nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒01‒30
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Performance Pay in Insurance Markets: Evidence from Medicare By Michele Fioretti; Hongming Wang
  2. Effort and Selection Effects of Performance Pay in Knowledge Creation By Erina Ytsma
  3. Diversity and Team Performance in a Kenyan Organization By Benjamin Marx; Vincent Pons; Tavneet Suri
  4. Employers’ associations, worker mobility, and training By Pedro S. Martins; Jonathan P. Thomas
  5. Eclipse of Rent-Sharing: The Effects of Managers' Business Education on Wages and the Labor Share in the US and Denmark By Daron Acemoglu; Alex Xi He; Daniel le Maire
  6. Working from Home in the Netherlands: Looking Inside the Blackbox of Work and Occupations By Emil Mihaylov
  7. Measuring an artificial intelligence agent's trust in humans using machine incentives By Tim Johnson; Nick Obradovich
  8. Closing the gender profit gap? By Batista, Catia; Sequeira, Sandra; Vicente, Pedro C.

  1. By: Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Hongming Wang (Hitotsubashi University)
    Abstract: Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties.
    Keywords: Pay-for-Performance, Medicare Advantage, Risk Selection, Quality Ratings, Health Insurance Access
    Date: 2021–05–01
  2. By: Erina Ytsma
    Abstract: The effects of performance pay in routine, easy to measure tasks are well-documented, but they are much less understood in knowledge creation. This paper studies the effects of explicit and implicit, career concerns incentives common in knowledge work in a multitasking model, and estimates their causal effort and selection effects in knowledge creation by exploiting the introduction of performance pay in German academia as a natural experiment. Using data encompassing the universe of German academics, I find that performance incentives attract more productive academics, and research quantity increases by 14 to 18%, but without increasing output of the highest quality. The latter is explained by response heterogeneity. The quantity effort response is strongest for low productivity academics, who do not produce high quality work. High ability academics also produce more publications, but not more of the highest quality. Medium ability academics do not increase quantity but produce fewer high-quality papers.
    Keywords: performance pay, knowledge creation, career concerns, effort and selection effects, multitasking
    JEL: J33 M52 O31
    Date: 2022
  3. By: Benjamin Marx (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Vincent Pons (Harvard Business School - Harvard University [Cambridge]); Tavneet Suri (MIT Sloan - Sloan School of Management - MIT - Massachusetts Institute of Technology)
    Abstract: We present the results from a field experiment on team diversity. Individuals working as door-to-door canvassers for a non-profit organization were randomly assigned a teammate, a supervisor, and a list of individuals to canvass. This created random variation within teams in the degree of horizontal diversity (between teammates), vertical diversity (between teammates and their supervisor) and external diversity (between teams and the individuals they canvassed). We observe team-level measures of performance and find that horizontal ethnic diversity decreases performance, while vertical diversity often improves performance, and external diversity has no effect. The data on time use suggests that horizontally homogeneous teams organized tasks in a more efficient way, while vertically homogeneous teams exerted lower effort.
    Keywords: Ethnic diversity, Organizational behavior, Labor management, Performance
    Date: 2021–05
  4. By: Pedro S. Martins; Jonathan P. Thomas
    Abstract: This paper studies firm-provided training in a context of potential worker mobility. We argue that such worker mobility may be reduced by employers’ associations (EAs) through no-poach agreements. First, we sketch a simple model to illustrate the impact of employer coordination on training. We then present supporting evidence from rich matched panel data, including firms’ EA affiliation and workers’ individual training levels. We find that workers’ mobility between firms in the same EA is considerably lower than mobility between equivalent firms not in the same EA. We also find that training provision by EA firms is considerably higher, even when drawing on within-employee variation and considering multiple dimensions of training. We argue that these results are consistent with a role played by EAs in reducing worker mobility.
    Keywords: Employers organisations, No-poach agreements, Worker mobility
    JEL: J53 J62 L40
    Date: 2023
  5. By: Daron Acemoglu; Alex Xi He; Daniel le Maire
    Abstract: This paper provides evidence from the US and Denmark that managers with a business degree (“business managers") reduce their employees' wages. Within five years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Firms appointing business managers are not on differential trends and do not enjoy higher output, investment, or employment growth thereafter. Using manager retirements and deaths and an IV strategy based on the diffusion of the practice of appointing business managers within industry, region and size quartile cells, we provide additional evidence that these are causal effects. We establish that the proximate cause of these (relative) wage effects are changes in rent-sharing practices following the appointment of business managers. Exploiting exogenous export demand shocks, we show that non-business managers share profits with their workers, whereas business managers do not. But consistent with our first set of results, these business managers show no greater ability to increase sales or profits in response to exporting opportunities. Finally, we use the influence of role models on college major choice to instrument for the decision to enroll in a business degree in Denmark and show that our estimates correspond to causal effects of practices and values acquired in business education--rather than the differential selection into business education of individuals unlikely to share rents with workers.
    Keywords: business education, labor share, management, rent sharing, wages
    JEL: J30 J31 J53 M52 G30
    Date: 2022–12
  6. By: Emil Mihaylov (Vrije Universiteit Amsterdam)
    Abstract: The paper provides new evidence on the ability to work from home (WFH) for hundreds of Dutch occupations and examines how WFH is related to various occupation-specific characteristics. This is done by linking several publicly available datasets from Statistics Netherlands, which contain different occupation-specific information (e.g., tasks descriptions, measures of physical and socio-psychological workload, autonomy of work, computer use at work, workplace accidents and injuries, job satisfaction and job turnover, actual WFH, etc.). The paper finds that WFH is possible only in high and mid-skilled occupations such as managers, professionals, technicians and associate professionals, and clerical support workers, while it is nearly impossible in low-skilled professions such as plant and machine operators and elementary occupations. Around 16% of the employed persons in the Netherlands work in occupations that cannot be done from home, 24% work in occupations that can be performed entirely from home, and 54% are employed in occupations with significant possibilities to WFH (i.e., their occupations contain 50% or more teleworkable tasks). Furthermore, the ability to WFH is negatively related to physical work, repetitive work, and dangerous work and positively related to working on screens and independence at work. The potential to WFH is also positively correlated with job satisfaction and negatively correlated with victimisation at work (i.e., intimidation, violence, bullying, unwanted sexual attention), incidence and duration of sick leave, and work-related reasons for sick leave. The analyses in the paper are of a descriptive nature.
    Keywords: working from home, occupations, job tasks, Netherlands, Covid-19
    JEL: J21 J22 J24 J29 J81
    Date: 2022–12–22
  7. By: Tim Johnson; Nick Obradovich
    Abstract: Scientists and philosophers have debated whether humans can trust advanced artificial intelligence (AI) agents to respect humanity's best interests. Yet what about the reverse? Will advanced AI agents trust humans? Gauging an AI agent's trust in humans is challenging because--absent costs for dishonesty--such agents might respond falsely about their trust in humans. Here we present a method for incentivizing machine decisions without altering an AI agent's underlying algorithms or goal orientation. In two separate experiments, we then employ this method in hundreds of trust games between an AI agent (a Large Language Model (LLM) from OpenAI) and a human experimenter (author TJ). In our first experiment, we find that the AI agent decides to trust humans at higher rates when facing actual incentives than when making hypothetical decisions. Our second experiment replicates and extends these findings by automating game play and by homogenizing question wording. We again observe higher rates of trust when the AI agent faces real incentives. Across both experiments, the AI agent's trust decisions appear unrelated to the magnitude of stakes. Furthermore, to address the possibility that the AI agent's trust decisions reflect a preference for uncertainty, the experiments include two conditions that present the AI agent with a non-social decision task that provides the opportunity to choose a certain or uncertain option; in those conditions, the AI agent consistently chooses the certain option. Our experiments suggest that one of the most advanced AI language models to date alters its social behavior in response to incentives and displays behavior consistent with trust toward a human interlocutor when incentivized.
    Date: 2022–12
  8. By: Batista, Catia; Sequeira, Sandra; Vicente, Pedro C.
    Abstract: We examine the impact of providing access to mobile savings accounts and improving financial management skills on the performance of microenterprises in Mozambique. The effects are highly heterogeneous: Combining both types of support is associated with a large increase in both short- and long-term firm profits and in financial security for female microentrepreneurs. This allowed female-headed microenterprises, particularly those with a higher level of profits at baseline, to close the gender profit gap in performance and skills relative to their male counterparts. The main drivers of improved business performance are improved financial management practices (bookkeeping), an increase in accessible savings, and reduced transfers to friends and relatives. Providing access to mobile money as a tool to save and manage finances also increases long-term profits of female microentrepreneurs, particularly for those with higher profits at baseline. However, neither treatment has any impact on male-led enterprises. Uncovering this heterogeneity in impact across different types of microenterprises can help improve the targeting of these interventions in the future.
    Keywords: economic development; financial literacy; gender; management; microenterprise development; mobile money
    JEL: J1 J50
    Date: 2022–12–01

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