nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒08‒21
ten papers chosen by
Patrick Kampkötter, Eberhard Karls Universität Tübingen

  1. Does Performance Pay Increase the Risk of Marital Instability? By Baktash, Mehrzad B.; Heywood, John S.; Jirjahn, Uwe
  2. Incentive Complexity, Bounded Rationality and Effort Provision By Johannes Abeler; David Huffman; Collin Raymond; David B. Huffman
  3. Does Incentive Pay Substitute for Monitoring? The Role of Managerial Skills and Span of Control By Filippo Belloc; Stefano Dughera; Fabio landini
  4. Employee Performance and Mental Well-Being: The Mitigating Effects of Transformational Leadership during Crisis By Kristina Czura; Florian Englmaier; Hoa Ho; Lisa Spantig
  5. Outside options and worker motivation By Alexander Ahammer; Matthias Fahn; Flora Stiftinger
  6. How do managers form their expectations about working from home? Survey experiments on the perception of productivity By Erdsiek, Daniel; Rost, Vincent
  7. Who Does the Talking Here? The Impact of Gender Composition on Team Interactions By David Hardt; Lea Mayer; Johannes Rincke
  8. Mismatch in preferences for working from home: Evidence from discrete choice experiments with workers and employers By Lewandowski, Piotr; Lipowska, Katarzyna; Smoter, Mateusz
  9. Displacement Effects in Manufacturing and Structural Change By Ines Helm; Alice Kuegler; Uta Schoenberg
  10. Access to Financing and Racial Pay Gap Inside Firms By Janet Gao; Wenting Ma; Qiping Xu

  1. By: Baktash, Mehrzad B.; Heywood, John S.; Jirjahn, Uwe
    Abstract: This paper uses German survey data on married couples to examine the association of performance pay at work and subsequent separation or divorce. Despite extensive controls, performance pay remains associated with an increased probability of separation or divorce. Yet, the results are entirely gender specific. When husbands earn performance pay, no association with marital instability is found. When wives earn performance pay, the association is large and robust. This pattern persists across a variety of modeling choices and attempts to account for endogeneity. We argue that the pattern fits theoretical expectations and discuss the implications.
    Keywords: Performance Pay, Separation, Divorce, Gender
    JEL: J33 I31 J32
    Date: 2023
  2. By: Johannes Abeler; David Huffman; Collin Raymond; David B. Huffman
    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: D80 D90 J20 J30
    Date: 2023
  3. By: Filippo Belloc; Stefano Dughera; Fabio landini
    Abstract: We model the conditions under which firm agency issues are tackled through incentive pay as opposed to monitoring. The model shows that a larger span of control makes labor surveillance less effective as an effort extraction mechanism, whereas managerial skills increase the opportunity cost of monitoring. As a result, the use of pay-for-performance schemes is more likely in firms with a lower staff-to-managers ratio and more skilled managers. An empirical analysis on firm-level Italian data produces results coherent with our theoretical predictions. Taken together, our results help to explain the highly heterogeneous use of incentive contracts among firms
    Keywords: Incentive pay, Managerial ability, Span of control
    JEL: L23 M52 C72 J33 J41
    Date: 2023–06
  4. By: Kristina Czura (University of Groningen); Florian Englmaier (LMU Munich); Hoa Ho (LMU Munich); Lisa Spantig (RWTH Aachen)
    Abstract: The positive role of transformational leadership on productivity and mental wellbeing has long been established. Transformational leadership behavior may be particularly suited to navigate times of crisis which are characterized by high levels of complexity and uncertainty. We exploit quasi-random assignment of employees to managers and study the role of frontline managers’ leadership styles on employees’ performance, work style, and mental well-being in times of crisis. Using longitudinal administrative data and panel survey data from before and during the Covid-19 pandemic, we find that frontline managers who were perceived as having a more transformational leadership style before the onset of the pandemic, lead employees to better performance and mental well-being during the pandemic.
    Keywords: leadership; frontline managers; labor-management relations; organizational behavior;
    JEL: M54 M12 J53
    Date: 2023–08–02
  5. By: Alexander Ahammer; Matthias Fahn; Flora Stiftinger (Department of Economics, Johannes Kepler University Linz, Austria)
    Abstract: We study the relationship between outside options and workers’ motivation to exert effort. We evaluate changes in outside options arising from age and experience cutoffs in the Austrian unemployment insurance (UI) system, and use absenteeism as a proxy for worker effort. Results indicate that a one-percent increase in the potential UI benefit duration increases absenteeism at the intensive margin by 0.28 percent. These results are consistent with a relational contracting model where effort is constrained by the future value of an employment relationship. This model further predicts that effort reductions are more pronounced if benefits assume a larger role in a worker’s outside option and if the perceived relationship value is small. Indeed, we find that our effects are stronger for workers with higher potential cost of unemployment, for older workers, in declining rather than in growing firms, in low-wage firms, and for women as well as workers with children
    Keywords: Outside options, effort incentives, relational contracts
    JEL: D21 D22 J22 J53 M52
    Date: 2023–07
  6. By: Erdsiek, Daniel; Rost, Vincent
    Abstract: The recent shift towards working from home (WFH) has far-reaching implications for social and economic outcomes. While firms are gatekeepers for the ongoing diffusion of flexible work arrangements, there is little evidence on how firms decide to offer WFH. We leverage two survey experiments among nearly 800 knowledge-intensive services firms in Germany to analyse whether managers' beliefs about the productivity effects of WFH affect their adoption decisions. Exploiting exogenous variation in managers' information set, we find that managers update their beliefs about the productivity effects of WFH when they receive information on workers' self-assessed WFH productivity. In addition, the information treatment significantly increases managers' willingness to adopt or intensify WFH policies. Combining our main survey experiment with two follow-up surveys, we find persistent information treatment effects on both managers' beliefs about WFH productivity and firms' expected WFH intensity after the Covid-19 pandemic. A complementary survey experiment confirms our results pointing to a causal relationship between managers' beliefs about WFH productivity and the adoption of WFH practices. These findings have implications for potential policy measures targeting firms' WFH adoption.
    Keywords: working from home, survey experiment, information provision, firm-level, managers, expectations
    JEL: D22 D23 L22 O33 M54
    Date: 2023
  7. By: David Hardt; Lea Mayer; Johannes Rincke
    Abstract: We analyze how the gender composition of teams affects team interactions. In an online experiment, we randomly assign individuals to gender-homogenous or gender-mixed teams. Teams meet in an audio chat room and jointly work on a gender-neutral team task. By design, effects on team performance can only work through communication. We find that all-male teams communicate more than all-female teams and outperform teams of both alternative gender compositions. In mixed teams, males strongly dominate the team conversation quantitatively. Past exposure to gender-mixed teamwork makes females more reluctant to engage in mixed teams, while for males the opposite is true.
    Keywords: teams, teamwork, gender composition, communication, team performance, preference for teamwork, online experiment
    JEL: C92 C93 D83 J16
    Date: 2023
  8. By: Lewandowski, Piotr; Lipowska, Katarzyna; Smoter, Mateusz
    Abstract: We study preferences for remote work using a large-scale discrete choice study with 10, 000 workers and 1, 500 employers in Poland. Workers value remote work more than employers. On average, workers are willing to sacrifice 2.9% of earnings for remote work, with hybrid work from home (WFH) for 2-3 days (5.1%) preferred over 5 days (0.6%). Employers expect a 21.0% wage cut from remote workers. This 18 pp gap between employers' and workers' valuations reflects employers' concerns over productivity loss (14 pp) and effort to manage remote workers (4 pp). Only 25-36% of employers with positive perceptions of remote work productivity show valuations of remote work that align with workers' willingness to pay for it.
    Keywords: Working from home, remote work, discrete choice experiment, willingness to pay
    JEL: J21 J31 J81
    Date: 2023
  9. By: Ines Helm (University of Munich); Alice Kuegler (Central European University); Uta Schoenberg (University College London)
    Abstract: We investigate the consequences of structural change for workers displaced from the manufacturing sector. Manufacturing establishments traditionally employed low- and high-wage workers in similar proportions and paid substantial wage premiums to both types of workers. Structural change has led to the disappearance of these jobs, particularly for low-wage workers. Decomposing displacement wage losses, we show that low-wage workers suffer considerable losses in establishment premiums following displacement, whereas high-wage workers tend to fall down the match quality ladder. With ongoing structural change, losses in wages and establishment premiums have increased over time, especially for low-wage workers, in part because they are increasingly forced to switch to low knowledge service jobs where establishment premiums are low. Our findings further highlight that structural change and layoffs in manufacturing have significantly contributed to job polarization and the rise in assortative matching of workers to firms.
    Keywords: : structural change, manufacturing decline, displaced workers, cost of job loss, human capital, firm rents
    JEL: J22 J24 J31 J63
    Date: 2023–07
  10. By: Janet Gao; Wenting Ma; Qiping Xu
    Abstract: How does access to financing influence racial pay inequality inside firms? We answer this question using the employer-employee matched data administered by the U.S. Census Bureau and detailed resume data recording workers’ career trajectories. Exploiting exogenous shocks to firms’ debt capacity, we find that better access to debt financing significantly narrows the earnings gap between minority and white workers. Minority workers experience a persistent increase in earnings and also a rise in the pay rank relative to white workers in the same firm. The effect is more pronounced among mid- and high-skill minority workers, in areas where white workers are in shorter supply, and for firms with ex-ante less diverse boards and greater pre-existing racial inequality. With better access to financing, minority workers are also more likely to be promoted or be reassigned to technology-oriented occupations compared to white workers. Our evidence is consistent with access to financing making firms better utilize minority workers’ human capital.
    Keywords: Racial Inequality, Diversity, Financing Friction, Access to Debt.
    JEL: J31 J71 G3
    Date: 2023–07

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