nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2020‒07‒13
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Worker reciprocity and the returns to training: evidence from a field experiment By Sauermann, Jan
  2. Overburdened judges By Ludivine Roussey; Raphaël Soubeyran
  3. Affirmative Action, Shifting Competition, and Human Capital Accumulation: A Comparative Static Analysis of Investment Contests By Christopher Cotton; Brent R. Hickman; Joseph P. Price
  4. Politics and Gender in the Executive Suite By Cohen, Alma; Hazan, Moshe; Weiss, David
  5. Optimal Incentives to Give By Castillo, Marco; Petrie, Ragan
  6. Intermediated Asymmetric Information, Compensation, and Career Prospects By Kaniel, Ron; Orlov, Dmitry
  7. Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data By Drenik, Andres; Jäger, Simon; Plotkin, Pascuel; Schoefer, Benjamin
  8. Encouraging Others: Punishment and Performance in the Royal Navy By Voth, Hans-Joachim; Xu, Guo
  9. Performance Feedback and Peer Effects By Marie Claire Villeval
  10. Workplace presenteeism, job substitutability and gender inequality By Azmat, Ghazala; Hensvik, Lena; Rosenqvist, Olof

  1. By: Sauermann, Jan (Swedish Institute for Social Research, Stockholm University)
    Abstract: Do reciprocal workers have higher returns to employer-sponsored training? Using a field experiment with random assignment to training combined with survey information on workers’ reciprocal inclinations, the results show that reciprocal workers reciprocate employers’ training investments by higher post-training performance. This result, which is robust to controlling for observed personality traits and worker fixed effects, suggests that individuals reciprocate the firm’s human capital investment with higher effort, in line with theoretical models on gift exchange in the workplace. This finding provides an alternative rationale to explain firm training investments even with risk of poaching.
    Keywords: on-the-job training; reciprocity; worker performance; field experiment
    JEL: D03 J24 M53
    Date: 2020–06–23
  2. By: Ludivine Roussey (UPD5 - Université Paris Descartes - Paris 5); Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: We develop a double-sided moral hazard model in which the production of justice depends on two tasks (jurisdictional and administrative). The jurisdictional task can be provided only by a judge (the agent) while the administrative task can be provided either by the government (the principal) and/or by the judge. However, the judge performs the administrative task at a higher unit cost. First, we show that the rst-best situation is such that the judge exerts no effort to provide the administrative task. Second, we show that two forms of (second-best) optimal contract can emerge when neither the government's effort nor the judge's effort is contractible: either the incentives are shared between the government and the judge and the judge exerts no effort to provide the administrative task, or the judge faces high-powered incentives which induce her to exert effort to provide both tasks. Our model proposes a rationale for judges work overload observed in many countries.
    Keywords: double-sided moral hazard,task misallocation,judicial organization,production of judicial services
    Date: 2020–06–05
  3. By: Christopher Cotton (Queen's University); Brent R. Hickman (Olin Business School, University of Washington); Joseph P. Price (Brigham Young University)
    Abstract: We develop a model in which many heterogeneous agents invest in human capital as they compete for better college admission slots or employment opportunities. The model provides theoretical predictions about how affirmative action or preferential treatment policies change the distribution of effort, human capital accumulation, and job/college slot allocations across different population groups. Our findings deliver two key insights. First, incentives to invest in human capital depends substantially on the strength of one's competition. Second, we find evidence of a counter-intuitive role for preferential treatment in promoting overall human capital development.
    Keywords: large contest, all-pay contest, all-pay auction, affirmative action, college admissions, field experiment, human capital
    JEL: J15 J24 C93 D82 D44
    Date: 2020–06
  4. By: Cohen, Alma; Hazan, Moshe; Weiss, David
    Abstract: We investigate whether CEOs' political preferences are associated with the prevalence and compensation of women among non-CEO top executives at U.S. public companies. We find that "Democratic" CEOs are associated with more women in the executive suite. To explore causality, we use an event study approach to show that replacing a Republican with a Democratic CEO increases female representation. Additionally, we discuss how the lack of an association between CEO political preferences and gender diversity in the boardroom influences our interpretation of these results. Finally, gender gaps in the level and performance-sensitivity of compensation diminish, or disappear, under Democratic CEOs.
    Keywords: CEO Politics; Executive Suite; Gender diversity
    JEL: G30 J16 J30 J33 J71 K00 M12 M14 M51 M52
    Date: 2020–03
  5. By: Castillo, Marco (Texas A&M University); Petrie, Ragan (Texas A&M University)
    Abstract: We examine optimal incentives for charitable giving with a large-scale field experiment involving 26 charities and over 112,000 unique individuals. The price of giving is varied by offering a fixed match if the donation meets a threshold amount (e.g. "give at least $25 and the charity receives a $25 match"). Responses are used to structurally estimate a model of charitable giving. The model estimates are employed to evaluate the effectiveness of various counterfactual match incentive schemes, taking into account the goals of the charity and donor preferences. Two of these optimal incentives were subsequently implemented in a follow-up field study. They were found to be effective at implementing the desired goals, as predicted by theory and our simulations. Our findings highlight the pitfalls of relying on a particular parameterization of a policy to evaluate effectiveness. The best-guess incentives in our initial field experiment turned out to be ineffective at increasing donations because optimal incentives should have been set higher.
    Keywords: charitable giving, mechanism design, field experiment
    JEL: D64 H41 C93 D91
    Date: 2020–06
  6. By: Kaniel, Ron; Orlov, Dmitry
    Abstract: Adverse selection harms workers, but benefits firms able to identify talent. An informed intermediary expropriates its agents' ability by threatening to fire and expose them to undervaluation of their skill. An agent's track record gradually reduces the intermediary's information advantage. We show that in response, the intermediary starts churning well-performing agents she knows to be less skilled. Despite leading to an accelerated reduction in information advantage, such selectivity boosts profits as retained agents accept below-reservation wages to build a reputation faster. Agents prefer starting their careers working for an intermediary, as benefits from building reputation faster more than offsets expropriation costs. We derive implications of this mechanism for pay-for- performance sensitivity, bonuses, and turnover. Our analysis applies to professions where talent is essential, and performance is publicly observable, such as asset management, legal partnerships, and accounting firms.
    Keywords: career concerns; Compensation; Dynamic adverse selection; Dynamic signaling; real options
    Date: 2020–04
  7. By: Drenik, Andres; Jäger, Simon; Plotkin, Pascuel; Schoefer, Benjamin
    Abstract: We estimate how much firms differentiate pay premia between regular and outsourced workers. We study temp agency work arrangements where pay setting has previously escaped measurement because existing datasets do not report links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We overcome this measurement challenge by leveraging unique administrative data from Argentina with such links. We estimate that temp agency workers receive 49% of the workplace-specific pay premia earned by regular workers in user firms: the midpoint between the benchmark for insiders (one) and the competitive spot-labor market benchmark (zero).
    Date: 2020–03
  8. By: Voth, Hans-Joachim; Xu, Guo
    Abstract: Can severe penalties "encourage the others"? Using the famous case of the British Admiral John Byng, executed for his failure to recapture French-held Menorca in 1757, we examine the incentive effects of judicial punishments. Men related to Byng performed markedly better after his unexpected death. We generalize this result using information from 963 court martials. Battle performance of captains related to a courtmartialed and convicted officer improved sharply thereafter. The loss of influential connections was key for incentive effects â?? officers with other important connections improved little after Byng's execution or other severe sentences.
    Keywords: Labor incentives; Principal agent problems; punishment
    JEL: D91 J20 N33
    Date: 2020–03
  9. By: Marie Claire Villeval (Univ Lyon, Centre National de la Recherche Scientifique (CNRS), GATE UMR 5824, 93 Chemin des Mouilles, F-69130, Ecully, France. IZA, Bonn, Germany)
    Abstract: This paper reviews studies conducted in naturally-occurring work environments or in the laboratory on the impact of performance feedback provision and peer effects on individuals’ performance. First, it discusses to which extent feedback on absolute performance affects individuals’ effort for cognitive or motivational reasons, and how evaluations can be distorted strategically. Second, this paper highlights the positive and negative effects of feedback on relative performance and rank on individuals’ productivity and persistence, but also on the occurrence of anti-social behavior. Relative feedback stimulates effort by informing on the marginal return or the marginal cost of effort, and by activating behavioral forces even in the absence of monetary incentives. These behavioral mechanisms relate to self-esteem, status concerns, competitive preferences and social learning. Relative feedback sometimes discourages or distorts effort, notably if people collude or are disappointment averse. In addition to incentive schemes and social preferences, the management of self-confidence affects the way relative feedback impacts productivity. Third, the paper addresses the question of the identification of peer effects on employees’ performance, their size, their direction and their heterogeneity along the hierarchy. The mechanisms behind peer effects include conformism, social pressure, rivalry, social learning and distributional preferences, depending on the presence of payoff externalities or technological and organizational externalities.
    Keywords: Feedback, performance, peer effects
    JEL: C9 D91 J3 M5
    Date: 2020
  10. By: Azmat, Ghazala (Sciences Po); Hensvik, Lena (Uppsala University, Department of Economics); Rosenqvist, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: Following the arrival of the first child, women’s absence rates soar and become less predictable due to the greater frequency of their own sickness and the need to care for sick children. In this paper, we argue that this fall in presenteeism in the workplace hurts women’s wages, not only indirectly and gradually, through a slower accumulation of human capital, but also immediately, through a direct negative effect on productivity in unique jobs (i.e., jobs with low substitutability). Although both presenteeism and uniqueness are highly rewarded, we document that women’s likelihood of holding jobs with low substitutability decreases substantially relative to men’s after the arrival of the first child. This gap persists over time, with important long-run wage implications. We highlight that the parenthood wage penalty for women could be reduced by organizing work in such a way that more employees have tasks that, at least in the short run, can be performed satisfactorily by other employees in the workplace.
    Keywords: first child; presenteeism; couples; job substitutability; gender wage gap
    JEL: J16 J22
    Date: 2020–06–23

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