nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2020‒08‒10
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Reciprocity in Dynamic Employment Relationships By Matthias Fahn
  2. The Influence of Personality Traits on University Performance: Evidence from Italian Freshmen Students By Luca Corazzini; Silvia D’Arrigo; Emanuele Millemaci; Pietro Navarra
  3. Inputs, Incentives, and Self-selection At the Workplace By Amodio, Francesco; Martinez-Carrasco, Miguel
  4. The effect of appraisal interviews and target agreements on employee effort - New evidence using representative data By Kampkötter, Patrick; Maier, Patrick
  5. Nominal Wage Adjustments and the Composition of Pay: New Evidence from Payroll Data By Daniel Schäfer; Carl Singleton
  6. Do Women Shy Away from Public Speaking? A Field Experiment By Maria De Paola; Rosetta Lombardo; Valeria Pupo; Vincenzo Scoppa
  7. Contracting Under Unverifiable Monetary Costs By Nicolas Quérou; Antoine Soubeyran; Raphael Soubeyran
  8. Understanding pay gaps By Amadxarif, Zahid; Angeli, Marilena; Haldane, Andrew G; Zemaityte, Gabija

  1. By: Matthias Fahn
    Abstract: This paper analyzes a dynamic relational contract for employees with reciprocal preferences. I develop a tractable model to investigate how “direct” performance-pay (promising a bonus in exchange for effort) and generous upfront wages (which activate the norm of reciprocity) interact over the course of an employee’s career. I show that firms can benefit from committing to paying non-discretionary wages in the future as this boosts their credibibility in the relational contract. The reason is that these wages have to be paid under any circumstances, whereas employees only reciprocate if the firm has kept its promises. Moreover, I demonstrate that more intense competition for workers can intensify the use of reciprocity-based incentives.
    Keywords: reciprocity, relational contracts, commitment, norms and social preferences
    JEL: C73 D21 D86 D90 D91
    Date: 2020–06
  2. By: Luca Corazzini (Department of Economics, University Of Venice Cà Foscari); Silvia D’Arrigo (Department of Economics and Business, University of Sassari); Emanuele Millemaci (Department of Economics, University of Messina); Pietro Navarra (Department of Economics, University of Messina)
    Abstract: Despite several attempts to provide a definite pattern regarding the effects of personality traits on performance in higher education, the debate over the nature of the relationship is far from being conclusive. The use of different subject pools and sample sizes, as well as the use of identification strategies that either do not adequately account for selection bias or are unable to establish causality between measures of academic performance and noncognitive skills, are possible sources of heterogeneity. This paper investigates the impact of the Big Five traits, as measured before the beginning of the academic year, on the grade point average achieved in the first year after the enrolment, taking advantage of a unique and large dataset from a cohort of Italian students in all undergraduate programs containing detailed information on student and parental characteristics. Relying on a robust strategy to credibly satisfy the conditional independence assumption, we find that higher levels of conscientiousness and openness to experience positively affect student score.
    Keywords: Noncognitive skills; Personality traits; Educational attainment; Economic Psychology
    JEL: I21 J24 D90
    Date: 2020
  3. By: Amodio, Francesco; Martinez-Carrasco, Miguel
    Abstract: This paper studies how asymmetric information over inputs affects workers' response to incentives and self-selection at the workplace. Using daily records from a Peruvian egg production plant, we exploit a sudden change in the worker salary structure and find that workers' effort, firm profits, and worker participation change differentially along the two margins of input quality and worker type. Firm profits increase differentially from high productivity workers, but absenteeism and quits of these workers also differentially increase. Evidence shows that information asymmetries over inputs between workers and managers shape the response to incentives and self-selection at the workplace.
    Keywords: asymmetric information; incentives; input heterogeneity; Self-selection
    JEL: D22 D24 J24 J33 M11 M52 M54 O12
    Date: 2019–12
  4. By: Kampkötter, Patrick; Maier, Patrick
    Abstract: Performance measurement and evaluation systems are among the most common management instruments. An integral element of this process is the use of targets, typically set in appraisal interviews and formalized via written target agreements. In this paper, we investigate the relationship between performance management and evaluation systems and individual effort, proxied by the commonly used concept of work engagement. Using four waves of a new representative, linked employer-employee data set, the Linked Personnel Panel (LPP), we apply fixed effects estimations to account for unobserved heterogeneity. Our results show positive and statistically significant relationships between the presence of a performance management and evaluation process and employee engagement on the individual level. We are further able to differentiate between appraisal interviews and written target agreements which allows us to show a positive effect of appraisal interviews and an additional positive effect of target agreements. In addition, we find first evidence that these direct relationships are partially mediated by goal clarity and procedural fairness.
    Keywords: Target Agreements,Performance Appraisals,Work Engagement,Goal Clarity,Procedural Fairness
    JEL: D23 J01 J33 M41 M52
    Date: 2020
  5. By: Daniel Schäfer (Economics Department at Johannes Kepler University); Carl Singleton
    Abstract: TWe use representative payroll data from Great Britain to document novel facts about nominal wage adjustments, focusing on workers who stayed in the same firm and job from one year to the next. The richness of these data allows us to analyse basic pay and the other components of earnings, such as overtime and incentive pay, while accounting for hours worked. Weekly and hourly basic pay show signs of downward nominal rigidity, but non-basic pay components adjust more commonly. Unusually, these payroll-based data also report the wage rates of hourly-paid employees. A quarter of these workers typically see no change in their wage rates from one year to the next in the same job, and very few experience wage cuts. We exploit the employer-employee link in the data and find evidence of state-dependent pay setting, depending on the business cycle and whether firms are shrinking or expanding. Finally, we show that the basic and non-basic wages of new hires and existing employees are similarly flexible.
    Keywords: downward nominal wage rigidity, components of pay, hourly pay rates, hiring wages, allocative wages
    JEL: E24 E32 J31 J33
    Date: 2020–06
  6. By: Maria De Paola; Rosetta Lombardo; Valeria Pupo; Vincenzo Scoppa
    Abstract: Public speaking is an important skill for career prospects and for leadership positions, but many people tend to avoid it because it generates anxiety. We run a field experiment to analyze whether in an incentivized setting men and women show differences in their willingness to speak in public. The experiment involved more than 500 undergraduate students who could gain two points to add to the final grade of their exam by presenting solutions to a problem set. Students were randomly assigned to present only to the instructor or in front of a large audience (a class of 100 or more). We find that while women are more willing to present face-to-face, they are considerably less likely to give a public presentation. Female aversion to public speaking does not depend on differences in ability, risk aversion, self-confidence and self-esteem. The aversion to public speaking greatly reduces for daughters of working women. From data obtained through an on-line Survey we also show that neither increasing the gains deriving from public speaking nor allowing participants more time to prepare enable to close the gender gap.
    Date: 2020
  7. By: Nicolas Quérou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Antoine Soubeyran (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Raphael Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: We consider a contracting relationship where the agent's effort induces monetary costs, and limits on the agent's resource restrict his capability to exert effort. We show that, the principal finds it best to offer a sharing contract while providing the agent with an up-front financial transfer only when the monetary cost is neither too low nor too high. Thus, unlike in the limited liability literature, the principal might find it optimal to fund the agent. Moreover, both incentives and the amount of funding are non-monotonic functions of the monetary cost. These results suggest that an increase in the interest rate may affect the form of contracts differently , depending on the initial level of the former. Using the analysis, we provide and discuss several predictions and policy implications.
    Keywords: moral hazard,funding,wealth constraint,contract theory
    Date: 2020
  8. By: Amadxarif, Zahid (Bank of England); Angeli, Marilena (Bank of England); Haldane, Andrew G (Bank of England); Zemaityte, Gabija (Bank of England)
    Abstract: In this paper, we use micro-data from the UK Labour Force Survey to estimate unconditional and conditional pay gaps for gender and ethnicity groups since the mid-90s. Both types of gender pay gap have decreased over the sample, but remain in double digits. For ethnicity, the unconditional pay gap has been materially lower, compared to the gender pay gap, while the conditional pay gap is of similar magnitude to the gender one. These trends are apparent not only at the mean but also at the lower and upper ends of the distributions. Interaction effects between gender and ethnicity reveal that female ethnic minority workers experience a larger pay gap than both ethnic minority male, and white female workers. Half of the gender pay gap can be accounted for by compositional effects, such as the individual’s age, education, and the nature of their job, such as occupation and sector, while half remains unaccounted for. We find that the minimum wage leads to a decrease in the gender pay gap. Compositional effects for ethnicity suggest that ethnic minorities should be earning more than their white counterparts, with the unaccounted for factors driving the positive ethnicity pay gap. We find that compositional effects are heterogeneous across gender and ethnic minority groups. We assert that there is a strong case to extend compulsory pay gap reporting to ethnicity. There is also a case to extend compulsory reporting from firms with more than 250 employees to those with around 30 or more, to increase the coverage of the UK employed population.
    Keywords: Gender; ethnicity; pay gap; inequality; minimum wage
    JEL: J15 J16 J31 J38
    Date: 2020–07–03

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