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on Human Capital and Human Resource Management |
| By: | Georganas, Sotiris (Royal Holloway, University of London); Tonin, Mirco (University of Southampton); Vlassopoulos, Michael (University of Southampton) |
| Abstract: | Peer effects arise in situations where workers observe each other's work activity. In this paper we disentangle the effect of observing a peer from that of being observed by a peer, by setting up a real effort experiment in which we manipulate the observability of performance. In particular, we randomize subjects into three groups: in the first one subjects are observed by another subject, but do not observe anybody; in the second one subjects observe somebody else's performance, but are not observed by anybody; in the last group subjects work in isolation, neither observing, nor being observed. We consider both a piece rate compensation scheme, where pay depends solely on own performance, and a team compensation scheme, where pay also depends on the performance of other team members. Overall, we find some evidence that subjects who are observed increase productivity at least initially when compensation is team based, while we find that subjects observing react to what they see in a non-linear but monotonic way when compensation is based only on own performance. |
| Keywords: | peer effects, piece rate, team incentives, real-effort experiment |
| JEL: | D03 J24 M52 M59 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7523&r=hrm |
| By: | Berg, Erland (University of Oxford); Ghatak, Maitreesh (London School of Economics); Manjula, R (ISEC); Rajasekhar, D (ISEC); Roy, Sanchari (University of Warwick) |
| Abstract: | This paper studies the interaction of incentive pay and social distance in the dissemination of information.We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives,but also preferences over dealing with one social group relative to another. In a randomised field experiment under taken across 151 villages in South India,local agents were hired to spread information about a public health insurance programme.Relative to flat pay,incentive pay improves knowledge transmission to households that are socially distant from the agent,but not to households similar to the agent. |
| Keywords: | public services,information constraints,incentive pay, social proximity,knowledge transmission |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:133&r=hrm |
| By: | Bartelsman, Eric (VU University Amsterdam); Dobbelaere, Sabien (VU University Amsterdam); Peters, Bettina (ZEW Mannheim) |
| Abstract: | This paper examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. Except for low-technology manufacturing, average innovation performance is higher in all industries in Germany and the innovation performance distributions are more dispersed in the Netherlands. In both countries, we observe non-linearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to product innovation whereas the most negative returns to process innovation are observed in the best-performing enterprises of most industries. In both countries, we find that the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence for the latter points to a winner-takes-all interpretation of this finding. |
| Keywords: | human capital, innovation, productivity, quantile regression |
| JEL: | C10 I20 O14 O30 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7540&r=hrm |
| By: | Ricardo Correa; Ugur Lel |
| Abstract: | This paper examines the effects of say on pay (SoP) laws on CEO compensation, the portion of top management pay captured by CEOs, and firm valuation. Using a large cross-country sample of about 103,000 firm-year observations from 39 countries, we document that compared to our control group of firms, SoP laws are associated with 1) a lower level of CEO compensation, which partly results from lower CEO compensation growth rates and is related to CEO power, 2) a higher pay for performance sensitivity suggesting that SoP laws have the greatest effects on firms with poor performance, 3) a lower portion of total top management pay awarded to CEOs indicating lower pay inequality among top managers and 4) a higher firm value, which is related to whether the CEO’s share of total top management pay was relatively high before the laws are passed. Further, while both mandatory and advisory SoP laws are associated with lower CEO pay levels, only advisory SoP laws tighten the sensitivity of executive pay to firm performance. Collectively, our results document significant changes in executive compensation policies and firm valuation following the passage of SoP laws around the world. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1084&r=hrm |
| By: | Smith, Jennifer C (University of Warwick) |
| Abstract: | Theories of wage rigidity often rely on a positive relationship between pay changes and utility, arising from concern for fairness or gift exchange. Supportive evidence has emerged from laboratory experiments, but the link has not yet been established with ?eld data. This paper contributes a ?rst step, using representative British data. Workers care about the level and the growth of earnings. Below-median wage increases lead to an insult e¤ect except when similar workers have real wage reductions or ?rm production is falling. Nominal pay cuts appear insulting even when the ?rm is doing badly. |
| Keywords: | Pay cuts, Social comparisons, Gift exchange |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:129&r=hrm |
| By: | Beugnot, Julie (Université Laval); Fortin, Bernard (Université Laval); Lacroix, Guy (Université Laval); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | This paper extends the standard work effort model by allowing workers to interact through networks. We investigate experimentally whether peer performances and peer contextual effects influence individual performances. Two types of network are considered. Participants in Recursive networks are paired with participants who played previously in isolation. In Simultaneous networks, participants interact in real-time along an undirected line. Mean peer effects are identified in both cases. Individual performances increase with peer performances in the recursive network. In the simultaneous network, endogenous peer effects vary according to gender: they are large for men but not statistically different from zero for women. |
| Keywords: | peer effects, social networks, work effort, piece rate, experiment |
| JEL: | C91 J16 J24 J31 M52 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7521&r=hrm |
| By: | Proto, Eugenio (University of Warwick) |
| Abstract: | Cooperating and trusting behavior may be explained by preferences over social outcomes (people care about others, are unselfish and help- ful), or attitudes to work and social responsibilities (plans have to be carried out, norms have to be followed). If the first hypothesis is true, Agreeable- ness, reporting stated empathy for others, should matter most; if the second, higher score in traits expressing attitude to work, intrinsic motivation (Con- scientiousness) should be correlated with cooperating behavior and trust. We find experimental support for the second hypothesis when subjects provide real mental effort in two treatments with identical task, differing by whether others' payment is affected. |
| Keywords: | Personality Traits, Cooperation, Effort Provision |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:142&r=hrm |
| By: | Junichiro Ishida |
| Abstract: | In many facets of life, we often face competition with a multilayered structure in which different levels of competition take place simultaneously. In this paper, we propose a new class of tournament models, called multilayered tournaments, to capture this type of competitive environment. Among other things, we find that: (i) an increase in individual incentives, holding the level of team incentives fixed, can lower total effort as it induces inefficient allocation of effort; (ii) the optimal level of individual incentives depends on and is complementary to the level of team incentives. The analysis illuminates the essential role of economic subgroups, such as firms, in achieving some degree of cooperation in an inherently competitive environment, and provides an explanation for why high-powered incentives are more common in market arrangements than within firms. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0879&r=hrm |
| By: | S. Bortolotti; M. Casari; F. Pancotto |
| Abstract: | Norms of cooperation and punishment differ across societies, but also within a single society. In an experiment with two subject pools sharing the same geographical and cultural origins, we show that opportunities for peer punishment increase cooperation among students but not in the general population. In previous studies, punishment magnified the differences across societies in peoples ability to cooperate. Here, punishment reversed the order: with punishment, students cooperate more than the general population while they cooperate less without it. Our results obtained with students cannot be readily generalized to the society at large. |
| JEL: | C72 C90 Z13 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp898&r=hrm |
| By: | Caria, Antonia Stefano; Hassen, Ibrahim Worku |
| Abstract: | In this study we focus on exclusion from job contact networks, which constitutes a major disadvantage for labor market participants in settings where referral hiring is common and information about jobs hard to obtain. In a mid-size town in northern Ethiopia, where these mechanisms are at work, we observe that many individuals do not access local job contact networks. Models of strategic network formation and behavioral decision theory suggest that given the right incentives, job contact networks should be more inclusive. On these grounds we hypothesize that workers would link to peripheral peers when this maximizes their chances of referral and when self-regarding concerns are absent due to social preferences. |
| Keywords: | social network, Labor market, field experiment, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1282&r=hrm |
| By: | Brunello, Giorgio (University of Padova); Fort, Margherita (University of Bologna); Weber, Guglielmo (University of Padova); Weiss, Christoph T. (University of Padova) |
| Abstract: | In the large empirical literature that investigates the causal effects of education on outcomes such as health, wages and crime, it is customary to measure education with years of schooling, and to identify these effects using the exogenous variation provided by school reforms increasing compulsory education and minimum school leaving age. If these reforms are correlated to changes in school quality, and school quality is an omitted variable, this identification strategy may fail. We test whether this is the case by using the information provided by two distinct test scores on mathematics and reading and find that we cannot reject the internal validity of this popular identification strategy. |
| Keywords: | human capital, instrumental variables, nested models |
| JEL: | C26 I2 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7533&r=hrm |
| By: | Peter A. Groothuis; Kurt W. Rotthoff; Mark C. Strazicich |
| Abstract: | Comparing talent across time is difficult as productivity changes. To compare talent across time we utilize Major League baseball data from 1871-2010 and time series techniques to determine if the mean and standard deviation of five performance measures are stationary and if structural breaks exist. We identify two structural breaks in the mean slugging percentage: in 1921, the free swinging era of Babe Ruth, and in 1992, the steroid era. Given that productivity changes over time, we develop a simple benchmark technique to compare talent over time and identify superstars. Applications of this measure outside of baseball are also suggested. Key Words: Benchmarking, Major League Baseball, Technology Changes, Structural Breaks |
| JEL: | J24 C22 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:13-15&r=hrm |