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on Human Capital and Human Resource Management |
| By: | Leonardo Bursztyn; Ewan Rawcliffe; Hans-Joachim Voth |
| Abstract: | We study the ability of a firm to elicit repeated effort from workers by creating a “rat race” of hierarchical status-based incentives. We examine performance using data on over 5, 000 German air force pilots during World War II. Pilots’ effort is hard to monitor; motivation is key to success. Fighter pilot performance increases markedly as they approach eligibility for a medal before falling off upon receipt of the award. The same effort path repeats itself as the pilot nears the next higher-prestige medal. Status-conscious pilots also exert more effort when new medals are introduced. We show that medals serve as substitutes for other forms of status. Medal cachet declines over time as lower-ability pilots receive them, making the introduction of new medals desirable. These results suggest that a tiered, expanding system of status-based incentives can repeatedly leverage worker status concerns to extract effort. |
| JEL: | D22 D91 M52 N44 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34707 |
| By: | Antonio Cabrales; Esther Hauk |
| Abstract: | Many workers value purpose and meaning in their jobs alongside income, and firms need to align these preferences with profit goals. This paper develops a dynamic model in which firms invest in purpose to enhance job meaning and motivate effort. Workers, who differ in productivity, choose both productive and socialization effort, gaining utility from income and meaning. Purpose accumulates over time through firm investment and interacts with socialization to generate meaning, which boosts productivity. Firms invest in purpose only insofar as it raises profits. We characterize the unique equilibrium, including steady state and transition dynamics. Meaning and purpose rise with the importance workers place on meaning and with firm's patience, but fall with depreciation and socialization costs. The relationship with workers' share of output is nonmonotonic. We also show that some intermediate level of heterogeneity in skills is best for performance. Compared to a worker-owned firm, profit-maximizing firms underinvest in purpose, highlighting a misalignment between firm incentives and worker preferences. The model provides insight into when and why firms adopt purpose-driven practices and underscores the role of diversity in fostering meaning at work. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.05005 |
| By: | Tsuyoshi Nihonsugi (Department of Economics, Osaka University of Economics); Yoshio Kamijo (Faculty of Political Science and Economics, Waseda University); Satoshi Taguchi (Graduate School of Commerce, Doshisha University); Shigeharu Okajima (Graduate School of International Cooperation Studies, Kobe University); Hiroko Okajima (Graduate School of Economics, Nagoya University) |
| Abstract: | This study examines how gender quotas influence job application decisions and occupational choices in Japan, and how these effects vary across individual characteristics. Using a choice-based conjoint experiment with 1, 167 participants, we analyze preferences for positions with and without gender quotas across different job types. We find that gender quotas significantly increase women's application likelihood by approximately 10 percentage points, with the strongest effects among high-performing employed women, while not discouraging applications from comparably qualified men. Beyond increasing female representation, quotas enable women to make occupational choices that better align with their preferences and are associated with higher expected productivity and workplace well-being. Further analysis reveals that support for gender quotas relates systematically to personality traits, gender role beliefs, and prior experiences—notably, men who recognize past gender advantages show greater support for quotas. These findings provide actionable insights for designing inclusive recruitment strategies and diversity policies in non-Western contexts, demonstrating that well-designed quotas can promote both equity and efficiency in labor markets. |
| Keywords: | gender quotas, affirmative action, gender gap, hiring discrimination, occupational segregation, labor market |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2529 |
| By: | Calebe Figueiredo; Neville Francis |
| Abstract: | We study the labor market effects of tenure-dependent severance pay systems that tie firing costs to workers’ accumulated earnings histories. We develop an overlapping-generations search-and-matching model in which firms face increasing separation costs over the employment relationship. Using administrative employer–employee data from Brazil, we estimate the model and show that tenure-dependent severance costs induce labor hoarding among low-productivity, long-tenured workers who would not be hired if unemployed. These distortions are strongest late in the life cycle, when firms optimally delay separation to avoid severance obligations, while simultaneously imposing higher hiring thresholds on older unemployed workers with shorter continuation values. These forces imply that tenure-based severance policies protect employment histories rather than productivity, shaping labor market dynamics over the life cycle and generating allocative inefficiencies. |
| JEL: | C61 C78 J64 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34704 |
| By: | Iñaki Aldasoro; Leonardo Gambacorta; Rozalia Pal; Debora Revoltella; Christoph Weiss; Marcin Wolski |
| Abstract: | This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12, 000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption. |
| Keywords: | artificial intelligence, firm productivity, Europe, digital transformation |
| JEL: | D22 J24 L25 O33 O47 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1325 |
| By: | Fabian Stephany; Ole Teutloff; Angelo Leone |
| Abstract: | The growing adoption of artificial intelligence (AI) technologies has heightened interest in the labour market value of AI-related skills, yet causal evidence on their role in hiring decisions remains scarce. This study examines whether AI skills serve as a positive hiring signal and whether they can offset conventional disadvantages such as older age or lower formal education. We conduct an experimental survey with 1, 700 recruiters from the United Kingdom and the United States. Using a paired conjoint design, recruiters evaluated hypothetical candidates represented by synthetically designed resumes. Across three occupations - graphic designer, office assistant, and software engineer - AI skills significantly increase interview invitation probabilities by approximately 8 to 15 percentage points. AI skills also partially or fully offset disadvantages related to age and lower education, with effects strongest for office assistants, where formal AI certification plays an additional compensatory role. Effects are weaker for graphic designers, consistent with more skeptical recruiter attitudes toward AI in creative work. Finally, recruiters' own background and AI usage significantly moderate these effects. Overall, the findings demonstrate that AI skills function as a powerful hiring signal and can mitigate traditional labour market disadvantages, with implications for workers' skill acquisition strategies and firms' recruitment practices. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.13286 |
| By: | Silvia Matalone; Michele Belloni; Ludovico Carrino; Elena Meschi |
| Abstract: | This paper estimates the causal effect of job quality on the physical and mental health of older European workers. We combine longitudinal data from the Survey of Health, Ageing and Retirement in Europe (SHARE) with occupation- and country-level job-quality measures from the European Working Conditions Survey (EWCS) for 14 European countries. To address endogenous occupational sorting, we focus on workers who remain within the same 3-digit ISCO occupation across waves, and estimate individual fixed-effects models that exploit exogenous within-occupation changes in working conditions over time. We find that deteriorations in job quality significantly worsen health outcomes. In particular, higher work intensity, poorer working time quality, and weaker job prospects reduce mental health and selected physical health outcomes. Pronounced gender heterogeneity emerges: women’s mental health is more sensitive to changes in work intensity and working time quality, while men’s health is more consistently affected by job discretion, including cardiovascular risk. Institutional context further moderates these effects, with smaller health penalties in countries with stronger healthcare capacity, stricter employment protection, and more comprehensive occupational health and safety regulation. Overall, the findings highlight the role of labour market conditions as causal determinants of health and the importance of integrated policy responses in ageing societies. |
| Keywords: | Working conditions, physical and mental health, healthcare systems and institutions |
| JEL: | I1 J01 J28 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:567 |