nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒10‒21
thirteen papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Organizational Culture as Equilibrium? Rules Versus Principles in Building Relational Contracts By Robert S. Gibbons; Manuel Grieder; Holger Herz; Christian Zehnder
  2. Are Women Doing It For Themselves? Gender Segregation and the Gender Wage Gap By Theodoropoulos, Nikolaos; Forth, John; Bryson, Alex
  3. Paying Gig Workers – Evidence from a Field Experiment By Butschek, Sebastian; González Amor, Roberto; Kampkötter, Patrick; Sliwka, Dirk
  4. Works Councils and Performance Appraisals By Grund, Christian; Sliwka, Dirk; Titz, Krystina
  5. Task Discretion, Labor Market Frictions and Entrepreneurship By Canidio, Andrea; Legros, Patrick
  6. History Dependence, Cohort Attachment, and Job Referrals in Networks of Close Relationships By Ayal Y. Chen-Zion; James E. Rauch
  7. Ownership, wealth, and risk taking: Evidence on private equity fund managers By Bienz, Carsten; Thorburn, Karin S; Walz, Uwe
  8. The Decline of Overtime Working in Britain By Bell, David N.F.; Hart, Robert A.
  9. The Gender Gap in Self-Promotion By Christine L. Exley; Judd B. Kessler
  10. Incentives to Discover Talent By Bruenner, Tobias; Friebel, Guido; Holden, Richard; Prasad, Suraj
  11. The role of preferences, attitudes, and personality traits in labor market matching By Haylock, Michael; Kampkötter, Patrick
  12. Flexible Wages or Flexible Workers? By Anja Deelen
  13. Coaches on Fire or Firing the Coach? Evidence of the Impact of Coach Changes on Team Performance from Italian Serie A By Argentieri, Alessandro; Canova, Luciano; Manera, Matteo

  1. By: Robert S. Gibbons; Manuel Grieder; Holger Herz; Christian Zehnder
    Abstract: Effective organizations are able not only to coordinate their members on efficient strategies but also to adapt members’ strategies to unforeseen change in an efficient manner. We explore whether part of organizational culture - namely, relational contracts that facilitate both coordi-nation and adaptation - enable organizations to achieve these ends. In a novel experiment, we explore how parties establish such relational contracts, whether they achieve efficient coopera-tion, and how they adapt to exogenous shocks. Specifically, we test the hypothesis that basing a relational contract on general principles rather than specific rules is more successful in achieving efficient adaptation. In our Baseline condition, we observe that pairs who articulate general principles achieve significantly higher performance than those who rely on specific rules. The mechanism underlying this correlation is that pairs with principle-based agreements are more likely to expect their pair to take actions that are consistent with what their relational contract prescribes. To investigate whether there is a causal link between principle-based agreements and performance, we implement a “Nudge” intervention to foster principle-based relational con-tracts. The Nudge succeeds in motivating more pairs to formulate principles and in making pairs significantly more likely to select efficient initial choices. However, the intervention fails to increase performance in the long run. Our results suggest that principle-based relational con-tracts may improve organizational performance, but our results also illustrate the difficulty of building such an organizational culture, which is consistent with the idea that high-performing relational contracts constitute a competitive advantage only if they are difficult to imitate.
    Keywords: organization economics, adaptation, relational contracts
    JEL: D02 D23 L14
    Date: 2019
  2. By: Theodoropoulos, Nikolaos (University of Cyprus); Forth, John (Cass Business School); Bryson, Alex (University College London)
    Abstract: Using matched employer-employee data from the 2004 and 2011 Workplace Employment Relations Surveys (WERS) for Britain we find a raw gender wage gap (GWG) in hourly wages of around 0.18-0.21 log points. The regression-adjusted gap is around half that. However, the GWG declines substantially with the increasing share of female managers in the workplace. The gap closes because women's wages rise with the share female managers in the workplace while men's wages fall. Panel and instrumental variables estimates suggest the share of female managers in the workplace has a causal impact in reducing the GWG. The role of female managers in closing the GWG is more pronounced when employees are paid for performance, consistent with the proposition that women are more likely to be paid equitably when managers have discretion in the way they reward performance and those managers are women. These findings suggest a stronger presence of women in managerial positions can help tackle the GWG.
    Keywords: gender wage gap, female managers, performance pay
    JEL: J16 J31 M52 M54
    Date: 2019–09
  3. By: Butschek, Sebastian (University of Cologne); González Amor, Roberto (Zalon by Zalando); Kampkötter, Patrick (University of Tübingen); Sliwka, Dirk (University of Cologne)
    Abstract: We study the performance effects of payment schemes for freelancers offering services on an online platform in an RCT. Under the initial scheme, the firm pays workers a pure sales commission. The intervention reduces the commission rate and adds a fixed payment per processed order to insure workers against earnings risk. Our experiment tests predictions from a formal model on labor supply and performance for individuals with different degrees of risk aversion and intrinsic motivation for the task. The treatment did not affect labor supply and even though the commission rate was reduced by 50% we find no sizeable loss in sales per order. However, there is strong evidence for heterogeneous treatment effects. The treatment reduced performance for less intrinsically motivated workers. For more intrinsically motivated workers, however, we observe the opposite pattern as performance increased even though commission rates were reduced.
    Keywords: incentives, risk aversion, intrinsic motivation, sales compensation, multitasking, field experiment, gig economy, on demand economy, platform economy
    JEL: D23 J33 M52
    Date: 2019–10
  4. By: Grund, Christian (RWTH Aachen University); Sliwka, Dirk (University of Cologne); Titz, Krystina (RWTH Aachen University)
    Abstract: Drawing on two large German representative data sets, we analyze the role of works councils for the use of performance appraisals (PA). We distinguish between the incidence of performance appraisal systems as intended by the firm and their actual implementation on the level of the individual employee. We find that works councils tend to promote rather than restrict PA. Employees working in establishments with a works council are more likely to face a formal performance appraisal procedure. Works councils also act as a transmission institution for the actual use of an existing PA system – i.e. among the firms that claim to implement performance appraisals for all their employees, the likelihood of their employees actually having regular appraisals is substantially larger when works councils are in place. Moreover, the existence of works councils is positively related particularly to PA systems, which affects bonus payments.
    Keywords: performance appraisals, voice, works councils, performance pay
    JEL: M54 M12 J53 J83
    Date: 2019–10
  5. By: Canidio, Andrea; Legros, Patrick
    Abstract: Each job can be performed in several ways, which we call tasks An agent's performance at a task is informative about his productivity at different tasks. But tasks are not contractible: choosing tasks is the prerogative of management within firms, and of the agent if he is an entrepreneur. Firms will invest in the discovery of their workers' productivity at different tasks only if they cannot easily move to other firms. Therefore, labor-market frictions determine whether learning an agent's talent occur within firms, or whether an agent may become an entrepreneur to acquire task discretion.
    Keywords: entrepreneurial failures; entrepreneurship; labor-market frictions; learning; organizational choice; Task discretion
    JEL: D83 J24 J62 J63 L26 M13
    Date: 2019–08
  6. By: Ayal Y. Chen-Zion; James E. Rauch
    Abstract: We model network formation in a firm. Agents learn about the quality of their working relationships with each other. Their good relationships become their networks. Accumulating relationships becomes increasingly costly, however. Over time agents become less open to forming relationships with others unknown to them, leading their networks to be front-loaded with agents they met near the beginning of their careers. The interaction of this dynamic with turnover yields predictions about the time pattern of history dependence in an agent’s network as a function of his tenure. Mutual openness of newly arrived agents in a firm also leads to the cross-section prediction of “cohort attachment,” a tendency for members of an agent’s hiring cohort to be disproportionately represented in his network. When members of a network formed within a firm are subsequently split across many firms, the desire to renew their successful working relationships can lead to job referrals. Former co-workers who provide referrals will be drawn disproportionately from the referred workers’ hiring cohorts at their previous employers.
    JEL: D85 J63 J64
    Date: 2019–10
  7. By: Bienz, Carsten; Thorburn, Karin S; Walz, Uwe
    Abstract: We examine the incentive effects of private equity (PE) professionals' ownership in the funds they manage. In a simple model, we show that managers select less risky firms and use more debt financing the higher their ownership. We test these predictions for a sample of PE funds in Norway, where the professionals' private wealth is public. Consistent with the model, firm risk decreases and leverage increases with the manager's ownership in the fund, but largely only when scaled with her wealth. Moreover, the higher the ownership, the smaller is each individual investment, increasing fund diversification. Our results suggest that wealth is of first order importance when designing incentive contracts requiring PE fund managers to coinvest.
    Keywords: buyouts; general partner; incentives; ownership; private equity; Risk Taking; Wealth
    JEL: D86 G12 G31 G32 G34
    Date: 2019–08
  8. By: Bell, David N.F. (University of Stirling); Hart, Robert A. (University of Stirling)
    Abstract: The share of overtime hours within total hours worked in Britain has declined from 4.8% to 2.9% between 1999 and 2018. This is equivalent to 321 thousand full-time jobs. We investigate this decline focussing on full-time and part-time males and females together with overtime pay effects that include the implications for the gender pay gap. We test for economic, structural and cyclical influences via a two-part regression model that allows us to differentiate between the incidence of overtime working and the average weekly hours of overtime workers. This investigation features collective bargaining coverage, job mobility, the minimum wage, industrial composition and the public/private sector dichotomy. The analysis covers the whole economy embracing nineteen 1-digit industries as well as a separate insight into the manufacturing industry where we feature vehicle manufacture.
    Keywords: overtime hours, overtime pay, two-part regression model
    JEL: J21 J22 J31 J52
    Date: 2019–09
  9. By: Christine L. Exley; Judd B. Kessler
    Abstract: In job applications, job interviews, performance reviews, and a wide range of other environ-ments, individuals are explicitly asked or implicitly invited to assess their own performance. In a series of experiments, we ?nd that women rate their performance less favorably than equally performing men. This gender gap in self-promotion is notably persistent. It stays just as strong when we eliminate gender di?erences in con?dence about performance and when we eliminate strategic incentives to engage in self-promotion. Because of the prevalence of self-promotion opportunities, this self-promotion gap may contribute to the persistent gender gap in education and labor market outcomes.
    Keywords: promotion, gender gap, performance incentives
    JEL: J16 J60 C92
    Date: 2019–10
  10. By: Bruenner, Tobias; Friebel, Guido; Holden, Richard; Prasad, Suraj
    Abstract: We study an agent's incentives to discover where her talents lie before putting them to productive use. In our setting, an agent can specialize and learn about the same type of talent repeatedly, or experiment and learn about different types of talent. When talents are normally and symmetrically distributed we find that experimentation is efficient, regardless of one's initial draw of talent. Competitive labor markets encourage experimentation whereas monopsonistic labor markets induce specialization. Relaxing our assumptions of normality and symmetry in the distribution of talents, and allowing for human capital acquisition, provides a role for specialization in discovering talents.
    Date: 2019–09
  11. By: Haylock, Michael; Kampkötter, Patrick
    Abstract: We provide new evidence of worker-firm matching based on preferences, attitudes and personality traits using new, representative matched employer-employee data from Germany. Time-constant firm characteristics explain a significant proportion of total variance in a series of outcome variables commonly applied in behavioral economics research. Hence, behavioral characteristics play an important, yet under researched, role in the labor market matching process.
    Keywords: Preferences,Attitudes,Personality,Sorting,Matching
    JEL: D90 D91 J01 M50
    Date: 2019
  12. By: Anja Deelen (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: This paper investigates how fi rms adjust wages and employment in periods of adverse economic circumstances, using extensive, administrative linked employer/employee panel data for the Netherlands. Changes in the contractual wage bills of fi rms are decomposed into wages and job flows, distinguishing stayers and workers entering and exiting the fi rm. This paper investigates how firms adjust wages and employment in periods of adverse economic circumstances, using extensive, administrative linked employer/employee panel data for the Netherlands. Changes in the contractual wage bills of firms are decomposed into wages and job flows, distinguishing stayers and workers entering and exiting the firm. Employment reduction is found to be the major channel for wage-bill contraction by firms, indicating downward wage rigidity. A negative relationship is established between fi rms' degree of downward wage rigidity and their employment growth, suggesting that job losses in response to adverse shocks would be signi cantly lower if wages were more downwardly flexible.
    JEL: J30 J31 J41 J62
    Date: 2019–08
  13. By: Argentieri, Alessandro; Canova, Luciano; Manera, Matteo
    Abstract: In this paper, football data from the 2007/2008 to 2016/2017 seasons of the Italian Serie A were used to identify the effects of replacing a coach mid-season due to poor team performance. We used an instrumental variable approach to correlate coach turnover within a season with player productivity and found a very low positive impact of the coach change in the short term but a significant negative impact in the long term. Our findings are also relevant to the literature on management replacement in small-size firms.
    Keywords: Research Methods/ Statistical Methods
    Date: 2019–10–17

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