nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒08‒14
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. When are employers interested in electronic performance monitoring? Results from a factorial survey experiment By Wieser, Luisa; Abraham, Martin; Schnabel, Claus; Niessen, Cornelia; Wolff, Mauren
  2. Closing the Gender Gap in Salary Increases: Evidence from a Field Experiment on Promoting Pay Equity By Alfitian, Jakob; Deversi, Marvin; Sliwka, Dirk
  3. Incentive Complexity, Bounded Rationality and Effort Provision By Abeler, Johannes; Huffman, David B.; Raymond, Collin
  4. Non-Common Priors, Incentives, and Promotions: The Role of Learning By Matthias Fahn; Nicolas Klein
  5. Persistent Overconfidence and Biased Memory: Evidence from Managers By Huffman, David B.; Raymond, Collin; Shvets, Julia
  6. Labor Market Regulation and Firm Adjustments in Skill Demand By Bottasso, Anna; Bratti, Massimiliano; Cardullo, Gabriele; Conti, Maurizio; Sulis, Giovanni
  7. Equal Pay for Similar Work By Diego Gentile Passaro; Fuhito Kojima; Bobak Pakzad-Hurson
  8. The Gender Pay Gap and its Determinants across the Human Capital Distribution By Ariel J. Binder; Amanda Eng; Kendall Houghton; Andrew Foote

  1. By: Wieser, Luisa; Abraham, Martin; Schnabel, Claus; Niessen, Cornelia; Wolff, Mauren
    Abstract: This paper examines supervisors' considerations about (not) using monitoring technologies to keep track of subordinates and their work performance. We conduct a factorial survey experiment. The hypothetical descriptions of workplace situations - so-called vignettes - create a situation where the surveyed supervisor is faced with a new team of subordinates and a given technology that can be used to track employees at work. Several components of the situation are randomly varied across vignettes and respondents. We find that supervisors are less interested in using monitoring technologies if the monitoring technology targets people rather than tasks and if the time effort for the supervisor is high. Supervisors' monitoring interest increases if their subordinates interact with sensitive firm data and the data evaluation is AI supported. Thus, our results confirm that supervisors take the costs and benefits of electronic performance monitoring into consideration regarding their attitude towards monitoring technologies at work.
    Keywords: employee performance monitoring, workplace technology, factorial survey experiment, Germany
    JEL: M50 D22 J01
    Date: 2023
  2. By: Alfitian, Jakob (University of Cologne); Deversi, Marvin (Education Y); Sliwka, Dirk (University of Cologne)
    Abstract: We present a natural field experiment on promoting pay equity through simple modifications to the salary review process involving 623 middle managers and 8, 951 subordinate employees of a large technology firm. We first document a gender gap not only in salary levels but also in salary increases. Our treatments provide for a gender-blind reallocation of the salary increase budget available to middle managers aimed at promoting pay equity, along with different variants of a corresponding decision guidance. We show that the budget reallocation combined with an explicit decision guidance, while still leaving middle managers discretion in allocating the budget, can completely eliminate the gender gap in salary increases. The treatments also do not appear to undermine the desired performance differentiation in salary increases. We thus show that simple modifications to the salary review process can go a long way toward achieving pay equity by preventing gender gaps from widening throughout employees' careers.
    Keywords: gender pay gap, pay equity, randomized controlled trial, salary structure
    JEL: J31 J71 M52
    Date: 2023–06
  3. By: Abeler, Johannes (University of Oxford); Huffman, David B. (University of Pittsburgh); Raymond, Collin (Purdue University)
    Abstract: Using field and laboratory experiments, we demonstrate that the complexity of incentive schemes and worker bounded rationality can affect effort provision, by shrouding attributes of the incentives. In our setting, complexity leads workers to over-provide effort relative to a fully rational benchmark, and improves efficiency. We identify contract features, and facets of worker cognitive ability, that matter for shrouding. We find that even relatively small degrees of shrouding can cause large shifts in behavior. Our results illustrate important implications of complexity for designing and regulating workplace incentive contracts.
    Keywords: complexity, bounded rationality, shrouded attribute, ratchet effect, dynamic incentives, field experiments
    JEL: D8 D9 J2 J3
    Date: 2023–07
  4. By: Matthias Fahn; Nicolas Klein
    Abstract: Consider a repeated principal-agent setting with verifiable effort and an extra profit that can materialize only if the agent is talented. The agent is overconfident and updates beliefs using Bayes’ rule. The agent's principal-expected compensation decreases over time until high talent is revealed; thus he may be employed only if beliefs are sufficiently low. We apply these results to a firm's promotion policy, which may be based on success in a previous job even if jobs are uncorrelated. This provides an explanation for the "Peter Principle" in a setting with verifiable performance and highly confident workers (Benson et al., 2019).
    Date: 2023–07
  5. By: Huffman, David B. (University of Pittsburgh); Raymond, Collin (Purdue University); Shvets, Julia (University of Cambridge)
    Abstract: A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using reduced form and structural methods we find that: (i) managers make overconfident predictions about future performance; (ii) managers have overly-positive memories of past performance; (iii) the two phenomena are linked at an individual level. Our results are consistent with models of motivated beliefs in which individuals are motivated to distort memories of feedback and preserve unrealistic expectations.
    Keywords: overconfidence, memory, tournament, motivated beliefs
    JEL: D82 D83 J33 L25 L81 M52 M54
    Date: 2023–07
  6. By: Bottasso, Anna (University of Genova); Bratti, Massimiliano (University of Milan); Cardullo, Gabriele (University of Genova); Conti, Maurizio (University of Genova); Sulis, Giovanni (University of Cagliari)
    Abstract: We study how changes in labor market regulation may trigger firm adjustments in skill demand. Leveraging rich administrative data from Italy, we investigate the effects of a reform that reduced firing costs for permanent employees and tightened temporary contracts' regulation to increase job stability. By using a difference-in-differences design, we document that the reform had unintended effects, inducing firms to increase layoffs of unskilled permanent employees and reducing hirings of unskilled workers on temporary contracts, but had no effect on skilled workers or permanent hirings. A theoretical search and matching model with heterogeneous skills and contract durations rationalizes our main findings.
    Keywords: labor market regulation, employment protection, temporary work, skill demand, worker flows
    JEL: J42 J63 J65 M53
    Date: 2023–06
  7. By: Diego Gentile Passaro; Fuhito Kojima; Bobak Pakzad-Hurson
    Abstract: Equal pay laws increasingly require that workers doing "similar" work are paid equal wages within firm. We study such "equal pay for similar work" (EPSW) policies theoretically and test our model's predictions empirically using evidence from a 2009 Chilean EPSW. When EPSW only binds across protected class (e.g., no woman can be paid less than any similar man, and vice versa), firms segregate their workforce by gender. When there are more men than women in a labor market, EPSW increases the gender wage gap. By contrast, EPSW that is not based on protected class can decrease the gender wage gap.
    Date: 2023–06
  8. By: Ariel J. Binder; Amanda Eng; Kendall Houghton; Andrew Foote
    Abstract: This paper leverages a unique linkage between American Community Survey data and postsecondary transcript records to examine how the gender pay gap, and its proximate determinants, varies across the distribution of education credentials in the 15 years following graduation. Although recent literature focuses on career disparities between the highest-educated women and men, we find evidence that the pay gap is smaller at higher education levels. Field-of-degree and occupation effects explain most of the gap among top bachelor’s graduates, while labor supply and unobserved channels matter more for less-competitive bachelor’s, associate’s, and certificate graduates. This heterogeneity in gap levels and mechanisms is especially large in the first decade following graduation. Our results suggest that contemporary early-career gender inequality lacks a unified explanation and requires different policy interventions for different subgroups. More research is needed to understand the larger unexplained gender pay gap among less-educated individuals.
    Keywords: gender pay gap, postsecondary transcript records, college selectivity, human capital, field and occupation choice, labor supply
    JEL: I24 I26 J16 J31
    Date: 2023–06

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