuance and higher value per loan. We estimate that daily lending is 92 percent higher in the last 5 days of each month as a result of loan targets, with only a small amount plausibly attributable to shifting loans forward from the following month. End-of-month loans are 1.6 percentage points (12 percent) more likely to be classified as bad in the years following issuance relative to mid-month loans. Our work highlights the distortionary effects of target-setting on capital allocation, in a context in which such concerns have risen to particular prominence in recent years. |
| Keywords: | Capital allocation; incentive design; Chinese banking |
| JEL: | G21 M52 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-321&r=all |
| By: | Steffes, Susanne; Warnke, Arne Jonas |
| Abstract: | One of the most important policy goals in industrialized countries is to increase the skill level of the labor force by life-long-learning strategies. In this paper our aim is to explain to what extent the variation in training investments is determined either by (observed and unobserved) heterogeneity of firms or of workers, hence we put a new perspective on the determinants of training. Rather than analyzing single determinants or groups of variables, we decompose the variation into a worker-specific and a firm-specific part and show how much of the unexplained variation is independent of both. Our results show that both firm-, job- and worker-level heterogeneity explains training participation and that firm heterogeneity is far less important compared to the others. Also interesting, is the finding that a large part of the overall variance is not driven by firm- or worker heterogeneity, hence training participation seems to be to some extent an unexplained event which happens by chance. |
| Keywords: | Human Capital,Training,Linked-Employer-Employee Data (LEE),Decomposition,Unobserved Heterogeneity |
| JEL: | I24 J24 M53 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19022&r=all |
| By: | Emilien Prost; Gaye del Lo |
| Abstract: | The aim of this experimental paper is to show how the willingness of an employee to accept inequality of wages between him and his executive will depend on the ability on which the executive is evaluated when he is promoted. This willingness to accept inequality is captured by the minimum wage enough to incentivize to work for his executive. We show that selecting an executive on his ability to outperform his employee at his own task will be counterproductive to make employee accepting inequality of wages. We argue that the efficiency of “merit-based” promotion procedure may be challenged by this result. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 J50 M50 M51 D86 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-21&r=all |
| By: | Emilien Prost |
| Abstract: | The aim of this paper is to study in a theoretical perspective how the choice of the ability on which an executive is evaluated to be promoted may be a crucial stake. We show that a procedure where an executive is selected on a managerial ability will allow to increase his own wage, compared to a procedure where he needs to demonstrate ability on the same task than his employee. The intuition is that it would neutralize the issue of rivalry with the employee by preserving the self confidence of the employee in spite he has failed at being promoted, making him easier to incentivize. The consequence is that selecting leaders on their ability to outperform their employee will tend to favor the emergence of a leadership culture of humility during the promotion process in a sense that opponents will strategically reduce their performance to preserve the self-confidence of their employee and then make him less costly to incentivize. On the contrary, selecting leaders on managerial ability will favor the emergence of a leadership culture of demonstration of strength. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 D86 J50 M50 M51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-20&r=all |
| By: | Emilien Prost |
| Abstract: | We design a two-stage model where the winner of a tournament becomes the executive of his former opponent. We call procedural legitimacy, the legitimacy an executive obtains if he is promoted through a competition with no unfair treatment. The aim of this paper is to study how effort may paradoxically bolster or undermine this type of legitimacy with respect to technological assumptions. Besides we show that, in bayesian terms, winning the competition reinforces the belief of having been advantaged but it also reinforces the belief that the looser will be disadvantaged in the future and thus be less productive. This will tend to make winning the competition by being advantaged much less profitable. To incentivize more effort during the competition, the firm has to design a procedure where opponents are not evaluated by their peers but by neutral and external people. Thus the competition will not bring information on a potential inequality of treatment in the future. We argue civil servant examination in public administration and human resources departments are designed partially for this reason.. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 D86 J50 M50 M51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-19&r=all |