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on Human Capital and Human Resource Management |
| By: | Zoe B. Cullen; Bobak Pakzad-Hurson; Ricardo Perez-Truglia |
| Abstract: | We estimate the value employees place on remote work using revealed preferences in a high-stakes, real-world context, focusing on U.S. tech workers. On average, employees are willing to accept a 25% pay cut for partly or fully remote roles. Our estimates are three to five times that of previous studies. We attribute this discrepancy partly to methodological differences, suggesting that existing methods may understate preferences for remote work. Because of the strong preference for remote work, we expected to find a compensating wage differential, with remote positions offering lower compensation than otherwise identical in-person positions. However, using novel data on salaries for tech jobs, we reject that hypothesis. We propose potential explanations for this puzzle, including optimization frictions and worker sorting. |
| JEL: | J24 J31 M54 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33383 |
| By: | Eriksson, Tor; Ortega, Jaime |
| Abstract: | Using firm-level data from Denmark, a country characterized by a high level of adoption of “high-performance work practices” (HPWPs), we document a large percentage of firms with limited adoption and large differences depending on the firms’ organizational structures. To explain these differences, we propose a theoretical framework based on agency theory and on human resource (HR) process theory in which the benefits of HPWPs vary across organizations according to their organizational structure. We find that opportunity- and skill-enhancing practices are more frequently used in firms with a network structure than in firms with a divisional structure, which in turn use them more frequently than firms with a functional structure. These findings are consistent with the idea that firms whose structures are designed to rely more heavily on employee control benefit less from HPWPs than those whose structures are meant to promote employee commitment. The use os performance pay is greater in divisional firms than in functional firms, which is consistent with this same idea. However, we find that the use of performance pay is lower in network organizations than in divisional organizations and is not significantly different from its use in functional organizations. |
| Keywords: | High-performance work practices, organizational structure |
| JEL: | M2 M5 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123332 |
| By: | Sydnee Caldwell; Ingrid Haegele; Jörg Heining |
| Abstract: | We use novel surveys of firms and workers, linked to administrative employer-employee data, to study the prevalence and importance of individual bargaining in wage determination. We show that simple survey questions accurately elicit firms’ bargaining strategies. Using the elicited strategies for 772 German firms, we document that the majority of firms are willing to engage in individual wage bargaining. Labor market factors predict firms’ strategies better than firm characteristics. Survey responses from nearly 10, 000 full-time workers indicate that most worker-firm interactions begin with the worker providing their salary expectations. Most interactions end with the worker rejecting the offer and remaining at the incumbent firm. There is substantial heterogeneity in workers’ bargaining behavior, which translates into within-firm wage inequality. Firms that set pay via individual bargaining have a 3 percentage point higher gender wage gap. |
| JEL: | J30 J31 J42 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33396 |
| By: | Sockin, Jason (Cornell University); Sockin, Michael (University of Texas at Austin) |
| Abstract: | Firms differ in the extent to which they use variable pay. Using U.S. employeeemployer matched data on variable pay from Glassdoor, we document such dispersion and find workers are exposed to firm-level shocks through variable pay. Credit rating downgrades from investment to speculative grade, negative shocks to financial or operational performance, and greater exposure to a financial crisis, as proxied for by the collapse of Lehman Brothers, induce firms to shift compensation toward base pay. Increased use of variable pay is associated with greater earnings variance for workers but less volatile growth for firms. We rationalize these findings in a model of risk sharing between a risk-averse firm and workers with limited commitment. |
| Keywords: | risk sharing, bonuses, firm-specific shocks, employment volatility, layoffs |
| JEL: | J33 E24 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17644 |
| By: | Nicholas Bloom; Mihai A. Codreanu; Robert A. Fletcher |
| Abstract: | We partner with a large US payment-processing company to run a 5-year, 10 wave panel survey of incentivized quarterly sales forecasts on over 6, 000 firms. We match firm predictions to proprietary revenue data to assess accuracy. We find firms forecast poorly, with issues of inaccuracy, over-optimism, predictable errors and over-precision. To assess the causes of these forecasting issues we run experiments on: (i) data use, (ii) incentives, (iii) forecasting skill, and (iv) contingent thinking. We find greater data use primarily decreases noise and reduces over-precision, while higher incentives moderate over-optimism. Both moderately increase accuracy. The other two treatments have no impact. These results suggest forecasting biases can be reduced but are hard to eliminate. In a simple simulation model, we show these biases change firm responsiveness to changes in taxes and productivity, highlighting their macro importance. |
| JEL: | J0 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33384 |
| By: | Jan Schymik; Matthias Meier; Alexander Schramm; Alexander Schwemmer |
| Abstract: | This paper studies how managerial pay shapes the allocation of capital within firms. We leverage quasi-experimental variation in the composition of managerial pay between cash bonuses and equity compensation. We find that a relative increase in cash bonuses leads firms to reallocate capital toward less durable investment projects. To rationalize the empirical evidence, we develop a quantitative model with agency frictions. In the model, a relative increase in cash bonuses strengthens managerial short-termism, which shifts the investment composition toward less durable projects. The observed change in managerial pay exacerbates within-firm capital misallocation and leads to a sizeable contraction in output. |
| Keywords: | Investment, Firms, Managerial Pay, Capital Misallocation. |
| JEL: | D25 E22 E32 G31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_637 |
| By: | Hennecke, Juliane (Otto-von-Guericke University Magdeburg); Knabe, Andreas (Otto-von-Guericke University Magdeburg) |
| Abstract: | This paper examines the relationship between flexible working arrangements (FWA) and workers' affective well-being (AWB), using data from the American Time-Use Survey (ATUS) and the Occupational Information Network (O*NET). We analyze differences in workers' emotional experiences during paid work, unpaid work, and leisure depending on the general availability of FWA within their occupation. Our findings reveal a significant negative association between teleworkability and AWB during labor activities for women, resulting in reduced day-average emotional well-being if jobs are also time-flexible. In contrast, we do not find significant associations between FWA and AWB during paid work for men. Additionally, we find no evidence of systematic spillovers to the AWB in non-labor activities for both men and women. Further nuanced findings regarding parents and the role of time flexibility underscore potential gender differences in the impact of FWA on well-being. |
| Keywords: | flexible working arrangements, affective well-being, telework, working from home, work and family, work-life balance, gender differences |
| JEL: | J22 J81 D91 I31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17634 |