nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒06‒12
nine papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Pay Transparency in Organizations By Amir Habibi
  2. Management and Performance in the Public Sector: Evidence from German Municipalities By Florian Englmaier; Gerd Muehlheusser; Andreas Roider; Niklas Wallmeier
  3. Diversity, Equity, and Inclusion By Alex Edmans; Caroline Flammer; Simon Glossner
  4. It's Not Who You Know—It's Who Knows You: Employee Social Capital and Firm Performance By DuckKi Cho; Lyungmae Choi; Jessie Jiaxu Wang
  5. Does Temporary Employment undermine the Quality of Permanent Jobs? By Pollio, Chiara; Landini, Fabio; Prodi, Elena; Arrighetti, Alessandro
  6. Subjective Earnings Risk By Andrew Caplin; Victoria Gregory; Eungik Lee; Soren Leth-Petersen; Johan Sæverud
  7. Violence Against Women at Work By Abi Adams-Prassl; Kristiina Huttunen; Emily Nix; Ning Zhang
  8. When Workplace Democracy Backfires. Lab Evidence on Honesty and Cooperation By José J. Domínguez; Giulio Ecchia; Natalia Montinari; Raimondello Orsini
  9. Does Artificial Intelligence Help or Hurt Gender Diversity? Evidence from Two Field Experiments on Recruitment in Tech By Mallory Avery; Andreas Leibbrandt; Joseph Vecci

  1. By: Amir Habibi (HU Berlin)
    Abstract: I study when a firm prefers to be transparent about pay using a simple multidimensional signaling model. Pay transparency within the firm means that a worker can learn about his own worker-firm match from another worker’s pay. This can either encourage or discourage workers—which affects retention—and so creates a trade-off for the firm when it commits to a level of transparency. The model pre- dicts that when few workers have a high worker-firm match, transparency is always preferred by the firm and becomes more favorable as the value of retaining these ‘star’ workers increases. This prediction is consistent with the firms in the field that choose to be internally transparent about pay. The model also predicts that transparency leads to pay compression, again consistent with evidence from the field.
    Keywords: pay transparency; bonus pay; multidimensional signaling; relative pay;
    JEL: D82 D86 J30 M52
    Date: 2023–05–10
  2. By: Florian Englmaier (LMU Munich); Gerd Muehlheusser (University of Hamburg); Andreas Roider (University of Regensburg); Niklas Wallmeier (University of Hamburg)
    Abstract: We study management practices and performance in a representative sample of German municipalities, which provide the bulk of direct administrative services for citizens and firms in Germany. Surveyed municipalities differ substantially in their use of structured management practices, and this heterogeneity is also pronounced within all federal states, regional types, and population size brackets. Moreover, we document a systematic positive relationship between the degree of structured management and a diverse set of performance measures capturing municipalities' attractiveness for citizens and firms. Topic modelling (LDA) of survey responses suggests that the predominant management style is to use relatively little structured management.
    Keywords: management practices; public sector organizations; local government; municipal performance; state capacity; World Management Survey (WMS);
    JEL: D20 D73 H11 H73 R50
    Date: 2023–05–14
  3. By: Alex Edmans; Caroline Flammer; Simon Glossner
    Abstract: This paper measures diversity, equity, and inclusion (DEI) using proprietary data on survey responses used to compile the Best Companies to Work For list. We identify 13 of the 58 questions as being related to DEI, and aggregate the responses to form our DEI measure. This variable has low correlation with gender and ethnic diversity in the boardroom, in senior management, and within the workforce, suggesting that DEI captures additional dimensions missing from traditional measures of demographic diversity. DEI is also unrelated to general workplace policies and practices, suggesting that DEI cannot be improved by generic initiatives. However, DEI is higher in small growth firms and firms with high financial strength. DEI is associated with higher future accounting performance across a range of measures, higher future earnings surprises, and higher valuation ratios, but demographic diversity is not. DEI perceptions among professional workers, such as R&D employees, are significantly correlated with the number and quality of patents. However, DEI exhibits no link with future stock returns.
    JEL: D63 G12 G32 J53 J71 J81
    Date: 2023–05
  4. By: DuckKi Cho; Lyungmae Choi; Jessie Jiaxu Wang
    Abstract: We show that the social capital embedded in employees' networks contributes to firm performance. Using novel, individual-level network data, we measure a firm's social capital derived from employees' connections with external stakeholders. Our directed network data allow for differentiating those connections that know the employee and those that the employee knows. Results show that firms with more employee social capital perform better; the positive effect stems primarily from employees being known by others. We provide causal evidence exploiting the enactment of a government regulation that imparted a negative shock to networking with specific sectors and provide evidence on the mechanisms.
    Keywords: Social capital; Social networks; Labor and finance
    JEL: G30 G41 L14
    Date: 2023–04–13
  5. By: Pollio, Chiara; Landini, Fabio; Prodi, Elena; Arrighetti, Alessandro
    Abstract: Standard screening and core-periphery theories claim that temporary employment does not undermine the quality of permanent jobs. In contrast, organizational approaches suggest that firms use temporary contracts to pursue low-road employment strategies, which involve the creation of cheap and low quality jobs also for permanent employees. We test these predictions by matching administrative data at the occupation, worker and firm level from the Emilia Romagna region (Italy). Job quality is measured through non-wage occupation-specific factors capturing self-realisation, recognition and social support. Baseline and IV estimates show that a larger use of temporary employees is associated with permanent jobs of lower quality. Moreover, in firms using more temporary workers the jobs of permanent employees are more routinized and less complex. Also, in such firms, permanent workers hold occupations that receive less training and involve less teamwork. These results suggest that where temporary work is used, the low quality of permanent positions is driven by work arrangements that tend to economize on individual skills and competences, which is consistent with the low-road employment hypothesis. Related managerial and policy implications are discussed.
    Keywords: job quality, temporary employment, skills, labour market institutions
    JEL: D22 J28 J41 L23
    Date: 2023
  6. By: Andrew Caplin; Victoria Gregory; Eungik Lee; Soren Leth-Petersen; Johan Sæverud
    Abstract: Earnings risk is central to economic analysis. While this risk is essentially subjective, it is typically inferred from administrative data. Following the lead of Dominitz and Manski (1997), we introduce a survey instrument to measure subjective earnings risk. We pay particular attention to the expected impact of job transitions on earnings. A link with administrative data provides multiple credibility checks. It also shows subjective earnings risk to be far lower than its administratively- estimated counterpart. This divergence arises because expected earnings growth is heterogeneous, even within narrow demographic and earnings cells. We calibrate a life-cycle model of search and matching to administrative data and compare the model-implied expectations with our survey instrument. This calibration produces far higher estimates of individual earnings risk than do our subjective expectations, regardless of age, earnings, and whether or not workers switch jobs. This divergence highlights the need for survey-based measures of subjective earnings risk.
    Keywords: earnings risk; job transitions; subjective expectations
    JEL: D31 D84 E24 J31
    Date: 2023–03–03
  7. By: Abi Adams-Prassl; Kristiina Huttunen; Emily Nix; Ning Zhang
    Abstract: The #MeToo movement has demonstrated that assaults between colleagues are an internationally relevant phenomenon. In this paper, we link every police report in Finland to administrative data to identify assaults between colleagues, and the economic consequences for victims, perpetrators, and firms. This new approach to observe when one colleague attacks another overcomes previous data constraints limiting evidence on this phenomenon to self-reported surveys that do not identify perpetrators. We document large, persistent labor market impacts of between-colleague violence on victims and perpetrators. Male perpetrators experience substantially weaker consequences after attacking female colleagues. Perpetrators’ relative economic power in male-female violence partly explains this asymmetry. Turning to broader implications for firm recruitment and retention, we find that male-female violence causes a decline in women at the firm, both because fewer new women are hired and current female employees leave. There is no change in hiring from within existing employees’ networks, ruling out supply-side explanations for the reduction in new female hires via "whisper networks". Management practices play a key role in mediating the impacts on the wider workforce. Only male-managed firms lose women. Female managers do one important thing differently: fire perpetrators.
    Keywords: Management practices; Sexual harassment; Workplace conflict; Gender inequality
    JEL: J81 J16 M54
    Date: 2022–11–28
  8. By: José J. Domínguez (Department of Economic Theory and Economic History, University of Granada.); Giulio Ecchia (Department of Economics, University of Bologna.); Natalia Montinari (Department of Economics, University of Bologna.); Raimondello Orsini (Department of Economics, University of Bologna.)
    Abstract: Democracy in the workplace often involves employee participation in decision-making and financial matters, both of which have been shown to increase employee effort. However, it is unclear whether these forms of participation also affect other important attitudes that are correlated with the spirit of democratic workplaces such as honesty and cooperation. To address this question, we conducted a laboratory experiment to examine the effects of employee participation on these attitudes. Our results show that both employees’ participation in decision-making and profit-sharing decrease honesty. This effect is stronger for employees involved in financial participation. Additionally, we found that the different treatments also affect productivity in the first and third tertiles of the productivity distribution. On the one side, employees in the first tertile are more productive and more cooperative when they are allowed to choose the type of organization compared to the one who are assigned to the no-participation treatment. On the other side, employees in the third tertile of the productivity distribution are more likely to free ride and reduce cooperation in settings with participation compared to the no-participation. Our study sheds light on the complex effects that participatory practices may have in modern workplaces.
    Keywords: Employee Participation, Attitudes, Honesty, Cooperation, Lab Experiment.
    Date: 2023–05–03
  9. By: Mallory Avery (Department of Economics, Monash Business School, Monash University); Andreas Leibbrandt (Department of Economics, Monash Business School, Monash University); Joseph Vecci (Gothenburg University, Vasagatan, Gothenburg, Sweden)
    Abstract: The use of Artificial Intelligence (AI) in recruitment is rapidly increasing and drastically changing how people apply to jobs and how applications are reviewed. In this paper, we use two field experiments to study how AI in recruitment impacts gender diversity in the male-dominated technology sector, both overall and separately for labor supply and demand. We find that the use of AI in recruitment changes the gender distribution of potential hires, in some cases more than doubling the fraction of top applicants that are women. This change is generated by better outcomes for women in both supply and demand. On the supply side, we observe that the use of AI reduces the gender gap in application completion rates. Complementary survey evidence suggests that this is driven by female jobseekers believing that there is less bias in recruitment when assessed by AI instead of human evaluators. On the demand side, we find that providing evaluators with applicants’ AI scores closes the gender gap in assessments that otherwise disadvantage female applicants. Finally, we show that the AI tool would have to be substantially biased against women to result in a lower level of gender diversity than found without AI.
    Keywords: Artificial Intelligence, Gender, Diversity, Field Experiment
    JEL: C93
    Date: 2023–05

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