nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒07‒29
six papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Managing wages: Fairness norms of low- and high-performing team members By Fochmann, Martin; Sachs, Florian; Weimann, Joachim
  2. Effort under alternative pay contracts in the ride-sharing industry By Belloc, Filippo
  3. Performance management and audit & feedback to support learning and innovation – Theoretical review and implications for Swedish primary care By Anell, Anders
  4. Discrimination in Hiring Based on Potential and Realized Fertility: Evidence from a Large-Scale Field Experiment By Becker, Sascha O.; Fernandes, Ana; Weichselbaumer, Doris
  5. Consistent and inconsistent choices under uncertainty: The role of cognitive abilities By Amador, Luis; Brañas-Garza, Pablo; Espín, Antonio M.; Garcia, Teresa; Hernández, Ana
  6. History dependence in wages and cyclical selection: Evidence from Germany By Bauer, Anja; Lochner, Benjamin

  1. By: Fochmann, Martin; Sachs, Florian; Weimann, Joachim
    Abstract: Services are often provided by groups. The question of remuneration arises both at the group level and for each individual group member. We examine the question of how relative pay should be designed within the group if all group members are to regard the payment scheme as fair. We use a three-step laboratory experiment to compare which fairness norms are chosen by high-performing and low-performing group members. It turns out that both types of group members prefer the performance pay principle. Support for equal pay is negligible. However, the low performers use their bargaining power to improve their position, but without deviating from the performance principle substantially. A random influence on the performance of the players does not change the results.
    Keywords: performance principle,fairness norms,relative remuneration
    JEL: C91 C92 D31 D90 J31 M52
    Date: 2019
  2. By: Belloc, Filippo
    Abstract: We study hours worked by drivers in the peer-to-peer transportation sector with cross-side network effects. Medallion lease (regulated market), commission-based (Uber-like pay) and profit-sharing ("pure" taxi coop) compensation schemes are compared. Our static model shows that network externalities matter, depending on the number of active drivers. When the number of drivers is limited, in the presence of positive network effects, a regulated system always induces more hours worked, while the commission fee influences the comparative incentives towards effort of Uber-like pay versus profit-sharing. When the number of drivers is infinite (or close to it), the influence of network externalities on optimal effort vanishes.
    Keywords: Uber, network effects, ride-sharing, pay schemes, effort, taxi industry
    JEL: J22 J33 L91
    Date: 2019–06–27
  3. By: Anell, Anders (Lund University)
    Abstract: Health care professionals frequently describe performance management and monitoring of efficiency and quality measures for external accountability as an administrative burden with limited benefits. Professionals argue that they are subject to too tight control that signals distrust, limits professional autonomy and ultimately decreases their motivation to perform. At worst, poorly incentivized indicators influence the behavior of providers in directions that undermine patient benefits. Against this background, policy interest has recently turned towards new governance and managerial approaches in Swedish health care services, allowing for a higher degree of professional autonomy, participatory processes and use of non-financial incentives. This change will undoubtedly have implications for performance management. Inspired by current changes in Swedish primary care, this article explores the design of audit & feedback elements through a review of the empirical evidence and theories about motivation and incentives. Audit & feedback interventions have so far taken a “diffusion of innovation” perspective focusing on implementation of evidence and targets into practice. More complex changes in the delivery of services is likely to require experience-based DUI (Doing, Using, Interacting) modes of innovation, which in turn calls for a more formative and enabling approach to performance management and audit & feedback. A key question is how an appeal to social determinants of professional identity and reputation mechanisms can motivate professionals to change their behavior. Practical implications and research opportunities that follow from the theoretical propositions are discussed using Swedish primary care as an illustrative case.
    Keywords: health care; audit & feedback; learning; innovation; incentives; motivation; transparency; trust
    JEL: D91 I18 L84 M12 O32
    Date: 2019–07–22
  4. By: Becker, Sascha O. (university of warwick; warwick); Fernandes, Ana (bern university); Weichselbaumer, Doris (university of linz)
    Abstract: Due to conventional gender norms, women are more likely to be in charge of childcare than men. From an employer’s perspective, in their fertile age they are also at “risk” of pregnancy. Both factors potentially affect hiring practices of firms. We conduct a large-scale correspondence test in Germany, Switzerland, and Austria, sending out approx. 9,000 job applications, varying job candidate’s personal characteristics such as marital status and age of children. We find evidence that, for part-time jobs, married women with older kids, who likely finished their childbearing cycle and have more projectable childcare chores than women with very young kids, are at a significant advantage vis-à-vis other groups of women. At the same time, married, but childless applicants, who have a higher likelihood to become pregnant, are at a disadvantage compared to single, but childless applicants to part-time jobs. Such effects are not present for full-time jobs, presumably, because by applying to these in contrast to part-time jobs, women signal that they have arranged for external childcare.
    Keywords: fertility, discrimination, experimental economics
    JEL: C93 J16 J71
    Date: 2019–05–20
  5. By: Amador, Luis; Brañas-Garza, Pablo; Espín, Antonio M.; Garcia, Teresa; Hernández, Ana
    Abstract: There is an intense debate whether decision making under uncertainty is partially driven by cognitive abilities. The critical issue is whether choices arising from subjects with lower cognitive abilities are more likely driven by errors or lack of understanding than pure preferences for risk. The latter implies that the often argued link between risk preferences and cognitive abilities might be a spurious correlation. This experiment reports evidence from a sample of 556 participants who made choices in risk-related tasks about winning and losing money and completed three cognitive tasks, all with real monetary incentives: number-additions under time pressure (including incentive-compatible expected number of correct additions), the Cognitive Refection Test (to measure analytical/reflective thinking) and the Remote Associates Test (for convergent thinking). Results are unambiguous: none of our cognition measures plays any systematic role on risky decision making. Our data indeed suggest that cognitive abilities are negatively associated with noisy, inconsistent choices, which might have led to spurious correlations with risk preferences in previous studies.
    Keywords: decision making under uncertainty, cognitive abilities, online experiment
    JEL: C91 D81
    Date: 2019–07–17
  6. By: Bauer, Anja; Lochner, Benjamin
    Abstract: Using administrative employer-employee data from Germany, we investigate the relationship between wages and past and present labor market conditions. Furthermore, we revisit recent findings of greater wage cyclicality of new hires. Overall, we find strong evidence for history dependent wages, manifested in both hiring and retention premiums - which is consistent with a variety of contract models. Taking into account composition effects as well as cyclical variation in unobserved match quality, we find that wages of new hires from unemployment are no more cyclical, but those of job changers are more cyclical than those of existing workers. We argue that much of the excess wage cyclicality of new hires discussed by the literature can be explained by cyclical job ladder movements in match quality of new hires from employment. In a novel empirical approach, where we further take into account occupational selection, we show that if job ladder movements accompany a simultaneous change of employers and occupations, the resulting wages are particularly cyclical sensitive.
    Keywords: Business Cycle,Wage,Wage Rigidity,Implicit Contracts,Match Quality
    JEL: E24 E32 J31 J41
    Date: 2019

This nep-hrm issue is ©2019 by Patrick Kampkötter. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.