|
on Human Capital and Human Resource Management |
| By: | Samuel Häfner; Niklas Haeusle; Winfried Koeniger; Alexander Braun |
| Abstract: | We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric separating equilibrium that is also efficient. In equilibrium, the extent to which the compensation scheme delays payment until the production quality becomes known depends on whether, and to which extent, the consumers are financially constrained. We discuss how our model relates to the design of compensation schemes in current online peer-to-peer markets. |
| Keywords: | adverse selection, self selection, peer-to-peer markets, labor markets, capital market imperfections |
| JEL: | D15 D82 D86 E24 J33 M52 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11488 |
| By: | Edoardo Di Porto; Marco Pagano; Vincenzo Pezone; Raffaele Saggio; Fabiano Schivardi |
| Abstract: | We investigate compensation policies in family and non-family firms using a novel employer-employee matched dataset comprising nearly the universe of Italian incorporated firms and ownership information. Family firms pay significantly lower wages and offer slower and less rewarding careers. Differences in worker sorting account for half of the wage gap while productivity differences and compensating differentials explain little of the residual gap. The wage distribution in family firms is more compressed, with infrequent promotions. We rationalize this evidence with a model where family owners seek to maintain control, creating a “glass ceiling” that limits their employees’ career progression. |
| JEL: | G30 G38 J01 J30 J31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33219 |
| By: | Aghion, Philippe (INSEAD); Bergeaud, Antonin (HEC Paris); Blundell, Richard W. (UCL); Griffith, Rachel (The University of Manchester) |
| Abstract: | This study employs matched employee-employer data from the UK to highlight the importance of social skills, in particular workers’ ability to work well in a team and communicate effectively with co-workers, as a driver of wage growth for workers with lower formal education. Our findings indicate that in tasks emphasizing social skills, such workers not only enjoy greater wage progression with tenure but also accrue higher returns in environments with a higher concentration of more educated colleagues. Additionally, workers’ exit occur sooner from jobs where social skills are more important. We rationalize these dynamics through a model that assesses social skills based on their complementarity with a firm’s assets and where a worker’s social skills, initially opaque to both the employee and employer, become increasingly apparent over time. |
| Keywords: | Team Work; Social Skills; Tenure-Wage Profiles; Individual Wage Growth; Firm Pay Premium |
| JEL: | J24 J31 L25 |
| Date: | 2024–03–29 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1513 |
| By: | Mocanu, Tatiana (Columbia University) |
| Abstract: | I combine novel data on job applications and hiring decisions for the universe of public sector jobs in Brazil and a natural experiment that decreased discretion in hiring to analyze how screening determines gender application and hiring gaps. I find that hiring practices have crucial gender equity consequences for selection and sorting, and not all approaches to reduce discretion have the same implications. Limiting discretion in existing tools or adding new impartial tools reduces the gender hiring gap by a third. However, policies that eliminate subjective tools like interviews are ineffective, suggesting employers should carefully weigh bias-information trade-offs. |
| Keywords: | hiring practices, gender bias, public sector personnel |
| JEL: | M51 D73 J16 J45 J71 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17480 |
| By: | Hall, Tessa; Manning, Alan; Rose, Rebecca |
| Abstract: | It is well-known that ethnic minority and migrant workers have lower average pay than the White UK-born workforce. However, we know much less about how these gaps vary over the life-cycle because of data limitations. We use new data that combine a 1999–2018 panel from the Annual Survey of Hours and Earnings (ASHE) with individual characteristics from the 2011 Census in England and Wales. We investigate pay gaps on labour market entry and differences in pay growth. We find that differences in entry pay gaps are more important than differences in pay growth. The entry pay gaps are large, though vary across groups. The pay penalties on labour market entry can, to a considerable degree, be explained by over-representation in lower-paying firms and, within firms, in lower-paying occupations. For most groups, the pay gaps at entry seem to be largely preserved over the life-cycle, neither narrowing nor widening. For migrants, we find that the extra pay penalty is concentrated almost exclusively in those who arrived in the UK at later ages. |
| Keywords: | wage gpas; ethnicity; migration; wage growth; ASHE-Census; wage gaps |
| JEL: | J31 J15 J61 J71 |
| Date: | 2024–11–11 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124515 |
| By: | Falck, Oliver (Ifo Institute for Economic Research); Guo, Yuchen (ifo Institute, University of Munich); Langer, Christina (Stanford University); Lindlacher, Valentin (Dresden University of Technology); Wiederhold, Simon (IWH Halle) |
| Abstract: | Job training is widely regarded as crucial for protecting workers from automation, yet there is a lack of empirical evidence to support this belief. Using internationally harmonized data from over 90, 000 workers across 37 industrialized countries, we construct an individual-level measure of automation risk based on tasks performed at work. Our analysis reveals substantial within-occupation variation in automation risk, overlooked by existing occupation-level measures. To assess whether job training mitigates automation risk, we exploit within-occupation and within-industry variation. Additionally, we employ entropy balancing to re-weight workers without job training based on a rich set of background characteristics, including tested numeracy skills as a proxy for unobserved ability. We find that job training reduces workers' automation risk by 4.7 percentage points, equivalent to 10 percent of the average automation risk. The training-induced reduction in automation risk accounts for one-fifth of the wage returns to job training. Job training is effective in reducing automation risk and increasing wages across nearly all countries, underscoring the external validity of our findings. Women tend to benefit more from training than men, with the advantage becoming particularly pronounced at older ages. |
| Keywords: | job training, human capital, automation, technological change, entropy balancing |
| JEL: | J24 J31 J61 O33 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17503 |
| By: | Efing, Matthias (HEC Paris); Ehmann, Stefanie (University of Tübingen); Kampkötter, Patrick (University of Tuebingen); Moritz, Raphael (University of Tuebingen) |
| Abstract: | This paper examines the integration of ESG performance metrics into executive compensation using a detailed panel dataset of European executives. Despite becoming more widespread, most ESG metrics are largely discretionary, carry immaterial weights in payout calculations, and contribute little to executive pay risk. Such ESG metrics with arguably weak incentive power are common in financial firms and large companies, particularly for their most visible executives, which seems consistent with greenwashing. In contrast, binding ESG metrics with significant weights, which have potential to influence incentives, are only found in sectors with a large environmental footprint. |
| Keywords: | executive compensation; ESG; optimal contracts; sustainability; incentive pay; performance pay; CSR; ESG contracting; ESG metrics |
| JEL: | G30 |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1507 |
| By: | Booth, Jonathan; Lup, Daniela |
| Abstract: | While it is well-known that employees with disabilities have significantly more negative work experiences compared to other employees, research geared towards understanding how employers could improve some of these experiences is still underdeveloped. To advance this research agenda, this study investigates links between five distinct types of discretionary arrangements (work discretion, scheduling discretion, part-timing, homeworking and pay for individual performance), and outcomes related to work experiences and the wellbeing of employees with disabilities (job satisfaction, perception of fairness, recognition, motivation, engagement, work stress and work-life interference). To explore these links, we use data from the European Working Conditions Survey (2015). We find that not all work arrangements that increase discretion at the workplace have a positive impact on employees with disabilities and that some can be especially detrimental. By unpacking the multiple ways in which various types of discretion at the workplace affect employees with disabilities, this study not only makes a theoretical contribution but also provides employers who aim to improve the working experiences of employees with disabilities with some empirical evidence to help them take more inclusive actions. |
| Keywords: | disability; discretionary work practice; wellbeing; discretionary work practices |
| JEL: | J50 R14 J01 |
| Date: | 2024–12–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126269 |
| By: | Bruno César Araújo; Lourenço S. Paz; James E. West |
| Abstract: | We use Brazilian administrative employer-employee matched data of worker demographics, industry of affiliation, occupation, and wages to examine whether females in managerial and executive positions (cracks in the glass ceiling) lead to more gender-equal workplace outcomes. In response to the large and unanticipated 1999 Brazilian Real exchange rate devaluation, the gender wage gap widened across all firms. The contrast between female and male-led firms was large and highly significant regarding managerial and supervisory employees. Both the gender wage gap and the proportion of female employees grew more in female-led firms than in male-led firms, consistent with the predictions of our monopsony model of firm behavior. We conclude that exports further crack the glass ceiling but do not necessarily improve the gender wage gap. |
| JEL: | F12 J16 J31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33260 |
| By: | Pauline Carry; Benjamin Schoefer |
| Abstract: | How do the employer and the worker interact during a dismissal? This paper tests whether they cooperate to minimize costs, or instead engage in conflict—i.e., deliberately amplify costs. We leverage a unique feature of the French labor market: an employer and a worker can jointly opt to replace a costly dismissal by a cheaper and more flexible “separation by mutual agreement” (SMA). Introduced in 2008, SMAs eliminate red tape costs, enable severance pay bargaining, and preclude litigation. However, we find that only 12% of dismissals are resolved through SMAs—far below the efficient level predicted by standard bargaining models. Surveying HR directors, we identify three drivers of conflict that hinder cost minimization: (i) hostility between the employer and the employee, (ii) employers using dismissals as a “discipline device” to maintain incentives, and (iii) asymmetric beliefs about subsequent labor court outcomes. Using counterfactual scenarios in the survey, we find that removing these three drivers of conflict would increase SMA adoption from 12% to 67% of dismissals. We confirm that less conflictual dismissals—due to either better employer-employee relationships or workers benefiting from early retirement—end more often as SMAs. |
| JEL: | D9 E24 J0 J38 J50 J63 M5 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33245 |