nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2020‒04‒06
seven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Smart-Working: Work Flexibility without Constraints By Marta Angelici; Paola Profeta
  2. Tournaments with Safeguards: A Blessing or a Curse for Women By Zhengyang Bao; Andreas Leibbrandt
  3. Executives' short-term and long-term incentives - a distributional analysis By Haylock, Michael
  4. Immigration and Worker-Firm Matching By Gianluca Orefice; Giovanni Peri
  5. The Innovation Premium to Soft Skills in Low-Skilled Occupations By Philippe Aghion; Antonin Bergeaud; Richard Blundell; Rachel Griffith
  6. Equal and Unequal Profit Sharing in Highly Interdependent Work Groups: A Laboratory Experiment By Andrej Angelovski; Jordi Brandts; Carles Solà
  7. Losing prosociality in the quest for talent? Sorting, selection, and productivity in the delivery of public services By Ashraf, Nava; Bandiera, Oriana; Lee, Scott

  1. By: Marta Angelici; Paola Profeta
    Abstract: Does removing the constraints of time and place of work increase the utility of workers and firms? We design a randomized experiment on a sample of workers in a large Italian company: workers are randomly divided into a treated group that engages in flexible space and time job (which we call “smart-working”) one day per week for 9 months and a control group that continues to work traditionally. By comparing the treated and control workers, we find causal evidence that the flexibility of smart-working increases the productivity of workers and improves their well-being and work-life balance. We also observe that the effects are stronger for women and that there are no significant spillover effects within workers of a team.
    Keywords: randomized control trial, productivity, work-life balance, well-being
    JEL: J16 J22 J24 L20 M54
    Date: 2020
  2. By: Zhengyang Bao; Andreas Leibbrandt
    Abstract: Workplace tournaments are one likely contributor to gender differences in labor market outcomes. Relative to men, women are often less eager to compete and thrive less under competitive pressure. We investigate a competitive workplace environment that may produce more gender-neutral outcomes: tournaments with safeguards. In our experiments, participants take part in a tournament with a real effort task and choose whether they want to have a complimentary safeguard that guarantees higher wages for the low-ranked. As expected, we find that women are more likely than men to obtain such a safeguard. However, obtaining a safeguard comes at a cost. On average, the safeguard causes lower performance, creates a gender wage gap, and over-proportionally disadvantages women. Thus, we provide novel evidence that easing women into tournaments can backfire.
    Keywords: workplace tournaments, gender differences, safeguard, experiment
    JEL: C92 J16 M52
    Date: 2020
  3. By: Haylock, Michael
    Abstract: Executives are often paid for short-term changes in shareholder wealth, but rational shareholders want executives to maximize long-term shareholder wealth. Incentives for short-term and long-term oriented behavior may depend on an executive's level of pay in the distribution, holding other factors constant. This paper tests for distributional heterogeneity of short-term and long-term incentives in a 12 year cross-country panel of executives. I use the band-pass filter to separate short-term and long-term shareholder wealth changes (Christiano and Fitzgerald, 2003), and estimate of the shareholder wealth-pay relation using method of moments-quantile regression, developed by Machado and Santos Silva (2019), which accounts for time-constant unobserved heterogeneity of executive-firm pairs across the distribution. When using yearly total compensation to measure pay, executives in the upper tail of the conditional compensation distribution have longer-term oriented incentives. In contrast, when accumulated executive wealth is used to measure pay, executives in the upper tail of the wealth distribution have shorter-term oriented incentives. Since executive wealth encompasses changes to executive utility after pay is granted through accumulated equity-linked pay, it is the preferred measure for evaluating equity-linked pay. Results thus suggest that equity-linked pay should have a longer vesting period for executives in the upper tail than in the lower tail. I find evidence that executives in the upper-tail are evaluated relatively to the industry's short-run and long-run performance.
    Keywords: Executive Compensation,Method of Moments-Quantile Regression,Short-Term Performance,Long-Term Performance,Distribution,Benchmarking
    JEL: J31 M12 M52
    Date: 2020
  4. By: Gianluca Orefice; Giovanni Peri
    Abstract: The process of matching between firms and workers is an important mechanism in determining the distribution of wages. In a labor market characterised by large dispersion of workers' productivity and worker-firm complementarity, high quality firms have strong incentives to screen for the quality of workers. This process will increase the positive quality association of firm-worker matches known as positive assortative matching (PAM). Immigration in a local labor market, by increasing the variance of workers abilities, may drive stronger PAM between firms and workers. Using French matched employer-employee (DADS) data over the period 1995-2005 we document that positive supply-driven changes of immigrant workers in a district increased the strength of PAM. We then show that this association is consistent with causality, is quantitatively significant, and is associated with higher average productivity and firm profits, but also with higher wage dispersion. We also show that the increased degree of positive assortative matching is mainly reached by high-productive firms "losing" lower quality workers and "attracting" higher quality workers.
    JEL: F22 J24 L25
    Date: 2020–03
  5. By: Philippe Aghion; Antonin Bergeaud; Richard Blundell; Rachel Griffith
    Abstract: Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm's innovativeness is reflected in the degree of complementarity between workers in low-skill and high-skilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.
    Keywords: : Innovation, Skill-biased Technological Change, Wage, Complementarity.
    JEL: O33 L23 J31
    Date: 2019
  6. By: Andrej Angelovski; Jordi Brandts; Carles Solà
    Abstract: We study the performance effects of two profit sharing schemes in a simplified representation of an organization with high task interdependence. The production process involves three stages such that output of earlier stages is the necessary input for subsequent stages. Work at earlier stages is easier than at later stages and the product is only final if it goes successfully through the highest stage. We compare the effects on the performance of the organization of a payment scheme in which profits are equally shared by all those involved in the production process with one where the participation in profits is strongly increasing in the production stage. The comparison is made for two ways of assigning individuals to the production stage: randomly or by merit. We also study the distinction between sharing schemes that are exogenously imposed and those that are chosen by the person at the top of the hierarchy. We find that overall the type of payment scheme has no effect on profits. We also find that profits increase over time and more so with the equal than with the unequal sharing scheme. The high interdependence in production that we study makes steep incentives ineffective and even counter-productive. These changes in profits over time can be explained by changes in production performance over time. We also find that merit-based assignment to positions in the hierarchy leads to significantly higher profits than random assignment.
    Keywords: profit sharing, experiments, Organizations
    JEL: C92 D23 D90
    Date: 2020–04
  7. By: Ashraf, Nava; Bandiera, Oriana; Lee, Scott
    Abstract: We embed a field experiment in a nationwide recruitment drive for a new healthcare position in Zambia to test whether career benefits attract talent at the expense of prosocial motivation. In line with common wisdom, offering career opportunities attracts less prosocial applicants. However, the trade-off only exists at low levels of talent; the marginal applicants in treatment are more talented and equally prosocial. These are hired, and perform better at every step of the causal chain: they provide more inputs, increase facility utilization, and improve health outcomes including a 25% decrease in child malnutrition.
    JEL: J24 O15 M54 D82
    Date: 2019–08–01

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