nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2022‒01‒24
six papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Absenteeism, Productivity, and Relational Contracts Inside the Firm By Achyuta Adhvaryu; Jean-François Gauthier; Anant Nyshadham; Jorge A. Tamayo
  2. Mandated sick pay: Coverage, utilization, and welfare effects By Maclean, Catherine; Pichler, Stefan; Ziebarth, Nicolas R.
  3. Careers in finance By Ellul, Andrew; Pagano, Marco; Scognamiglio, Annalisa
  4. Ex-post moral hazard and manipulation-proof contracts By Jean-Gabriel Lauzier
  5. Shining with the Stars: Competition, Screening, and Concern for Coworkers' Quality By Barigozzi, Francesca; Cremer, Helmuth
  6. The Effect of Age Diversity in Groups on Peer Evaluations and Individual Performance By Görlitz, Katja; Sels, Tim

  1. By: Achyuta Adhvaryu; Jean-François Gauthier; Anant Nyshadham; Jorge A. Tamayo
    Abstract: We study relational contracts among managers using unique data that tracks transfers of workers across teams in Indian ready-made garment factories. We focus on how relational contracts help managers cope with worker absenteeism shocks, which are frequent, often large, weakly correlated across teams, and which substantially reduce team productivity. Together these facts imply gains from sharing workers. We show that managers respond to shocks by lending and borrowing workers in a manner consistent with relational contracting, but many potentially beneficial transfers are unrealized. This is because managers’ primary relationships are with a very small subset of potential partners. A borrowing event study around main trading partners’ separations from the firm reinforces the importance of relationships. We show robustness to excluding worker moves least likely to reflect relational borrowing responses to idiosyncratic absenteeism shocks. Counterfactual simulations reveal large gains to reducing costs associated with forming and maintaining additional relationships among managers.
    JEL: D23 D86 L14 L23 M54
    Date: 2021–12
  2. By: Maclean, Catherine; Pichler, Stefan; Ziebarth, Nicolas R.
    Abstract: This paper evaluates how sick pay mandates operate at the job level in the United States. Using the National Compensation Survey and difference-in-differences models, we estimate their impact on coverage rates, sick leave use, labor costs, and non-mandated fringe benefits. Sick pay mandates increase coverage significantly by 18 percentage points from a baseline level of 66% in the first two years. Newly covered employees take two additional sick days per year. We find little evidence that mandating sick pay crowds-out non-mandated fringe benefits. Finally, we develop a model of optimal sick pay provision and illustrate the trade-offs when assessing welfare.
    Keywords: sick pay mandates,take-up,social insurance,fringe benefits,moral hazard,unintended consequences,medical leave,National Compensation Survey,optimal social insurance,Baily-Chetty,welfare
    JEL: I12 I18 J22 J28 J32 J38 J88 H75
    Date: 2021
  3. By: Ellul, Andrew; Pagano, Marco; Scognamiglio, Annalisa
    Abstract: The finance wage premium since the 1990s has arguably lured talent away from other industries. However, the allocation of talent is likely to respond to differences in career paths, not in wages at a given date. We use resume data to reconstruct the careers of 11,255 professionals in finance, high-tech and services from 1980 to 2017, and find that careers mostly develop within sectors. Careers in asset management feature higher and steeper pay profiles than those of employees in banking, insurance and non-finance, yet this career premium cannot be explained by higher risk. Labor market entry responds positively to career premia in asset management and high-tech, and these sectors are regarded as substitutes by potential entrants, consistently with high-tech competing with asset management in attracting talent.
    Keywords: careers,finance premium,asset management,labor market entry,high-tech
    JEL: G20 G23 J24 J62 J63
    Date: 2021
  4. By: Jean-Gabriel Lauzier
    Abstract: We examine the trade-off between the provision of incentives to exert costly effort (ex-ante moral hazard) and the incentives needed to prevent the agent from manipulating the profit observed by the principal (ex-post moral hazard). Formally, we build a model of two-stage hidden actions where the agent can both influence the expected revenue of a business and manipulate its observed profit. We show that manipulation-proofness is sensitive to the interaction between the manipulation technology and the probability distribution of the stochastic output. The optimal contract is manipulation-proof whenever the manipulation technology is linear. However, a convex manipulation technology sometimes leads to contracts with manipulations in equilibrium. Whenever the distribution satisfies the monotone likelihood ratio property, we can always find a manipulation technology for which the optimal contract is not manipulation-proof.
    Date: 2021–12
  5. By: Barigozzi, Francesca (University of Bologna); Cremer, Helmuth (Toulouse School of Economics)
    Abstract: We study how workers' concern for coworkers' ability (CfCA) affects competition in the labor market. We consider two firms offering nonlinear contracts to a unit mass of prospective workers. Firms may differ in their marginal productivity, while workers are heterogeneous in their ability (high or low), and in their taste for being employed by any of the two firms. Workers receive a utility premium when employed by the firm hiring the workforce with larger average ability and they suffer a utility loss in the opposite case. These premiums/losses are endogenously determined. When workers' ability is observable and the difference in firms' marginal productivities is strictly positive, we show that CfCA increases surplus but it also increases firms' competition for high-ability workers. As a result, CfCA benefits high-ability workers but is detrimental to firms. In addition, CfCA exacerbates the existing distortion in sorting of high-ability workers to firms: too many workers are hired by the least efficient firm. When ability is not observable, the additional surplus appropriated by high-ability workers is eroded by overincentivization (countervailing incentives) and the more so when CfCA is high. Conversely, high-types' sorting improves when CfCA is low and remains the same when it is high.
    Keywords: screening, competition, concern for coworkers’ quality, sorting
    JEL: D82 L13 M54
    Date: 2021–11
  6. By: Görlitz, Katja (Hochschule der Bundesagentur für Arbeit (HdBA)); Sels, Tim (Freie Universität Berlin)
    Abstract: This study analyzes how individuals evaluate their peers' performance in a high stakes tournament in response to being randomly assigned to an age homogenous or heterogeneous group using data from two TV shows. The data also allows us to explore superior evaluations because it contains objective ratings from an independent expert. Additionally, this study investigates how age diverse groups affect individual performance in professional golf tournaments. The results show that peer and superior evaluations as well as individual performance are lower in age diverse groups. Further evidence suggests that these effects occur in the short run, but fade away once group members have gotten to know each other.
    Keywords: age diversity, peer evaluation, superior evaluation, performance
    JEL: J14 M12 M54
    Date: 2021–12

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