nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2021‒06‒14
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The economics of deferral and clawback requirements By Hoffmann, Florian; Inderst, Roman; Opp, Marcus M.
  2. Informed Choices: Gender Gaps in Career Advice By Yana Gallen; Melanie Wasserman
  3. Drivers of Working Hours and Household Income Dynamics during the COVID-19 Pandemic: The Case of the Netherlands By Christian Zimpelmann; Hans-Martin von Gaudecker; Radost Holler; Lena Janys; Bettina Siflinger
  4. Informing employees in small and medium sized firms about training: results of a randomized field experiment By Berg, Gerard van den; Dauth, Christine; Homrighausen, Pia; Stephan, Gesine
  5. Are Overconfident Players More Likely to Win Tournaments and Contests? By Luis Santos Pinto
  6. Employers' Willingness to Invest in the Training of Temporary Workers: A Discrete Choice Experiment By Poulissen, Davey; de Grip, Andries; Fouarge, Didier; Künn-Nelen, Annemarie
  7. Escaping from Low-Wage Employment: The Role of Co-worker Networks By Anna Baranowska-Rataj; Zoltán Elekes; Rikard Eriksson
  8. Relative Performance Evaluation, Sabotage and Collusion By Bloomfield, Matthew J.; Marvao, Catarina; Spagnolo, Giancarlo

  1. By: Hoffmann, Florian; Inderst, Roman; Opp, Marcus M.
    Abstract: We analyze the effects of regulatory interference in compensation contracts, focusing on recent mandatory deferral and clawback requirements restricting (incentive) compensation of material risk-takers in the financial sector. Moderate deferral requirements have a robustly positive effect on equilibrium risk-management effort only if the bank manager's outside option is sufficiently high, else, their effectiveness depends on the dynamics of information arrival. Stringent deferral requirements unambiguously backfire. We characterize when regulators should not impose any deferral regulation at all, when it can achieve second-best welfare, when additional clawback requirements are of value, and highlight the interaction with capital regulation.
    Keywords: bonus deferral; clawbacks; compensation regulation; moral hazard; principal-agent models with externalities; Short-termism
    JEL: D86 G21 G28
    Date: 2020–07
  2. By: Yana Gallen (The University of Chicago); Melanie Wasserman (University of California, Los Angeles)
    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, gender, discrimination, correspondence study
    JEL: C93 J16 J24 J71
    Date: 2021–06
  3. By: Christian Zimpelmann; Hans-Martin von Gaudecker; Radost Holler; Lena Janys; Bettina Siflinger (Department of Economics, University of Bonn, Adenauerallee 24-42, 53113 Bonn, Germany)
    Abstract: Using customized panel data spanning the entire year of 2020, we analyze the dynamics of working hours and household income across different stages of the CoVid-19 pandemic. Similar to many other countries, during this period the Netherlands experienced a quick spread of the SARS-CoV-2 virus, adopted a set of fairly strict social distancing measures, gradually reopened, and imposed another lockdown to contain the second wave. We show that socio-economic status is strongly related to changes in working hours, especially when strict economic restrictions are in place. In contrast, household income is equally unaffected for all socio-economic groups. Examining the drivers of these observations, we find that pandemic-specific job characteristics (the ability to work from home and essential worker status) explain most of the socio-economic gradient in total working hours. Furthermore, household income is largely decoupled from shocks to working hours for employees. We provide suggestive evidence that large-scale labor hoarding schemes have helped insure employees against demand shocks to their employees.
    Keywords: inequality, labor market, working from home, coronavirus, essential workers, mitigation policies
    JEL: D31 J21 J22 J24 J33
    Date: 2021–05
  4. By: Berg, Gerard van den; Dauth, Christine; Homrighausen, Pia; Stephan, Gesine
    Abstract: We mailed brochures to 10,000 randomly chosen employed German workers eligible for a subsizided occupational training program called WeGebAU, informing them about the importance of skill-upgrading occupational training in general and about WeGebAU in particular. Using survey and register data, we estimate effects of the information treatment brochure on awareness of the program, on take-up of WeGebAU and other training, and on subsequent employment. The brochure more than doubles awareness of the program. There are no effects on WeGebAU take-up but participation in other (unsubsidized) training increases among employees aged below 45. Short-term labor market outcomes are not affected.
    Keywords: employment; information treatment; randomized controlled trial; skills; wages
    JEL: J24 J65
    Date: 2020–07
  5. By: Luis Santos Pinto
    Abstract: This paper investigates whether an overconfident player is more likely to win a competition against a rational player. The two players are identical, except that the overconfident player overestimates his productivity of effort and, as a consequence, his probability of winning. The competition can take the form of either a tournament or a contest. The paper shows that the overconfident player is the Nash winner (loser) of a tournament with monotonic best responses when his effort and overconfidence are complements (substitutes). The overconfident player is the Nash winner (loser) of a tournament with non-monotonic best responses when he is slightly (significantly) overconfident. In contrast, the overconfident player is always the Nash loser of a contest. The paper also discusses the welfare implications of overconfidence.
    Keywords: Overconfidence, Tournaments, Contests, Welfare
    JEL: D60 D69 D91
    Date: 2021–05
  6. By: Poulissen, Davey (Maastricht University); de Grip, Andries (ROA, Maastricht University); Fouarge, Didier (ROA, Maastricht University); Künn-Nelen, Annemarie (ROA, Maastricht University)
    Abstract: Various studies have shown that temporary workers participate less in training than those on permanent contracts. Human resources practices are considered to be an important explanation for this difference. We develop a theoretical framework for employers' provision of training that explicitly incorporates the costs and benefits associated with training investments in employees with different types of employment contracts. Our framework not only predicts employers to be less willing to invest in temporary workers due to the shorter time horizon associated with such an investment, but it also provides insights into how this willingness depends on characteristics of the training that are related to the expected costs and benefits of the training investment. A discrete choice experiment is used to empirically test the predictions from our theoretical framework. In line with our theoretical framework, we find that employers are less likely to invest in the training of temporary workers. This particularly holds when temporary workers do not have the prospect of a permanent contract with their current employer. Furthermore, we show that employers' likelihood of investing in temporary workers indeed depends on aspects related to the costs and benefits of training, that is, a financial contribution to the training costs made by employees, a repayment agreement that applies when workers leave the organisation prematurely, and the transferability of the skills being trained. Our findings can be used to increase employers' willingness to invest in temporary workers. However, similar effects are observed when looking at employers' willingness to invest in permanent workers, suggesting that it will be difficult to decrease the gap in employers' willingness to invest between temporary and permanent workers.
    Keywords: flexible contracts, human capital investments, stated preference experiment, cost–benefit assessment
    JEL: J24 J41 J62
    Date: 2021–05
  7. By: Anna Baranowska-Rataj (Department of Sociology, UmeA University and Centre for Demographic and Ageing Research, UmeA University); Zoltán Elekes (Agglomeration and Social Networks Research Group, Centre for Economic and Regional Studies and Department of Geography, UmeA University); Rikard Eriksson (Department of Geography, Umea University and Centre for Regional Science, Umea University)
    Abstract: Low-wage jobs are often regarded as dead-ends in the labour market careers of young people. Previous research focused on disentangling to what degree the association between a low-wage job at the start of working life and limited chances of transitioning to better-paid employment is causal or spurious. Less attention has been paid to the channels that may facilitate the upward wage mobility of low-wage workers. We focus on such mechanisms, and we scrutinize the impact of social ties to higher-educated co-workers. Due to knowledge spillovers, job referrals, as well as firm-level productivity gains, having higher-educated co-workers may improve an individual’s chances of transitioning to a better-paid job. We use linked employer-employee data from longitudinal Swedish registers and panel data models that incorporate measures of low-wage workers’ social ties to higher-educated co-workers. Our results confirm that having social ties to higher-educated co-workers increases individual chances of transitioning to better-paid employment.
    Keywords: co-worker networks, employer-employee data, low-wage, wage mobility
    JEL: C23 D85 J24 J31
    Date: 2021–05
  8. By: Bloomfield, Matthew J.; Marvao, Catarina; Spagnolo, Giancarlo
    Abstract: We examine whether the potential for costly sabotage is a deterrent to firms' use of relative performance evaluation ("RPE") in CEO pay plans. We exploit illegal cartel membership as a source of variation in the potential for costly sabotage and document that firms are more likely to use RPE if they are currently cartel members. Moreover, firms frequently drop RPE from their CEOs' pay plans immediately after their cartels are detected. We further provide suggestive evidence that the potential for costly sabotage explains these patterns; cartel membership severs the empirical association between RPE and competitive aggression.
    Keywords: cartels; Collusion; Compensation; Relative Performance Evaluation; Sabotage
    JEL: G34 L22
    Date: 2020–07

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