nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2021‒10‒18
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Physicians' incentives, patients' characteristics, and quality of care: A systematic experimental comparison of fee-for-service, capitation, and pay for performance By Brosig-Koch, Jeannette; Groß, Mona; Hennig-Schmidt, Heike; Kairies-Schwarz, Nadja; Wiesen, Daniel
  2. Do employees always reciprocate homebased working with commitment? The role of blurring boundaries, trust and fairness By Lott, Yvonne
  3. Moral Hazard with Heterogeneous Beliefs By Martin Dumav; Urmee Khan; Luca Rigotti
  4. A reassessment of the potential for loss-framed incentive contracts to increase productivity: a meta-analysis and a real-effort experiment By Paul J. Ferraro; J. Dustin Tracy
  5. Limiting the Leader: Fairness Concerns in Team Production with Leader-Determined Monitoring By Luke Boosey; R. Mark Isaac; Abhijit Ramalingam
  6. Productivity-wage nexus at the firm-level in Portugal: Decoupling and divergences By Alexandre Mergulhão; José Azevedo Pereira
  7. Commuting, Children and the Gender Wage Gap By Borghorst, Malte; Mulalic, Ismir; van Ommeren, Jos
  8. On the Stability of Risk Preferences: Measurement Matters By Joop Adema; Till Nikolka; Panu Poutvaara; Uwe Sunde; Joop Age Harm Adema

  1. By: Brosig-Koch, Jeannette; Groß, Mona; Hennig-Schmidt, Heike; Kairies-Schwarz, Nadja; Wiesen, Daniel
    Abstract: This paper systematically studies how performance pay, complementing either baseline feefor-service or capitation, affects physicians' medical service provision and the quality of care. Using a series of controlled experiments with physicians and students, we test the incentive effect of performance pay at a within-subject level. A discrete bonus is granted if a quality threshold is reached, which varies with the patients' severity of illness. We find that performance pay significantly reduces non-optimal service provision and enhances the quality of care. Effect sizes depend on the patients' severity of illness and whether the baseline is fee-for-service or capitation. Health policy implications, including a cost benefit analysis of introducing performance pay, are discussed.
    Keywords: Fee-for-service,capitation,pay for performance,heterogeneous patients,artefactual field experiment,laboratory experiments
    JEL: C91 I11
    Date: 2021
  2. By: Lott, Yvonne
    Abstract: Work organizations are increasingly under pressure to offer home-based working. However, there is inconsistent evidence on whether granting employees to work from home is a business case increasing their organizational commitment. Analysis of the representative German Linked Personnel Panel revealed that, overall, the use of home-based working is associated with employees' higher organizational commitment. A closer look at the data, however, shows that this is less often the case when the use of home-based working involves the blurring of work-life boundaries. Our results are the first to provide evidence that perceived fairness in the exchange relation with supervisors is of particular importance for employees' experiences with working from home.
    Date: 2021
  3. By: Martin Dumav; Urmee Khan; Luca Rigotti
    Abstract: We study a model of moral hazard with heterogeneous beliefs where each of agent's actions gives rise to a pair of probability distributions over output levels, one representing the beliefs of the agent and the other those of the principal. The agent's relative optimism or pessimism dictates whether the contract is high-powered (i.e. with high variability between wage levels) or low-powered. When the agent is sufficiently more optimistic than the principal, the trade-off between risk-sharing and incentive provision may be eliminated. Using Monotone Likelihood Ratio ranking to model disagreement in the parties' beliefs, we show that incentives move in the direction of increasing disagreement. In general, the shape of the wage scheme is sensitive to the differences in beliefs. Thereby, key features of optimal incentive contracts under common beliefs do not readily generalize to the case of belief heterogeneity.
    Date: 2021–10
  4. By: Paul J. Ferraro (arey Business School & Whiting School of Engineering, Johns Hopkins University); J. Dustin Tracy (Economic Science Institute, Chapman University)
    Abstract: Behavioral scientists have reported substantial increases in worker productivity when incentives are framed as losses rather than gains. Loss-framed incentive contracts have also been reported to be preferred by workers. These claims are challenged by results from our meta-analysis and real-effort experiment. Whereas the summary effect size from loss-framed contracts in laboratory experiments is a 0.4 SD increase in productivity, the summary effect size from ï¬ eld experiments is 0.0 SD. Although this difference may reflect differing labor environments in the laboratory and ï¬ eld, we detect evidence of publication biases among laboratory experiments. In a new laboratory experiment that addresses prior design weaknesses, we estimate an effect size of 0.1 SD. This result, in combination with evidence from the meta-analysis, suggests that the difference between the effect size estimates in published laboratory and ï¬ eld experiments does not stem from the limited external validity of laboratory experiments, but may instead stem from a mix of underpowered laboratory designs and publication biases. Moreover, in our experiment, most workers preferred the gain-framed contract and the increase in average productivity is only detectable in the subgroup of workers (∼20%) who preferred the loss-framed contracts. This result suggests that employers may ï¬ nd using these contracts in real labor environments challenging. Based on the results from our experiment and meta-analysis, we believe that further research is warranted to assess the robustness and magnitude of the impacts from loss-framed contracts before advocating for their adoption by private and public sector actors.
    Keywords: framing effects, incentive contracts, meta-analysis, real-effort experiment, and behavioral insights
    JEL: C91 J24 J33
    Date: 2021
  5. By: Luke Boosey; R. Mark Isaac; Abhijit Ramalingam
    Abstract: We use a laboratory experiment to investigate the extent to which leaders—faced with opportunistic incentives—employ monitoring to improve team production. Participants are assigned to teams, with one person appointed as the leader. The leader has the power to commit to a monitoring option, which replaces the default equal sharing rule with one that distributes team revenue in proportion to individual investments. Additionally, the leader can announce a claim to a portion of the team revenue, which is paid before shares are distributed. Theoretically, there are multiple equilibria involving monitoring and full investment, characterized by the largest claim the non-leaders are willing to cede to the leader. We appeal to fairness concerns and repeated interaction in order to provide sharper predictions that pivot around a ‘fair claim’. In the experiments, leaders are mostly unsuccessful at increasing team production as they claim too much or forgo the monitoring option too often, especially when it is costly to monitor. When there is no cost, nearly half of the leaders successfully increase team production towards full investment, by relying on constant monitoring and resisting the temptation to issue unfair claims. These results highlight the potential for opportunistic incentives to undermine efficiency-enhancing leadership, even when the leader can commit to her decisions. Key Words: leader, monitoring, team production, fairness, free-riding, experiment
    JEL: C72 C92 D20 D70 H41 M5
    Date: 2021
  6. By: Alexandre Mergulhão; José Azevedo Pereira
    Abstract: There is a growing international concern about the slowdown in productivity growth, especially as labor productivity enhancements are important drivers of higher general-ised living standards.Using administrative data of firms in Portugal between 2010 and 2016, we analyse the relationships between productivity and wages. At odds with neoclassical theory of mar-ginal productivity of labor, we find that two thirds of firms insufficiently raised wages giv-en observed productivity growth. Employing unconditional quantile regressions, we in-vestigate some quantifiable determinants of the productivity-wage gap at different parts of the distributions. Most of the documented dynamics contributed not only to the diver-gence of productivity and wages but also to the decoupling of productivity and wage growth. We argue that labor market flexibilisation intensified segmentation, providing incentives for non standard contracts. Both dimensions, as well as higher board com-pensations, international trade and on-the-job training weakened the link between productivity and wages.
    Keywords: compensation, income distribution, Productivity, public policy, Quantile regressions, wage share
    JEL: C3 D2 D31 D33 J31 J38
    Date: 2021–10–18
  7. By: Borghorst, Malte (Mercator School of Management, University of Duisburg-Essen); Mulalic, Ismir (Department of Economics, Copenhagen Business School); van Ommeren, Jos (Department of Spatial Economics, VU University)
    Abstract: It has been documented that the gender pay gap strongly increases after the birth of the first child. We focus on Denmark and show that gender differences regarding commuting play an important role in explaining this. We offer 3 pieces of evidence. First, the gender pay and commuting gaps come into existence at the same moment: when the first child is born. Second, wage compensation for commuting is lower for women after the birth compared to men: about 3 − 4 percentage points of the overall gender pay gap is due to gender differences related to compensation for commuting when having children. Third, women who get a child are much more likely to leave their job when they have a long commute, which is not true for men. <p>Using information on job moving through the lens of a dynamic search model, these results imply that the marginal cost of commuting increases substantially for women with a child. For female workers with a child, a one standard deviation increase in commuting distance induces costs equivalent to about 10% of their wage, whereas for all other workers these costs are equivalent to only 3-4% of their wages.
    Keywords: Commuting; Wages; Gender wage gap
    JEL: J31 J61 R23 R41
    Date: 2021–10–06
  8. By: Joop Adema; Till Nikolka; Panu Poutvaara; Uwe Sunde; Joop Age Harm Adema
    Abstract: We exploit the unique design of a repeated survey experiment among students in four countries to explore the stability of risk preferences in the context of the COVID-19 pandemic. Relative to a baseline before the pandemic, we find that self-assessed willingness to take risks decreased while the willingness to take risks in an incentivized lottery task increased, for the same sample of respondents. These findings suggest domain specificity of preferences that is partly reflected in the different measures.
    Keywords: stability of risk preferences, measurement of risk aversion, Covid-19
    JEL: D12 D91 G50
    Date: 2021

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