nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2021‒05‒10
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Voice at Work By Harju, Jarkko; Jäger, Simon; Schoefer, Benjamin
  2. Leadership Styles and Labor-Market Conditions By Dur, Robert; Kvaløy, Ola; Schöttner, Anja
  3. World Management Survey at 18: lessons and the way forward By Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Scur, Daniela; Van Reenen, John
  4. Informed Choices: Gender Gaps in Career Advice By Gallen, Yana; Wasserman, Melanie
  5. Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector By Deserranno, Erika; León-Ciliotta, Gianmarco
  6. Macroeconomic Conditions When Young Shape Job Preferences for Life By Cassar, Lea; Cotofan, Maria; Dur, Robert; Meier, Stephan
  7. Efficiency Wages with Motivated Agents By Armouti-Hansen, Jesper; Cassar, Lea; Dereky, Anna
  8. Can role models influence female's decision to participate in the labor market? Evidence from a field experiment By Martini, Christina; Urueña, Viviana
  9. How Should Performance Signals Affect Contracts? By Chaigneau, Pierre; Edmans, Alex; Gottlieb, Daniel
  10. Employment Contracts and Stress: Experimental Evidence By Allan, Julia L.; Andelic, Nicole; Bender, Keith A.; Powell, Daniel; Stoffel, Sandro; Theodossiou, Ioannis

  1. By: Harju, Jarkko; Jäger, Simon; Schoefer, Benjamin
    Abstract: How does boosting worker voice affect worker separations, job quality, wages, and firm performance? We study the 1991 introduction of a right to worker voice in Finland. The law granted workers in firms with at least 150 employees the right to elect representatives to company boards. The size-dependent introduction permits a difference-in-differences design. In contrast to exit-voice theory, we find no effects on voluntary job separations as a revealed-preference measure of job quality. We can also rule out small increases in the labor share or rent sharing, with some evidence for small pay premia increases, in particular at the bottom of the wage distribution. We detect a small reduction in involuntary separations, zero effects on worker health, and a moderate increase in survey-based subjective job quality. Regarding firm performance, we find, if anything, small positive effects on survival, productivity, and capital intensity. An additional 2008 introduction of shop-floor representation in smaller firms had similar, limited effects. Interviews and surveys indicate that worker representation facilitates information sharing and cooperation rather than shifting power or rents to labor.
    Date: 2021–03
  2. By: Dur, Robert; Kvaløy, Ola; Schöttner, Anja
    Abstract: Why do some leaders use praise as a means to motivate workers, while other leaders use social punishment? This paper develops a simple economic model to examine how leadership styles depend on the prevailing labor-market conditions for workers. We show that the existence of a binding wage floor for workers (e.g., due to trade union wage bargaining, minimum-wage legislation, or limited-liability protection) can make it attractive for firms to hire a leader who makes use of social punishment. While the use of social punishments generally is socially inefficient, it lessens the need for high bonus pay, which allows the firm to extract rents from the worker. In contrast, firms hire leaders who provide praise to workers only if it is socially efficient to do so. Credible use of leadership styles requires either repeated interaction or a leader with the right social preferences. In a single-period setting, only moderately altruistic leaders use praise as a motivation tool, whereas only moderately spiteful leaders use social punishment. Lastly, we show that when the leaders' and workers' reservation utilities give rise to a bigger income gap between leaders and workers, attracting spiteful leaders becomes relatively less costly and unfriendly leadership becomes more prevalent.
    Keywords: incentives; labor-market conditions; leadership styles; motivation; social preferences; Wage-setting
    JEL: M5
    Date: 2021–02
  3. By: Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Scur, Daniela; Van Reenen, John
    Abstract: Understanding how differences in management "best practices" affect organizational outcomes has been a focus of both theoretical and empirical work in the fields of management, sociology, economics and public policy. The World Management Survey (WMS) project was born almost two decades ago with the main goal of developing a new systematic measure of management practices being used in organisations. The WMS has contributed to a body of knowledge around how managerial structures, not just managerial talent, relates to organizational performance. Over 18 years of research, a set of consistent patterns have emerged and spurred new questions. We will present a brief overview of what we have learned in terms of measuring and understanding management practices and condense the implications of these findings for policy. We end with an outline of what we see as the path forward for both research and policy implications of this research programme.
    Keywords: Management Practices; policy toolkit; productivity; world management survey
    JEL: L2 M2 O14 O32 O33
    Date: 2021–03
  4. By: Gallen, Yana; Wasserman, Melanie
    Abstract: This paper estimates gender differences in access to informal information regarding the labor market. We conduct a large-scale field experiment in which real college students seek information from 10,000 working professionals about various career paths, and we randomize whether a professional receives a message from a male or a female student. We focus the experimental design and analysis on two career attributes that prior research has shown to differentially affect the labor market choices of women: the extent to which a career accommodates work/life balance and has a competitive culture. When students ask broadly for information about a career, we find that female students receive substantially more information on work/life balance relative to male students. This gender difference persists when students disclose that they are concerned about work/life balance. In contrast, professionals mention workplace culture to male and female students at similar rates. After the study, female students are more dissuaded from their preferred career path than male students, and this difference is in part explained by professionals' greater emphasis on work/life balance when responding to female students. Finally, we elicit students' preferences for professionals and find that gender differences in information provision would remain if students contacted their most preferred professionals.
    Keywords: career information; correspondence study; discrimination; Gender
    JEL: C93 J16 J24 J71
    Date: 2021–01
  5. By: Deserranno, Erika; León-Ciliotta, Gianmarco
    Abstract: We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. The experiment creates exogenous variation in meritocracy by linking promotions to performance and variation in perceived pay progression among the lowest tier of health workers. We find that meritocratic promotions lead to higher productivity, and more so when workers expect a steep pay increase. However, when promotions are not meritocratic, increasing the pay gradient reduces productivity through negative morale effects. The findings highlight the importance of taking into account the interactions between different tools of personnel policy.
    Keywords: Meritocracy; Pay Progression; promotions; Worker productivity
    JEL: D73 J31 M51 M52
    Date: 2021–02
  6. By: Cassar, Lea; Cotofan, Maria; Dur, Robert; Meier, Stephan
    Abstract: Preferences for monetary and non-monetary job attributes are important for understanding workers' motivation and the organization of work. Little is known, however, about how those job preferences are formed. We study how macroeconomic conditions when young shape workers' job preferences for the rest of their life. Using variation in income-per-capita across US regions and over time since the 1920s, we find that job preferences vary in systematic ways with experienced macroeconomic conditions during young adulthood. Recessions create cohorts of workers who give higher priority to income, whereas booms make cohorts care more about job meaning, for the rest of their life.
    Keywords: experience; generational difference; macroeconomic condition; preferences for job attributes
    JEL: D9 E7 J2 M5
    Date: 2021–01
  7. By: Armouti-Hansen, Jesper; Cassar, Lea; Dereky, Anna
    Abstract: Many organizations nowadays combine profits with a social mission. This paper reveals a new hidden benefit of the mission: its role in facilitating the emergence of efficiency wages. We show that in a standard gift exchange principals highly underestimate agents' reciprocity and thereby offer wages that are much lower than the profit-maximizing level. This bias has a high social cost: if principals had correct beliefs and thus offered the profit-maximizing wage, efficiency would increase by 86 percent. However, the presence of a social mission (in the form of a positive externality generated by the agent's effort), by increasing principals' trust, acts as a debiasing mechanism. Thereby efficiency is increased by 50 percent. These results contribute to our understanding of behavior in mission-oriented organizations and to the debate about the relevance of reciprocity in the workplace and open new questions about belief formation in prosocial contexts.
    Keywords: Biased Beliefs; efficiency wages; Gift exchange; mission motivation
    JEL: D23 M52
    Date: 2021–01
  8. By: Martini, Christina; Urueña, Viviana
    Abstract: In this paper we experimentally test the effect of an intervention aimed at encouraging females to enter the labor market in Madagascar. We randomly assigned students in their last year of secondary education to watch a role model or a placebo video. In the role model videos, a female or a male narrate how they succeeded in achieving a goal they set for themselves. After video exposure, we gave female and male students the opportunity to apply for one of two types of jobs in our research team - assistant or coordinator. We find that the female role model encourages both females and males to apply for the advertised positions, compared to the placebo video. This positive treatment effect can partly be explained by participants' aspirations and current level of achievements. Moreover, we find that female students apply more often to the coordinator position compared to the control in the male role model treatment. Our results suggest that not only individuals from the in-group (females), but also males can serve as role models for females and foster behavioral changes.
    Keywords: Aspirations,Role models,Performance,Competition,Gender
    JEL: J16 C9 I25 N37
    Date: 2021
  9. By: Chaigneau, Pierre; Edmans, Alex; Gottlieb, Daniel
    Abstract: The informativeness principle demonstrates that a contract should depend on informative signals. This paper studies how it should do so. Signals that indicate the output distribution has shifted to the left (e.g. weak industry performance) reduce the threshold for the manager to be paid; those that indicate output is a precise measure of effort (e.g. low volatility) decrease high thresholds and increase low thresholds. Surprisingly, "good" signals of performance need not reduce the threshold. Applying our model to performance-based vesting, we show that performance measures should affect the strike price rather than the number of vesting options, contrary to practice.
    Keywords: Informativeness principle; limited liability; option repricing; Pay-for-luck; performance-based vesting; performance-sensitive debt
    JEL: D86 G32 G34 J33
    Date: 2021–02
  10. By: Allan, Julia L.; Andelic, Nicole; Bender, Keith A.; Powell, Daniel; Stoffel, Sandro; Theodossiou, Ioannis
    Abstract: A growing literature has found a link between performance-related pay (PRP) and poor health, but the causal direction of the relationship is not known. To address this gap, the current paper utilises a crossover experimental design to randomly allocate subjects into a work task paid either by performance or a fixed payment. Stress is measured through self-reporting and salivary cortisol. The study finds that PRP subjects had significantly higher cortisol levels and self-rated stress than those receiving fixed pay, ceteris paribus. By circumventing issues of self-report and self-selection, these results provide novel evidence for the detrimental effect PRP may have on health.
    Keywords: performance-related pay,stress,experiment,cortisol
    JEL: J33 I0 C91
    Date: 2021

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