nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2020‒01‒20
eleven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Perks of Being in the Smaller Team: Incentives in Overlapping Contests By Christoph March; Marco Sahm
  2. Alternative Work Arrangements By Alexandre Mas; Amanda Pallais
  3. The Negative Consequences of Loss-Framed Performance Incentives By Lamar Pierce; Alex Rees-Jones; Charlotte Blank
  4. Paying Gig Workers - Evidence from a Field Experiment By Sebastian Butschek; Roberto González Amor; Patrick Kampkötter; Dirk Sliwka
  5. Attribution Bias by Gender: Evidence from a Laboratory Experiment By Fenske, James; Castagnetti, Alessandro; Sharma, Karmini
  6. Free Riding and Workplace Democracy – Heterogeneous Task Preferences and Sorting By Kenju Kamei; Thomas Markussen
  7. When Improvements in Performance Don’t Translate into Improvements in Trust: A Chair’s Reflection on the Importance of Distinguishing between Transactional and Relational Performance in Building Trust, Reputation, and Advocacy from Stakeholders By Peter Molyneux; Kelly Sloan; Kevin Money
  9. Human-Capital Formation During Childhood and Adolescence: Evidence from School Quality and Postsecondary Success in California By Naven, Matthew
  10. Why Firms Offer Paid Parental Leave: An Exploratory Study By Claudia Goldin; Sari Pekkala Kerr; Claudia Olivetti
  11. Is Parental Leave Costly for Firms and Coworkers? By Anne A. Brenøe; Serena P. Canaan; Nikolaj A. Harmon; Heather N. Royer

  1. By: Christoph March; Marco Sahm
    Abstract: We investigate overlapping contests in multi-divisional organizations in which an individual’s effort simultaneously determines the outcome of several contests on different hierarchical levels. We show that individuals in smaller units are advantaged in the grand (organization-wide) contest for two reasons: First, the incentive to free-ride is smaller in inter-divisional contests. Second, competition in the intra-divisional contest is less fierce. Both effects induce a higher marginal utility of effort provision. We test the model in a laboratory experiment and confirm its main predictions. Our results have important consequences for the provision of incentives in organizations and the design of sports competitions.
    Keywords: contest, rent-seeking, hierarchy, teams, experiment
    JEL: C72 C92 D72
    Date: 2019
  2. By: Alexandre Mas; Amanda Pallais
    Abstract: Alternative work arrangements, defined both by working conditions and by workers’ relationship to their employers, are heterogeneous and common in the U.S. This article reviews the literature on workers’ preferences over these arrangements, inputs to firms’ decision to offer them, and the impact of regulation. It also highlights several descriptive facts. Work arrangements have been relatively stable over the past 20 years, work conditions vary substantially with education, and jobs with schedule or location flexibility are less family-friendly on average. This last fact helps explain why women are not more likely to have schedule or location flexibility and seem to largely reduce hours to get more family-friendly arrangements.
    JEL: H0 J0
    Date: 2020–01
  3. By: Lamar Pierce; Alex Rees-Jones; Charlotte Blank
    Abstract: Behavioral economists have proposed that loss-averse employees increase productivity when bonuses are "loss framed"—prepaid then clawed back if targets are unmet. We theoretically document that loss framing raises incentives for costly risk mitigation and for inefficient multitasking, potentially leading to large negative performance effects. We empirically document evidence of these concerns in a nationwide field experiment among 294 car dealers. Dealers randomized into loss-framed (but financially identical) contracts sold 5% fewer vehicles than control dealers, generating a revenue loss of $45 million over 4 months. We discuss implications regarding the use of behavioral economics to motivate both employees and firms.
    JEL: D03 D81 J22 J31
    Date: 2020–01
  4. By: Sebastian Butschek; Roberto González Amor; Patrick Kampkötter; Dirk Sliwka
    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
  5. By: Fenske, James (University of Warwick); Castagnetti, Alessandro (University of Warwick); Sharma, Karmini (University of Warwick)
    Abstract: In many settings, economic outcomes depend on the competence and effort of the agents involved, and also on luck. When principals assess agents’ performance they can suffer from attribution bias by gender: male agents may be assessed more favorably than female agents because males will be rewarded for good luck, while women are punished for bad luck. We conduct a laboratory experiment to test whether principals judge agents’ outcomes differently by gender. Agents perform tasks for the principals and the realized outcomes depend on both the agents’ performance and luck. Principals then assess agents’ performance and decide what to pay the agents. Our experimental results do not show evidence consistent with attribution bias by gender. While principals’ payments and beliefs about agent performance are heavily influenced by realized outcomes, they do not depend on the gender of the agent. We find suggestive evidence that the interaction between the gender of the principal and the agent plays a role. In particular, principals are more generous to agents of the opposite gender.
    Keywords: JEL Classification:
    Date: 2020
  6. By: Kenju Kamei (Business School, Durham University, United Kingdom); Thomas Markussen (Department of Economics, University of Copenhagen, Denmark)
    Abstract: A novel laboratory experiment is used to show that mismatching between task preferences and task assignment undermines worker productivity and leads to free riding in teams. We elicit task preferences from all workers. Workers’ endogenous sorting into tasks significantly improves productivity under individual-based remuneration (performance pay). Under team-based remuneration (revenue sharing), free riding is significant, but almost exclusively among those working on undesired tasks. Task selection by majority voting in teams alleviates free riding, but only partly so, because some workers are still assigned to undesired tasks. Our findings have broad implications for research using real effort tasks.
    Keywords: free riding, team, workplace democracy, experiment, real effort
    JEL: C92 C91 H41 D82 J01
    Date: 2020–01–08
  7. By: Peter Molyneux (Henley Business School, University of Reading); Kelly Sloan (Henley Business School, University of Reading); Kevin Money (Henley Business School, University of Reading)
    Abstract: This paper presents qualitative findings related to stakeholders’ trust in, and perceived reputation of, a health care provider. These findings are novel as they reveal that improvements in established measures of quality and performance may not result in increased reputation or trust from stakeholders. A deeper analysis reveals that performing well on transactional elements of service delivery has a limited effect in generating positive advocacy for the organisation; it is equally important to focus on the relational elements of public service delivery, as it is these that are most associated with trust and positive advocacy for the organisation concerned. Practical insights for building trust and reputation are then considered.
    Keywords: trust, reputation, corporate dashboards, corporate governance, board decision-making
    JEL: M0 M1 M4
    Date: 2019–10
  8. By: Yendra, Dona; Dewi, Aminar Sutra
    Abstract: The performance of the employee produces the quantity and quality that the employee gains on the actual behavior shown in accordance with the responsibilities given to him. This study aims to examine the effect of compensation on employee performance with job satisfaction as intervening variable. Problems that occurred at the Office of Regional Finance Agency of West Sumatra Province is the issue of leadership to employees who neglect in work, in the employee's work is not timely completion of tasks given by the leadership example in the manufacture of letters not on time and delay in work. Population in this research is civil servant at Regional Finance Board of West Sumatera Province. The sample in this study amounted to 30 respondents, the study was selected by using purposive sampling technique. The data were collected from respondents and analyzed by simple linear regression, t test, test of test, and path analysis test. The result of the research shows that compensation has an effect on employee performance positively and significantly. Compensation affects job satisfaction positively and significantly, job satisfaction on employee performance and job satisfaction have positive and significant effect directly to employee's compensation and performance. This means that high job satisfaction in accordance with compensation will bring high performance employees at the Regional Finance Agency of West Sumatra Province.
    Date: 2019–01–05
  9. By: Naven, Matthew
    Abstract: This paper investigates the role of school quality in human-capital formation. Specifically, I investigate how the timing of school quality differentially affects long-run outcomes. Using individual-level data on the universe of public-school students in California, I estimate elementary-, middle-, and high-school quality using a value-added methodology that accounts for the fact that students sort to schools on observable characteristics. I then determine the impact of school quality on future K-12 and postsecondary outcomes. I find that high-school quality has the largest impact on postsecondary enrollment, while elementary- and middle-school quality play a larger role in college readiness. In other words, early human-capital investments are important for future postsecondary success, but the unique timing of the college decision process allows for later human-capital investments to also play a significant role.
    Keywords: School Quality; Human Capital; Postsecondary Education; Value Added
    JEL: H75 I21 I23 J24
    Date: 2019–12–19
  10. By: Claudia Goldin; Sari Pekkala Kerr; Claudia Olivetti
    Abstract: Why do competitive firms in the US provide paid parental leave (PPL)? Which firms do and to what extent? We use several firm- and individual-level data sets to answer these questions. These include the BLS-Employee Benefit Survey (EBS) for 2010 to 2018 and an extensive firm-level data collection that we compiled. Our work is undergirded by a two-period model with competitive firms whose workers vary by their optimal firm-specific training and the probability that each will remain on the job after PPL is taken. We find that firm-provided PPL has greatly increased in the last two decades and generally covers new fathers. The levels of provision differ greatly by the industry, firm size, and the degree of firm-specific training. But even the top-of-the-line firm in the US provides fewer fully paid parental weeks than does the median OECD nation.
    JEL: J13 J2 J32
    Date: 2020–01
  11. By: Anne A. Brenøe; Serena P. Canaan; Nikolaj A. Harmon; Heather N. Royer
    Abstract: Most of the existing evidence on the effectiveness of family leave policies comes from studies focusing on their impacts on affected families - that is, mothers, fathers, and their children - without a clear understanding of the costs and effects on firms and coworkers. We use data from Denmark to evaluate the effect on firms and coworkers when a worker gives birth and goes on leave. Using a dynamic difference-in-differences design, we compare small firms in which a female employee is about to give birth to an observationally equivalent sample of small firms with female employees who are not close to giving birth. Identification rests on a parallel trends assumption, which we substantiate through a set of natural validity checks. When an employee gives birth she goes on leave from her firm for 9.5 months on average. Firms respond by increasing their labor inputs along several margins such that the net effect on total work hours is close to zero. Firms' total wage bill increases in response to leave take up, but this is driven entirely by wages paid to workers on leave for which firms receive reimbursement. There are no measurable effects on firm output, profitability or survival. Finally, coworkers of the woman going on leave see temporary increases in their hours, earnings, and likelihood of being employed but experience no significant changes in well-being at work as proxied by sick days. Overall, our results suggest that employees going on parental leave impose negligible costs on their firm and coworkers.
    JEL: H0 J13 J2
    Date: 2020–01

This nep-hrm issue is ©2020 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.