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on Human Capital and Human Resource Management |
| By: | Clemens, Marco (Institute for Labor Law and Industrial Relations in the European Union (IAAEU) and Trier University); Sauermann, Jan (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | Performance pay has been shown to have important implications for worker and firm productivity.Although workers’ skills may directly matter for the cost of effort to reach performance goals, surprisingly little is know about the heterogeneity in the effects of incentive pay across workers. In this study, we apply a dynamic difference-in-differences estimator to the introduction of a generous bonus pay program to study how salient performance thresholds affect incentivized and non-incentivized performance outcomes for low- and high-skilled workers. While we do find that individual incentive pay did not affect workers’ performance on average, we show that this result conceals an underlying heterogeneity in the response to individual performance pay: individual performance pay has a significant effect on the performance of high-skilled workers but not for low-skilled workers. The findings can be rationalized with the idea that the costs of effort differ by workers’ skill level. We also explore whether agents alter their overtime hours and find a negative effect, possibly avoiding negative consequences of longer working hours. |
| Keywords: | performance pay; incentives; productivity; skills; panel data |
| JEL: | C23 J33 M52 |
| Date: | 2025–05–19 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2025_006 |
| By: | Kunze, Astrid (Dept. of Economics, Norwegian School of Economics and Business Administration); Scharfenkamp, Katrin (Dept. of Sports Science, Bielefeld University) |
| Abstract: | This study examines the interplay of co-determination law and board gender quotas using novel board-director panel data for Norway. We present descriptive evidence suggesting that boards with employee representatives on boards of directors were more gender diverse before the gender quota. Difference-in-differences estimation results reveal that the differential effect of employee representation on gender diversity is negative after implementing the quota. Boards with employee representatives have recruited fewer women during the phase-in period and the flexible quota tended to be ineffective. We interpret the effect through employee representation as a potential mediating factor of board gender quotas on gender diversity. |
| Keywords: | Employee representation; boards of directors; gender; leadership affirmative action; public policy; shareholder directors; firm size |
| JEL: | G34 J16 J51 J53 J78 M54 |
| Date: | 2025–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhheco:2025_012 |
| By: | Beomjun Kim |
| Abstract: | This paper considers the optimal management structure about hiring a manager and providing the manager with a separate salary and bonus using a relational contract among an owner, a manager, and workers, assuming that the manager can observe individual worker performances while the owner can observe only overall team performance. I derive optimal contracts for the two cases in which the manage's salary and bonus are integrated into total team bonus or provided separately. I compare situations of having the manager distribute bonuses based on individual worker performance to the situation of equal bonus distribution based on overall team performance without a manager. Only a contract with a manager who receives a separate bonus is feasible for low discount factor. Making the manager to distribute the salary and bonus including himself is best with intermediate discount factor. Providing an equal bonus without a manager is optimal with high discount factor. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.21264 |
| By: | Sehoon Kim; Bernadette A. Minton; Rohan G. Williamson |
| Abstract: | We document that corporate directors’ past experience with abnormally severe climatic natural disasters shape their prosocial preferences and influence firm climate policies. Using detailed data on director career histories and county-level natural disasters, we identify Directors with Abnormal Disaster Experiences (DADEs). DADEs are significantly more likely to be affiliated with nonprofit organizations, consistent with heightened prosocial preferences. Importantly, firms with more DADEs on their boards exhibit lower scope 1 and 2 greenhouse gas emission intensities and are more likely to implement climate-related policies, including board climate oversight, emission targets, and management incentives to reduce emissions. These effects are driven by influential DADEs serving on governance, audit, or ESG committees, but absent among DADEs on finance, compensation, or risk committees, supporting a preference-based rather than risk-based mechanism. Independent directors, rather than the influence of CEOs, play a central role. The effects are stronger when disaster experiences are accumulated over longer histories and in large or high-emission firms. The results are muted in smaller disasters and not driven by recent trends in attention to climate change. Despite the role of preferences, firms with more DADEs do not exhibit worse financial or operational performance. Using director deaths as plausibly exogenous shocks, we provide causal evidence. Our findings show that directors’ experiences heighten their prosocial preferences that lead them to influence corporate climate policy. |
| JEL: | D64 G34 G41 Q54 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33750 |
| By: | Garg, Teevrat (University of California, San Diego); Jagnani, Maulik (Tufts University); Lyons, Liz (University of California, San Diego) |
| Abstract: | Heat's impact on economic growth and aggregate productivity is well-established, but while individual impairments are well-understood as mechanisms, the role of interpersonal dynamics remain unexplored despite the growing prevalence of team-based occupations. In our experiment, programmers were randomly assigned to work individually or in pairs under warm (29°C) or control (24°C) conditions. We found that heat had no effect on individual performance but impaired team performance—not through decreased effort but likely through impaired collaboration. This negative impact was strongest in heterogeneous teams, suggesting heat exacerbates coordination challenges, confirmed by poorer partner evaluations in warm conditions. |
| Keywords: | team production, heat stress, labor productivity |
| JEL: | J24 Q54 Q56 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17870 |
| By: | Görlitz, Katja (Hochschule der Bundesagentur für Arbeit (HdBA)); Sels, Tim (UC Berkeley) |
| Abstract: | This study analyzes the gender gap in self- and peer evaluations based on a laboratory experiment. Five players performed a creativity task in a high-stakes winner-takes-all tournament. The treatment without validation informed all players that evaluations that they will conduct determine who will win. The treatment with public validation additionally informed them that they can see an objective performance measure of all players (including themselves) at the end of the experiment which is irrelevant for winning. The results show that men give themselves better selfevaluations compared to women when there is no validation. This gender difference vanishes completely when providing public validation. |
| Keywords: | self-evaluation, peer evaluation, public validation, gender |
| JEL: | J16 M50 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17877 |
| By: | Andrews, Dan (OECD); Garnero, Andrea (OECD) |
| Abstract: | Restraints clauses that prevent workers from joining (or starting) a competing firm (non-compete clauses), the disclosure of confidential information or the poaching of former co-workers or clients are traditionally justified to protect legitimate business interests (e.g. trade secrets, investments in training). Yet, there are increasing concerns that such clauses may be deployed to suppress job mobility and competition. This paper reviews the international evidence base and finds that non-compete clauses are more prevalent than anticipated, with up to one-quarter of employees subject to such clauses in some countries. These clauses extend beyond highly paid professionals to include low-wage and elementary workers, often bundled with other restrictions, further diminishing workers’ bargaining power. The balance of evidence suggests that non-compete clauses suppress job mobility, firm entry, innovation, wages and productivity, which more than offset any gains from enhanced incentives for firm-specific investment. Regulatory efforts to limit non-compete clauses are gaining traction in some countries but comprehensive empirical evidence remains scarce outside the United States, underscoring the need for more research. |
| Keywords: | non-compete clauses, monopsony, earnings, knowledge diffusion, mobility |
| JEL: | J31 J41 J42 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17865 |
| By: | Sugat Chaturvedi; Rochana Chaturvedi |
| Abstract: | Generative artificial intelligence (AI), particularly large language models (LLMs), is being rapidly deployed in recruitment and for candidate shortlisting. We audit several mid-sized open-source LLMs for gender bias using a dataset of 332, 044 real-world online job postings. For each posting, we prompt the model to recommend whether an equally qualified male or female candidate should receive an interview callback. We find that most models tend to favor men, especially for higher-wage roles. Mapping job descriptions to the Standard Occupational Classification system, we find lower callback rates for women in male-dominated occupations and higher rates in female-associated ones, indicating occupational segregation. A comprehensive analysis of linguistic features in job ads reveals strong alignment of model recommendations with traditional gender stereotypes. To examine the role of recruiter identity, we steer model behavior by infusing Big Five personality traits and simulating the perspectives of historical figures. We find that less agreeable personas reduce stereotyping, consistent with an agreeableness bias in LLMs. Our findings highlight how AI-driven hiring may perpetuate biases in the labor market and have implications for fairness and diversity within firms. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.21400 |