nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2022‒07‒18
four papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Dynamics of Referral Hiring and Racial Inequality: Evidence from Brazil By Miller, Conrad; Schmutte, Ian
  2. Vague by Design: Performance Evaluation and Learning From Wages By Franz Ostrizek
  3. Can Wage Transparency Alleviate Gender Sorting in the Labor Market? By Bamieh, Omar; Ziegler, Lennart
  4. Gender Pay Gap across Cultures By Natasha Burns; Kristina Minnick; Jeffry Netter; Laura Starks

  1. By: Miller, Conrad; Schmutte, Ian
    Abstract: We study how referral hiring contributes to racial inequality in firm-level labor demand over the firm’s life cycle using data from Brazil. We consider a search model where referral networks are segregated, firms are more informed about the match quality of referred candidates, and some referrals are made by non-referred employees. Consistent with the model, we find that firms are more likely to hire candidates and less likely to dismiss employees of the same race as the founder, but these differences diminish as firms’ cumulative hires increase. Referral hiring helps to explain racial differences in dismissals, seniority, and employer size.
    Keywords: Social and Behavioral Sciences, firms and organizations, inequality
    Date: 2021–09–17
  2. By: Franz Ostrizek
    Abstract: We study a dynamic principal-agent setting in which both sides learn about the importance of effort. The quality of the agent’s output is not observed directly. Instead, the principal jointly designs an evaluation technology and a wage schedule. More precise performance evaluation reduces current agency costs but promotes learning, which is shown to increase future agency costs. As a result, the optimal evaluation technology is both imprecise and tough: a bad performance is always sanctioned, but a good one is not always recognized. We also study the case in which principal and agent have different priors, for instance because the agent is overconfident. Then, the principal uses a tough evaluation structure to preserve the agent’s profitable misperception. For an underconfident agent, by contrast, she either uses a fully informative evaluation in order to promote learning and eliminate costly underconfidence, or is lenient if learning is too costly.
    Keywords: Moral Hazard, Performance Evaluation, Learning, Information Design
    JEL: D86 D83 M50
    Date: 2022–06
  3. By: Bamieh, Omar (University of Vienna); Ziegler, Lennart (University of Vienna)
    Abstract: Wage decompositions suggest that a large share of the gender wage gap can be explained by differences in occupation and employer choices. If female workers are not well informed about these pay differences, increasing wage transparency might alleviate the gender gap. We test this hypothesis by examining the impact of the 2011 Pay Transparency Law in Austria, which requires companies to state a wage figure in job advertisements. For the analysis, we combine vacancy postings from the largest Austrian job board with social security spells that record the gender of new hires. To compare the pay level of vacancies before and after the reform, we predict wage postings using detailed occupation-employer cells, which explain about 75 percent of the variation in posted wages. While we estimate a substantial gender wage gap of 15 log points, pay transparency did not affect gender sorting into better-paid occupation and firms. To study job transitions, we focus on a subsample of workers whose previous employment is also observed. Our estimates show that switching occupations is common, and it often entails significant wage changes. Yet, in line with our main estimates, we do not find that women become more likely to switch to better-paid jobs. We interpret the absence of effects as evidence that limited transparency does not explain the persistence of gender sorting in the labor market.
    Keywords: gender differences, wage postings, pay transparency, job vacancies, labor market sorting
    JEL: J16 J31 J62 J63 J68
    Date: 2022–06
  4. By: Natasha Burns; Kristina Minnick; Jeffry Netter; Laura Starks
    Abstract: We employ a cross-country sample to examine whether cultural differences help explain gender compensation variations across corporate executives. The results show that the cultural differences, which are embedded in societies from long prior to the compensation decisions, provide significant explanatory power to the observed gender gap in executive compensation. Using an Oaxaca-Blinder decomposition with variables that have previously been shown to be significant determinants of executive compensation, we find that adding cultural measures to the model increases the explanatory power from 44% to 95% of the gender compensation gap.
    JEL: J71
    Date: 2022–06

This nep-hrm issue is ©2022 by Patrick Kampkötter. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.