nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2020‒10‒19
six papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Worker Empowerment and Subjective Evaluation: On Building an Effective Conflict Culture By W. Bentley MacLeod; Victoria Valle Lara; Christian Zehnder
  2. Flight to Safety: How Economic Downturns Affect Talent Flows to Startups By Shai Bernstein; Richard R. Townsend; Ting Xu
  3. The Ties That Bind Us: Social Networks and Productivity in the Factory By Afridi, Farzana; Dhillon, Amrita; Sharma, Swati
  4. Mental health and the response to financial incentives: evidence from a survey incentives experiment By Kung, Claryn S. J.; Johnston, David W.; Shields, Michael A.
  5. Female Human Capital Mismatch: An extension for the British public sector By Galanakis, Yannis
  6. Human Capital Formation and Changes in Low Pay Persistence By Kabir Dasgupta; Alexander Plum

  1. By: W. Bentley MacLeod; Victoria Valle Lara; Christian Zehnder
    Abstract: Although conflicts typically lead to a waste of resources, organizations may still benefit from a corporate culture that tolerates or even encourages conflicts. The reason is that coordinated conflicts may help to enforce informal contracts and foster cooperation. In this paper we report results of a series of laboratory experiments designed to explore whether and under what conditions an efficiency-enhancing conflict culture can emerge. Using a principal-worker setup with subjective performance evaluation, we show that establishing a functional conflict culture is a delicate matter. If conflicts are encouraged in a careless, hands-off manner, the destructive side of conflicts is likely to dominate. To be successful a conflict culture requires a careful management of fairness norms. In our experiment we find that conflicts have positive net effects on efficiency only if an explicit code of conduct is established and conflicts are institutionalized through a grievance process. Thus, providing workers with more power may be a necessary but not sufficient condition for improving productivity when performance evaluations are subjective.
    JEL: D02 D03 J33 J41 M5 M52
    Date: 2020–09
  2. By: Shai Bernstein; Richard R. Townsend; Ting Xu
    Abstract: This paper investigates how economic downturns affect the flow of human capital to startups. Using proprietary data from AngelList Talent, we study how individuals’ online job searches and applications changed during the emergence of the COVID-19 crisis. We find that job seekers shifted their searches toward larger firms and away from early-stage ventures, even within the same individual over time. Simultaneously, job seekers broadened their other search parameters, considering lower salaries and a wider variety of job types, roles, markets, and locations. Relative to larger firms, early-stage ventures experienced a decline in the number of applications per job posting, a decline driven by higher quality and more experienced job seekers. This led to a deterioration in the quality of the human capital pool available to early-stage ventures during the downturn. These declines hold within a firm as well as within a job posting over time. Our findings uncover a flight to safety channel in the labor market, which may amplify the pro-cyclical nature of entrepreneurial activities.
    JEL: E32 J22 J24 L26 M13
    Date: 2020–10
  3. By: Afridi, Farzana (Indian Statistical Institute); Dhillon, Amrita (King's College London); Sharma, Swati (Indian Statistical Institute)
    Abstract: We use high frequency worker level productivity data from garment manufacturing units in India to study the effects of caste-based social networks on individual and group productivity when workers are complements in the production function but wages are paid at the individual level. Using exogenous variation in production line composition for almost 35,000 worker-days, we find that a 1 percentage point increase in the share of own caste workers in the line increases daily individual productivity by about 10 percentage points. The lowest performing worker increases her effort by more than 15 percentage points when the production line has a more homogeneous caste composition. Production externalities that impose financial costs due to worker's poor performance on co-workers within her social network can explain our findings. Our results suggest that even in the absence of explicit group-based financial incentives, social networks can be leveraged to improve both worker and group productivity.
    Keywords: caste, social networks, labor productivity, assembly lines, India
    JEL: Y40 Z13 J15 J24
    Date: 2020–09
  4. By: Kung, Claryn S. J.; Johnston, David W.; Shields, Michael A.
    Abstract: Although mental health disorders such as anxiety and depression are common, there is little research on whether individuals in poor mental health react differently from others to financial incentives. This paper exploits an experiment from the UK Understanding Society Innovation Panel to assess how the participation response to randomly-assigned financial incentives differs by mental health status. We find that individuals in good mental health are more likely to respond when offered a higher financial incentive, whereas those in poor mental health are indifferent to the increased incentive. We find no comparable differences for physical health.
    Keywords: mental health; financial incentives; survey incentives experiment
    JEL: C93 I10
    Date: 2018–11–01
  5. By: Galanakis, Yannis
    Abstract: This paper looks at the extent of labour market mismatch of public-sector female employees. It contributes to earlier findings for the British labour market by taking into account the endogenous self-selection into jobs. Estimates are based on data from the British Household Panel Study and the ’Understanding Society’ covering the years 1991-2016. The analysis verifies that the public sector offers a few lowskilled jobs and employs, mostly, high-educated (female) workers. Regarding the market flows, findings show the greater mobility of the female workforce, which moves proportionately between sectors. Greater in-/out-flows to/from private sector are observed regardless the gender of the employee. Once comparing women to the median employee, a sizeable incidence of mismatch arises due to negative selection. Specifications using the selection model for the public sector illustrate a systematically higher magnitude of mismatch. Pooled results seem to dominate when women seen in the male labour market or in a restricted subsample. Finally, the map of occupations in mismatch supports that the public sector is more attractive as a waiting room for highly-qualified graduates. They queue less time until they find a good job. Hence, policy implications regarding the allocation of jobs for women may arise.
    Keywords: Human Capital Mismatch,women,British public-sector
    JEL: I24 I26 J21 J24
    Date: 2020
  6. By: Kabir Dasgupta (NZ Work Research Institute, Faculty of Business, Economics and Law at AUT University); Alexander Plum (NZ Work Research Institute, Faculty of Business, Economics and Law at AUT University)
    Abstract: This study aims at understanding how persistence in low pay changes over time. In particular, we extend the existing literature on human capital formation by documenting heterogeneity in low pay persistence by age and human capital level. We utilise population-wide tax ecords to track monthly labour market trajectories of workers who are observed in low paid employment during the initial period of analysis. Performing age- and qualification-specific regressions, our empirical findings indicate that low pay persistence reduces with time. However, the magnitude is highly heterogeneous acorss the workforce. For a qualified worker in their early 20s, the risl of staying on low-pay declines by, on average, 5 to 10% points after one year - while for a worker in their 50s, independent of their qualification level, persistence remains almost unchanged. We find a strong association between decline in low-pay persistence and the firm's average wage level.
    Keywords: low pay, human capital formation, state dependence, random-effects probit, intital condition, unobserved heterogeneity
    JEL: J63 J61 J24
    Date: 2020–09

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