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on Human Capital and Human Resource Management |
| By: | Edoardo Di Porto (CSEF, INPS, Università di Napoli Federico II, UCFS, Uppsala University); Marco Pagano (University of Naples Federico II, CSEF and EIEF.); Vincenzo Pezone (Tilburg University); Raffaele Saggio (University of British Columbia and NBER); Raffaele Saggio; Fabiano Schivardi (LUISS, EIEF and CEPR) |
| 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 Òglass ceilingÓ that limits their employeesÕ career progression. |
| Keywords: | family firms, corporate control, wage, career, workers, human capital, productivity, management. |
| JEL: | D22 D23 D24 G32 G34 J24 J31 J32 J62 M12 M51 M52 M54 |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:736 |
| By: | Michael D. Bates; Andrew C. Johnston |
| Abstract: | Theoretical rationales for employer-provided pensions often focus on their ability to increase employee effort and selectively retain quality workers. We test these hypotheses using rich administrative data on public school teachers around the pension-eligibility threshold. When teachers cross the threshold, their effective compensation drops by over 50 percent of salary due to sharply reduced pension accrual rates. Standard economic models predict this compensation reduction should decrease teacher effort and output, yet we observe no such decline. This suggests that yearly pension accruals near retirement do not meaningfully increase effort. Similarly, if pensions selectively retained better teachers, we would expect average teacher quality to decline when the retentive incentive disappears at the threshold. Instead, we find no change in the composition of teacher quality, suggesting pensions do not selectively retain higher-performing workers in late career. |
| JEL: | H55 I21 J33 J45 M52 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33986 |
| By: | Kyle Herkenhoff; Josh Lerner; Gordon M. Phillips; Francisca Rebelo; Benjamin Sampson |
| Abstract: | We measure the real effects of private equity buyouts on worker outcomes by building a new database that links transactions to matched employer-employee data in the United States. To guide our empirical analysis, we derive testable implications from three theories in which private equity managers alter worker outcomes: (1) exertion of monopsony power in concentrated markets, (2) breach of implicit contracts with targeted groups of workers, including managers and top earners, and (3) efficient reallocation of workers across plants. We do not find any evidence that private equity-backed firms vary wages and employment based on local labor market power proxies. Wage losses are also very similar for managers and top earners. Instead, we find strong evidence that private equity managers downsize less productive plants relative to productive plants while simultaneously reallocating high-wage workers to more productive plants. We conclude that post-buyout employment and wage dynamics are consistent with professional investors providing incentives to increase productivity and monitor the companies in which they invest. |
| Keywords: | Private equity, employment, wages, monopsony, market power, productivity |
| JEL: | G20 G34 L1 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-37 |
| By: | Christoph Becker; Dietmar Fehr; Hannes Rau; Stefan T. Trautmann; Yilong Xu |
| Abstract: | How do different characteristics of pay-for-performance schemes affect fairness perceptions? In two studies, we systematically consider three major classes of incentive schemes: continuous piece rate incentives, discrete bonus schemes, and tournament incentives. We find that pay inequality has a strong negative effect on perceived fairness. Controlling for pay inequality, people consider piece rate schemes fairer than those with a discrete bonus and a tournament design in particular. Adding performance-dependent resource advantages or handicaps negatively influences perceived fairness. We find that procedural fairness judgments are an important factor influencing overall judgments and demonstrate in a third study that the latter have relevant behavioral consequences. |
| Keywords: | incentives, merit, contract design, fairness, inequality |
| JEL: | C90 D63 J31 J41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11943 |
| By: | Rachel Kranton; Duncan Thomas |
| Abstract: | Why do workers exert effort at their tasks and what are the implications for their well-being when greater effort is necessary? This paper, which studies university employees during the Covid-19 pandemic, provides empirical evidence that identity – in terms of both the importance of work to employees’ sense of self and the extent to which their employer shares their values – is related to both effort and productivity. Those employees who feel work is important to them and feel the university does not share their values report exerting more effort but accomplishing less, relative to a pre-pandemic benchmark. Furthermore, all these factors are associated with employee’s reported mental health. Stress and anxiety are particularly elevated for employees for whom work is important and who feel the employer does not share their values, with similar patterns for depression symptoms and worse overall mental health relative to pre-pandemic. These relationships hold across job roles (faculty vs. staff) and the number of co-resident children. The research suggests a new direction in the study of incentives and organizations: links between non-pecuniary motivations and work-related mental health. |
| JEL: | D2 D9 I1 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33812 |
| By: | Daniel Herbst |
| Abstract: | For workers facing uncertain output, fixed-wage contracts provide implicit insurance compared to self-employment or performance-based pay. But like any insurance product, these contracts are prone to market distortions through moral hazard and adverse selection. Using a model of wage contracts under asymmetric information, I show how these distortions can be identified as potential outcomes in a marginal treatment effects (MTE) framework. I apply this framework to a field experiment in which data-entry workers are offered a choice between a randomized fixed hourly wage and a piece rate. Using experimental wage offers as an instrument for hourly wage take-up, I find evidence of both moral hazard and adverse selection. Hourly wage contracts reduce worker productivity by an estimated 6.32 percent relative to the mean. Meanwhile, a 10 percent increase in the hourly wage offer attracts a marginal worker whose productivity is higher by 1.44 percent of mean worker output. Using semi-parametric MTE estimation, I calculate the welfare loss associated with asymmetric information and the marginal values of public funds (MVPFs) for a range of wage-based subsidy and tax policies. My estimates suggest that a 14-percent tax on performance-based pay can efficiently raise government revenue by mitigating adverse selection into fixed-wage contracts. |
| Keywords: | compensation structure, wage insurance, performance pay, adverse selection, moral hazard, information asymmetries, marginal treatment effects |
| JEL: | J33 J38 M52 D82 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11946 |
| By: | Xienan Cheng; Mustafa Dogan; Pinar Yildirim |
| Abstract: | This study investigates the effects of artificial intelligence (AI) adoption in organizations. We ask: (1) How should a principal optimally deploy limited AI resources to replace workers in a team? (2) In a sequential workflow, which workers face the highest risk of AI replacement? (3) How does substitution with AI affect both the replaced and non-replaced workers' wages? We develop a sequential team production model in which a principal can use peer monitoring -- where each worker observes the effort of their predecessor -- to discipline team members. The principal may replace some workers with AI agents, whose actions are not subject to moral hazard. Our analysis yields four key results. First, the optimal AI strategy involves the stochastic use of AI to replace workers. Second, the principal replaces workers at the beginning and at the end of the workflow, but does not replace the middle worker, since this worker is crucial for sustaining the flow of information obtained by peer monitoring. Third, the principal may choose not to fully exhaust the AI capacity at her discretion. Fourth, the optimal AI adoption increases average wages and reduces intra-team wage inequality. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.12337 |
| By: | Camille Hebert; Emmanuel Yimfor; Heather Tookes |
| Abstract: | What is the role of gender in the serial founding of VC-backed startups? Despite robust evidence linking serial entrepreneurship to startup success, women comprise 13.3% of VC-backed founders but only 4% of those founding three or more startups. Using a novel design comparing men and women cofounders of the same startup, we estimate substantial gender gaps in subsequent funding outcomes on average and following failure or success of the current startup. We find these at both the extensive and intensive margins. For example, following failure, women are 22.5% less likely to found another VC-backed startup compared to their cofounders who are men. Among those who do found another VC-backed firm, women raise 53.3% less capital following failure of the current venture and 24.6% less capital following success. These gaps contribute to the well-documented gender gap in VC funding. Lower interest of women in founding new firms can only partially explain our findings. We find no evidence of gender differences in founder quality or of statistical updating by investors. Instead, consistent with unequal treatment of women, we find that women serial founders are penalized with smaller VC deals following failures of their prior startups but they are not rewarded with larger deal sizes following past successes. By contrast, men are rewarded for their prior experiences as founders, regardless of whether their startups were failures or successes. In line with theories of stereotyping and confirmation bias, we also find striking negative spillovers from unrelated women-founded failures within investors’ portfolios (and no positive spillovers from their successes). |
| JEL: | G0 G24 G30 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33943 |
| By: | José María Barrero; Nicholas Bloom; Kathryn Bonney; Cory Breaux; Catherine Buffington; Steven J. Davis; Lucia Foster; Brian McKenzie; Keith Savage; Cristina Tello-Trillo |
| Abstract: | Timely business-level measures of work from home (WFH) are scarce for the U.S. economy. We review prior survey-based efforts to quantify the incidence and character of WFH and describe new questions that we developed and fielded for the Business Trends and Outlook Survey (BTOS). Drawing on more than 150, 000 firm-level responses to the BTOS, we obtain four main findings. First, nearly a third of businesses have employees who work from home, with tremendous variation across sectors. The share of businesses with WFH employees is nearly ten times larger in the Information sector than in Accommodation and Food Services. Second, employees work from home about 1 day per week, on average, and businesses expect similar WFH levels in five years. Third, feasibility aside, businesses’ largest concern with WFH relates to productivity. Seven percent of businesses find that onsite work is more productive, while two percent find that WFH is more productive. Fourth, there is a low level of tracking and monitoring of WFH activities, with 70% of firms reporting they do not track employee days in the office and 75% reporting they do not monitor employees when they work from home. These lessons serve as a starting point for enhancing WFH-related content in the American Community Survey and other household surveys. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-36 |
| By: | Armando Miano (University of Naples Federico II and CSEF.) |
| Abstract: | I study how beliefs about search costs, returns to search effort, and outside options relate to the job mobility decisions of employed workers. I design an online survey and administer it to a representative sample of wage and salaried workers in the US. In the survey, I directly measure employed workers’ perceptions of search costs—time, money, stress—the perceived returns to their job search effort—the expected success rate of their job applications—and their beliefs about their opportunities outside of their current job. I document significant heterogeneity in expectations across demographic groups. Women expect higher costs and lower returns to effort. I find that beliefs about outside options, returns to search effort and search costs are significant predictors of job search intentions. Respondents who expect to spend more time looking for job openings have a lower propensity to search, consistent with the relevance of information frictions. Using two information experiments, I show that accurate information about the median wage does not affect search intentions, whereas shifting perceived search costs improves women’s willingness to search. |
| Keywords: | On-the-Job Search, Job Mobility, Search Costs, Survey, Subjective Expectations, Online Experiment. |
| JEL: | J01 J62 D91 D83 |
| Date: | 2025–06–19 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:753 |