nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2020‒10‒26
six papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Management Practices and Establishment Performance under Non-Union Workplace Representation By John T. Addison; Paulino Teixeira; Lutz Bellmann
  2. What Makes the Ideal Profile of a New Manager in Times of Adversity? Evidence from Italian Serie A By Kaori Naritaa; J .D. Tenaa; Claudio Detottoc
  3. The Expected (Signaling) Value of Higher Education By Laura Ehrmantraut; Pia Pinger; Renske Stans
  4. Organizational Hierarchies in the Slovenian Manufacturing Sector By Bonilla, Santiago; Polanec, Sašo
  5. Human Capital Depreciation By Michael Dinerstein; Rigissa Megalokonomou; Constantine Yannelis
  6. How People Know Their Risk Preference By Ruben C. Arslan; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner

  1. By: John T. Addison; Paulino Teixeira; Lutz Bellmann
    Abstract: This paper brings together two factors deemed important correlates of firm performance: advanced management practices and works councils. The country sample comprises nations where workplace representation is via a works council. The Management Questionnaire of the 2013 European Company Survey defines our full sample of mixed establishments (with and without councils) and its sister Employee Representative Questionnaire is used to derive a much smaller matched sample of works council plants. The outcome indicators are subjective measures of financial performance and the growth in labor productivity. For the full sample, we report that better management practices are strongly related to improved establishment performance, with no suggestion that works council presence influences that association one way or another. Works council presence is, however, negatively associated with financial performance and labor productivity growth. Distinguishing between councils based on managements’ views of their type suggests that this negative association is likely attributable to unconstructive and delaying councils. Irrespective of works council type, the association between management practices and the performance indicators remains positive. Analysis of the smaller sample again confirms the favorable link between management practices and establishment performance. Circumstances in which the employee representative has a favorable view of the general work climate or expresses trust in management coincide with an improved financial situation if not higher productivity growth. Mutual distrust is negatively associated with financial performance situation but unrelated to labor productivity growth.
    Keywords: management as a technology, work councils, works council type, financial performance, labor productivity growth, trust, mutual distrust, Germanic cluster
    JEL: D22 J53 M50
    Date: 2020
  2. By: Kaori Naritaa; J .D. Tenaa; Claudio Detottoc
    Abstract: Leadership succession entails changes in various managerial human capital. However, this issue has been rather overlooked in the literature. Whilst much of the previous studies focus on an overall impact of managerial turnover on organisational success, this paper contributes to the field by providing with some evidence that the changes in different characteristics of a manager, such as experience, skills, expertise, and relevance, asymmetrically affect post-succession performance. Using the data from the top-tier Italian football league for the seasons 2004/2005 - 2017/2018 inclusive, the effects of shifts in managerial human capital, in addition to Average Treatment Effect of replacing a head coach, are estimated by means of weighted regression with Inverse Propensity Score Weighting. In line with previous findings in the majority of literature, we find that head coach replacement does not significantly improve on-field performance, which implies that such a decision may be taken too often. However, significant improvement is found when a new manager is more experienced, has stronger association with the club, has been on sabbatical in the previous season, or is more defence oriented, relative to a dismissed head coach. Meanwhile, differences in neither playing career nor industry specific knowledge between outgoing and incoming managers affect effectiveness of replacement. The robustness of these results is tested for different performance measures and event windows.
    Keywords: OR in sports, Replacement, Human capital, Propensity score weighting, Football managers
    Date: 2020–10
  3. By: Laura Ehrmantraut; Pia Pinger; Renske Stans
    Abstract: This paper explores students’ expectations about the returns to completing higher education and provides first evidence on perceived signaling and human capital effects. We elicit counterfactual labor market expectations for the hypothetical scenarios of leaving university with or without a degree certificate among a large and diverse sample of students at different stages of higher education. Our findings indicate substantial perceived returns to higher education. Moreover, using within-individual fixed effects models, we document substantial expected labor market returns from signaling, whereas perceived productivity-enhancing (human capital) returns seem to be less pronounced. Over the expected course of career, we find lasting education premia as well as evidence consistent with employer learning.
    Keywords: higher education, returns to education, signaling, educational attainment, licensing, employer learning
    JEL: I21 I23 I26 J24 J31 J32 J44
    Date: 2020
  4. By: Bonilla, Santiago; Polanec, Sašo
    Abstract: We study organizational hierarchies in a transition country. Using employer-employee matched data for a set of Slovenian manufacturing firms, we find strong support for the key hypotheses of the knowledge-based hierarchies proposed by Garicano (2000) and Caliendo and Rossi-Hansberg (2012). According to these theories, firms should organize in consecutively ordered layers with less hours and higher wages in higher layers. Following Caliendo, Monte, and Rossi-Hansberg (2015b), who were the first to test the predictions of knowledge-based theories of organizational hierarchies, we are able to directly compare our results to those obtained for French manufacturing firms. We find that Slovenian firms exhibit lower consistency with consecutive ordering of organizational layers, have on average fewer organizational layers and change them less frequently. We attribute lower organizational depth to the higher wage premia to workers in higher organizational layers, which is an implication of under-investment in human capital during the socialist era.
    Keywords: Organizational hierarchies, human capital, wages
    JEL: D21 D24 J24 J31
    Date: 2020–09–13
  5. By: Michael Dinerstein; Rigissa Megalokonomou; Constantine Yannelis
    Abstract: Human capital can depreciate if skills are unused. But estimating human capital depreciation is challenging, as worker skills are difficult to measure and less productive workers are more likely to spend time in non-employment. We overcome these challenges with new administrative data on teachers assignments and their students outcomes, and quasi-random variation from the teacher assignment process in Greece. We find significant losses to output, as a one-year increase in time without formal employment lowers students test scores by 0.09 standard deviations. Using a simple production model, we estimate a skill depreciation rate of 4.3% and experience returns of 6.8%.
    Keywords: human capital, unemployment, teachers
    JEL: J01 J24 I29
    Date: 2020
  6. By: Ruben C. Arslan; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner
    Abstract: People differ in their willingness to take risks. Recent work found that revealed preference tasks (e.g., laboratory lotteries)—a dominant class of measures—are outperformed by survey-based stated preferences, which are more stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential “cheap talk,” be more valid and predictive than controlled, incentivized lotteries? In our multimethod study, over 3,000 respondents from population samples answered a single widely used and predictive risk-preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third-party readers of respondents’ brief memories and explanations reached similar inferences about respondents’ preferences, indicating the intersubjective validity of this information. Our results help unpack the self perception behind stated risk preferences that permits people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences, as revealed in high-stakes situations in the real world.
    Keywords: risk preferences, self-report, self-perception
    JEL: A12 C81 J10
    Date: 2020

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