nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒08‒28
eight papers chosen by
Patrick Kampkötter, Eberhard Karls Universität Tübingen

  1. Why wages don't fall in jobs with incomplete contracts By Marco Fongoni; Daniel Schaefer; Carl Singleton
  2. Managerial Preferences towards Employees Working from Home: Post-Pandemic Experimental Evidence By Aga Kasperska; Anna Matysiak; Ewa Cukrowska-Torzewska
  3. Competition and Career Advancement By Julian Johnsen; Hyejin Ku; Kjell G. Salvanes
  4. Indicator Choice in Pay-for-Performance By Majid Mahzoon; Ali Shourideh; Ariel Zetlin-Jones
  5. Female Leadership and Workplace Climate By Sule Alan; Gözde Corekcioglu; Mustafa Kaba; Matthias Sutter
  6. Are Managers More Machiavellian Than Other Employees? By Baktash, Mehrzad B.; Jirjahn, Uwe
  7. Working from Home, Worker Sorting and Development By David Atkin; Antoinette Schoar; Sumit Shinde
  8. The Wage Effect of Workplace Sexual Harassment: Evidence for Women in Europe By Giulia Zacchia; Izaskun Zuazu

  1. By: Marco Fongoni (École d'Économie d'Aix-Marseille, Aix-Marseille Université); Daniel Schaefer (Institut für Volkswirtschaftslehre, Johannes-Kepler-Universität Linz); Carl Singleton (Department of Economics, University of Reading)
    Abstract: We investigate how the incompleteness of an employment contract - discretionary and non-contractible effort - can affect an employer's decision about cutting nominal wages. Using matched employer-employee payroll data from Great Britain, linked to a survey of managers, we find support for the main predictions of a stylised theoretical framework of wage determination: nominal cuts are at most half as likely when managers believe their employees have significant discretion over how they do their work, though involvement of employees in workplace decision-making reduces this correlation. We also describe how contract incompleteness and wage cuts tend to vary across different jobs. These findings provide the first quantitative evidence of the notion that managerial beliefs about contractual incompleteness can account for their hesitancy over nominal wage cuts. This has long been conjectured by economists, based on anecdotes, qualitative surveys, and lab experiments.
    Keywords: Wage rigidity, Employment contract, Workplace relations, Employer-employee data
    JEL: E24 E70 J31 J41
    Date: 2023–08–02
  2. By: Aga Kasperska (University of Warsaw, Faculty of Economic Sciences); Anna Matysiak (University of Warsaw, Faculty of Economic Sciences); Ewa Cukrowska-Torzewska (University of Warsaw, Faculty of Economic Sciences)
    Abstract: Work from home (WFH) has been a part of the professional landscape for over two decades, yet it was the COVID-19 pandemic that has substantially increased its prevalence. The impact of WFH on careers is rather ambiguous, and a question remains open about how this effect is manifested in the current times considering the recent extensive and widespread use of WFH during the pandemic. In an attempt to answer these questions, this article investigates whether managerial preferences for promotion, salary increase and training allowance depend on employee engagement in WFH. We also explore the heterogeneity of the effects of WFH on careers across different populations by taking into account the employee’s gender, parenthood status, frequency of WFH as well as the prevalence of WFH in the team. An online discrete choice experiment was run on a sample of over 1, 000 managers from the United Kingdom. The experiment was conducted between July and December 2022, and thus after the extensive use of this working arrangement during the COVID-19 pandemic. The findings indicate that employees who WFH are less likely to be considered for promotion, salary increase and training than on-site workers. The pay and promotion penalties for WFH are particularly true for men (both fathers and non-fathers) and childless women, but not mothers. We also find that employees operating in teams with a higher prevalence of WFH do not experience negative career effects when working from home. The findings underline the importance of individual factors and familiarisation as well as social acceptance of flexible working arrangements in their impact on careers.
    Keywords: career, experiment, family, gender, promotion, work from home
    JEL: J12 J13 J16 J21
    Date: 2023
  3. By: Julian Johnsen; Hyejin Ku; Kjell G. Salvanes
    Abstract: In standard promotion tournaments, contestants are ranked based on their output or productivity. We argue that workers’ career progression may also depend on their relative rankings in dimensions a priori unrelated to their job performance, such as visibility or in-person presence. Such implicit tournaments may rationalize a variety of seemingly counterproductive practices in the workplace, including long working hours, low uptake of statutory leave, and presenteeism. We illustrate the significance of implicit tournaments using the case of paternity leave among new fathers, where we exogenously vary a focal worker’s ranking within a contest, not via his own leave status but that of his competitors, exploiting a policy reform. We show that the focal worker is put on a better earnings trajectory than otherwise when a larger share of his competitors take leave because of the reform. The focal worker’s own absolute leave, however, has no direct effect on his earnings path as long as his own and his competitors’ leave statuses are symmetric. With effective coordination, it should thus be possible for all fathers to utilize paternity leave without incurring unwarranted career costs. This has implications for statutory leave policies, flexible work arrangements, and gender equality.
    Keywords: implicit tournaments, relative rank, promotion, parental leave, flexible work arrangements, gender differences
    JEL: M51 M52 J16 J22 J24 J31
    Date: 2023
  4. By: Majid Mahzoon; Ali Shourideh; Ariel Zetlin-Jones
    Abstract: We study the classic principal-agent model when the signal observed by the principal is chosen by the agent. We fully characterize the optimal information structure from an agent's perspective in a general moral hazard setting with limited liability. Due to endogeneity of the contract chosen by the principal, the agent's choice of information is non-trivial. We show that the agent's problem can be mapped into a geometrical game between the principal and the agent in the space of likelihood ratios. We use this representation result to show that coarse contracts are sufficient: The agent can achieve her best with binary signals. Additionally, we can characterize conditions under which the agent is able to extract the entire surplus and implement the first-best efficient allocation. Finally, we show that when effort and performance are one-dimensional, under a general class of models, threshold signals are optimal. Our theory can thus provide a rationale for coarseness of contracts based on the bargaining power of the agent in negotiations.
    Date: 2023–07
  5. By: Sule Alan (European University Institute); Gözde Corekcioglu (Kadir Has University); Mustafa Kaba (Max Planck Institute for Research on Collective Goods); Matthias Sutter (Max Planck Institute for Research on Collective Goods, University of Cologne, University of Innsbruck)
    Abstract: Using data from over 2, 000 professionals in 24 large corporations, we show that female leaders shape the relational culture in the workplace differently than male leaders. Males form homophilic professional ties under male leadership, but female leadership disrupts this pattern, creating a less segregated workplace. Female leaders are more likely to establish professional support links with their subordinates. Under female leadership, female employees are less likely to quit their jobs but no more likely to get promoted. Our results suggest that increasing female presence in leadership positions may be an effective way to mitigate toxic relational culture in the workplace.
    Keywords: female leadership; workplace climate; social networks
    JEL: C93 J16 M14
    Date: 2023–08
  6. By: Baktash, Mehrzad B.; Jirjahn, Uwe
    Abstract: Concerns about corporate scandals and abusive leadership suggest that individuals with an opportunistic and manipulative personality take advantage of incomplete incentive and control systems to get their way into managerial positions. Against this background, we examine whether there is an association between Machiavellianism and occupying a managerial position. We suggest how to incorporate the psychological concept of Machiavellianism into agency theory and hypothesize that individuals scoring high on Machiavellianism are more likely to attain and keep a managerial position. Using a large and representative panel dataset from Germany, our empirical analysis confirms a strong and positive relationship between Machiavellianism and occupying a managerial position. This result holds in various robustness checks and in instrumental variable estimations accounting for possible endogeneity. Furthermore, our analysis provides evidence that the relationship is monotone; i.e., those with the highest scores of Machiavellianism are most likely to be managers. It also suggests that the direction of influence runs from Machiavellianism to occupational status and not vice versa.
    Keywords: Machiavellianism, Dark Triad, Managers, Agency Theory, Occupational Sorting
    JEL: D23 D90 J24 M12 M51
    Date: 2023
  7. By: David Atkin; Antoinette Schoar; Sumit Shinde
    Abstract: A growing literature explores the impact of home-based versus office-based work. Differences in productivity may arise due to a treatment effect of the office or from workers with different abilities sorting into office or home work. We conduct an RCT in the data entry sector in India that exogenously allocates workers to the home or office. We find that the productivity of workers randomly assigned to working from home is 18% lower than those in the office. Two-thirds of the effect manifests itself from the first day of work with the remainder due to quicker learning by office workers over time. We find negative selection effects for office-based work: workers who prefer home-based work are 12% faster and more accurate at baseline. We also find a negative selection on treatment: workers who prefer home work are substantially less productive at home than at the office (27% less compared to 13% less for workers who prefer the office). These negative selection effects are partially explained by subgroups that likely face bigger constraints on selecting into office work, such as those with children or other home care responsibilities as well as poorer households.
    JEL: J01 J10 J22 J24 J46
    Date: 2023–07
  8. By: Giulia Zacchia (Sapienza University of Rome); Izaskun Zuazu (Duisburg-Essen University)
    Abstract: This article contributes to the literature on wage discrimination by examining the consequences of sexual harassment in the workplace on wages for women in Europe. We model the empirical relationship between sexual harassment risk and wages for European women employees using individual-level data provided by the European Working Conditions Survey (EWCS, Eurostat). We find that sexual harassment risk has a negative and statistically significant effect on wages of -0.03% on average for women in Europe. However, our empirical analysis uncovers the importance of considering the dynamics of workplace power relations: analyzing individual-level data, we find evidence of a higher negative impact of sexual harassment risk on wages for women working in counter-stereotypical occupations. We conclude that the wage effect of hostile working conditions, mainly in terms of sexual harassment risk in the workplace, should be considered and monitored as a first critical step in making women be less vulnerable at work and increasing their bargaining power, thereby reducing inequalities in working conditions and pay in Europe.
    Keywords: Sexual harassment, wages, working conditions, Europe.
    JEL: J71 J31 J16 M52
    Date: 2023–05–08

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