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on Human Capital and Human Resource Management |
| By: | Marco Faravelli; Lana Friesen; Lata Gangadharan |
| Abstract: | We conduct a real effort experiment in which performance is not monitored and participants are paid according to their reported performance. Participants are paid according to a piece rate and a winner-take-all tournament and then select between the two schemes before performing the task one more time. Competition increases dishonesty and lowers output when the payment scheme is exogenously determined. Participants with a higher propensity to be dishonest are more likely to select into competition. However after selection, we find no output difference between piece rate and tournament. This is attributable to a handful of honest individuals who select competition. |
| Keywords: | Dishonesty, Selection, Tournament, Piece rate, Real effort experiment |
| JEL: | C91 K42 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2014-08&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:wacage:134&r=hrm |
| By: | Gabriel Burdin |
| Abstract: | Are high-ability individuals more likely to quit egalitarian regimes? Does the threat of exit by talented individuals restrict the redistributive capacity of democratic organizations? This paper revisits that long-standing debate by analyzing the interplay between compensation structure and quit behavior in the distinct yet underexplored institutional setting of workermanaged firms. The study exploits two novel administrative data sources: a panel of Uruguayan workers employed in both worker-managed and conventional firms; and a linked employer–employee panel data set covering the population of Uruguayan workermanaged firms and their workers from January 1997 to April 2010. A key advantage of the data is that it enables one to exploit within-firm variation on wages to construct an ordinal measure of the worker ability type. The paper's four main findings are that (1) workermanaged firms redistribute in favor of low-wage workers; (2) in worker-managed firms, high-ability members are more likely than other members to exit; (3) the hazard ratio of high-ability members is lower for founding members and for those employed by workermanaged firms in which there is less pay compression; and (4) high-ability members are less likely to quit when labor market conditions in the capitalist sector are less attractive. This paper contributes to the study of the interplay between equality and incentives that permeates many debates in public finance, comparative economic systems, personnel and organizational economics |
| Keywords: | Labor managed firms, redistribution, compensation structure, job mobility |
| JEL: | H00 J54 J62 M52 P0 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:694&r=hrm |
| By: | Dhillon, Amrita (Kings College, London); Peeters, Ronald (Maastrict); Muge Yukse, Ayse (Maastrict) |
| Abstract: | The use of social networks in the workplace has been documented by many authors, although the reasons for their widespread prevalence are less well known. In this paper we present evidence based on a lab experiment that suggests quite strongly that social networks are used by employers to reduce worker moral hazard. We capture moral hazard with a dictator game between the referrer and worker. The worker chooses how much to return under dierent settings of social proximity. Social proximity is captured using Facebook friendship information gleaned anonymously from subjects once they have been recruited. Since employers themselves do not have access to social connections, they delegate the decision to referrers who can select among workers with dierent degrees of social proximity to themselves. We show that employers choose referrals over anonymous hiring relatively more when they know that the referrer has access to friends, and are willing to delegate more often when the social proximity between referrer and worker is potentially higher. In keeping with this expectation, referrers also choose workers with a greater social proximity to themselves and workers who are closer to referrers indeed pay back more to the referrer. The advantage of the lab setting is that we can isolate directed altruism as the only reason for these results. |
| Keywords: | Eciency wage contracts, Moral hazard, Dictator game, Referrals, Altruism, Reciprocity, Directed altruism, Social proximity, Facebook, Experiment, Social networks, Strength of ties, Spot market. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:183&r=hrm |
| By: | Pavel V. Travkin (National Research University Higher School of Economics) |
| Abstract: | This paper investigates the wage return to job-related training using a difference-in-differences estimator to control for unmeasured differences in ability and measured differences in past wages as a proxy for ability and motivation. Estimates use data from the Russia Longitudinal Monitoring Survey from 2004 to 2011. As predicted, positive returns to training are identified, and the returns increase absolutely with the level of past wages, consistent with human capital and selection models. |
| Keywords: | returns to training, human capital, unobserved abilities, Russia. |
| JEL: | J24 J31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:56/ec/2014&r=hrm |
| By: | Dorsett, Richard (National Institute of Economic and Social Research); Oswald, Andrew J. (University of Warwick) |
| Abstract: | Many politicians believe they can intervene in the economy to improve people’s lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy. |
| Keywords: | Well-Being |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:182&r=hrm |
| By: | Blanco, Mariana (University of Rosario); Dalton, Patricio S. (Tilburg University); Vargas, Juan F. (University of Rosario) |
| Abstract: | We investigate whether and how the type of unemployment benefit institution affects productivity. We designed a field experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefit institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we find that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benet. We document the empirical relevance of precisely this channel. The differences we observe in productivity suggest that this psychological cost acts as an extra non- monetary incentive for workers under Welfare to put a higher effort in their work. |
| Keywords: | Unemployment Benefits, Workfare, Productivity, Self-esteem, Shame. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:178&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:wacage:130&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:wacage:143&r=hrm |
| By: | Jesper Bagger; Rasmus Lentz |
| Abstract: | This paper studies wage dispersion in an equilibrium on-the-job-search model with endogenous search intensity. Workers differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if the match production function is supermodular (submodular). The model is estimated on Danish matched employer-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We decompose wage variation into four sources: Worker heterogeneity, firm heterogeneity, frictions, and sorting. Worker heterogeneity contributes 51% of the variation, firm heterogeneity contributes 11%, frictions 23%, and finally sorting contributes 15%. We measure the output loss due to mismatch by asking how much greater output would be if the estimated population of matches were perfectly positively assorted. In this case, output would increase by 7.7%. |
| JEL: | J24 J33 J62 J63 J64 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20031&r=hrm |
| By: | Brigham Frandsen; James B. Rebitzer |
| Abstract: | Accountable Care Organizations (ACOs) are new organizations created by the Affordable Care Act to encourage more efficient, integrated care delivery. To promote efficiency, ACOs sign contracts under which they keep a fraction of the savings from keeping costs below target provided they also maintain quality levels. To promote integration and facilitate measurement, ACOs are required to have at least 5,000 enrollees and so must coordinate across many providers. We calibrate a model of optimal ACO incentives using proprietary performance measures from a large insurer. Our key finding is that free-riding is a severe problem and causes optimal incentive payments to exceed cost savings unless ACOs simultaneously achieve extremely large efficiency gains. This implies that successful ACOs will likely rely on motivational strategies that amplify the effects of under-powered incentives. These motivational strategies raise important questions about the limits of ACOs as a policy for promoting more efficient, integrated care. |
| JEL: | D23 D86 I12 L14 L24 M5 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20034&r=hrm |
| By: | Alves, Paulo; Couto, Eduardo; Francisco, Paulo |
| Abstract: | This essay analyses the relationship between corporate governance practices and Chief Executive Officer (CEO) wages from a sample of Portuguese listed companies over the period from 2002-2011. The relationship between CEO total compensation and shareholders return, firm characteristics, CEO characteristics, board of directors and shareholders characteristics is analysed. It is found that firm specific factors accounts for the majority of the variance in total CEO pay, while firm performance accounts for less than 5%. It is also found that the CEO characteristics, board of directors’ structures, and shareholders features are related with the CEO pay. The policy implications of these results are then derived. |
| Keywords: | Pay, performance, CEO, corporate governance, listed companies, Portugal |
| JEL: | G30 G32 J33 L22 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55189&r=hrm |
| By: | Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie-Claire Villeval |
| 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: | 2013–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2013s-27&r=hrm |
| By: | Jonathan de Quidt |
| Abstract: | Empirically, labor contracts that financially penalize failure induce higher effort provision than economically identical contracts presented as paying a bonus for success, an effect attributed to loss aversion. This is puzzling, as penalties are infrequently used in practice. The most obvious explanation is selection: loss averse agents are unwilling to accept such contracts. I formalize this intuition, then run an experiment to test it. Surprisingly, I find that workers were 25 percent more likely to accept penalty contracts, with no evidence of adverse or advantageous selection. Consistent with the existing literature, penalty contracts also increased performance on the job by 0.2 standard deviations. I outline extensions to the basic theory that are consistent with the main results, but argue that more research is needed on the long-term effects of penalty contracts if we want to understand why firms seem unwilling to use them. |
| Keywords: | loss aversion, reference points, framing, selection, Mechanical Turk |
| JEL: | D03 J41 D86 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stieop:52&r=hrm |
| By: | Bruna Bruno; Damiano Fiorillo |
| Abstract: | The effects of voluntary work on earnings have recently been studied for some developed countries such as Canada, France and Austria. This paper extends this line of research to Italy, using data from the European Union Statistics on Income and Living Conditions (EU-SILC) dataset. A double methodological approach is used in order to control for unobserved heterogeneity: Heckman and IV methods are employed to account for unobserved worker heterogeneity and endogeneity bias. Empirical results show that, when the unobserved heterogeneity is taken into account, a wage premium of 2.7 percent emerges, quite small if compared to previous investigations on Canada and Austria. The investigation into the channels of influence of volunteering on wages gives support to the hypotheses that volunteering enables the access to fruitful informal networks, avoids the human capital deterioration and provides a signal for intrinsically motivated individuals. |
| Keywords: | Voluntary work, wages, Mincer equation, selection bias, instrumental variables, Italy. |
| JEL: | C31 C36 J31 |
| Date: | 2014–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2014_05&r=hrm |