|
on Human Capital and Human Resource Management |
| By: | Brown, Sarah (University of Sheffield); Gray, Daniel (University of Sheffield); McHardy, Jolian (University of Sheffield); Taylor, Karl (University of Sheffield) |
| Abstract: | We explore the relationship between employee trust of managers and workplace performance. We present a theoretical framework which serves to establish a link between employee trust and firm performance as well as to identify possible mechanisms through which the relationship may operate. We then analyse matched workplace and employee data in order to ascertain whether the average level of employee trust within the workplace influences workplace performance. We exploit the 2004 and 2011 Work Place and Employee Relations Surveys (WERS) to analyse the role of employee trust in influencing workplace performance in both pre and post recessionary periods. Our empirical findings support a positive relationship between three measures of workplace performance (financial performance, labour productivity and product or service quality) and employee trust at both points in time. We then exploit employee level data from the WERS to ascertain the determinants of employee trust as well as how trust is influenced by measures taken by employers to deal with the recent recession. Our findings suggest that restricting paid overtime and access to training potentially erode employee trust. In addition, we find that job or work reorganisation experienced at either the employee or organisation level are associated with lower employee trust. |
| Keywords: | employee trust, financial performance, labour productivity, product quality |
| JEL: | J20 J50 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8284&r=hrm |
| By: | Randolph Sloof (University of Amsterdam); Mirjam van Praag (Copenhagen Business School, Denmark) |
| Abstract: | Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to be dysfunctional (gaming). This paper applies the empirical test developed by Courty and Marschke (2008) to detect whether the widely used class of Residual Income based performance measures —such as Economic Value Added (EVA)— is distorted, leading to unintended agent behavior. The paper uses a difference-in-differences approach to account for changes in economic circumstances and the self-selection of firms using EVA. Our findings indicate that EVA is a distorted performance measure that elicits the gaming response. |
| Keywords: | Residual Income, Economic Value Added, distortion, performance measurement, incentive compensation |
| JEL: | D21 G35 J33 L21 M12 M40 M52 |
| Date: | 2014–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140056&r=hrm |
| By: | Roel van Veldhuizen (WZB Berlin Social Science Center); Hessel Oosterbeek (Universiteit van Amsterdam); Joep Sonnemans (Universiteit van Amsterdam) |
| Abstract: | In an influential study, Mas and Moretti (2009) find that “worker effort is positively related to the productivity of workers who see him, but not workers who do not see him”. They interpret this as evidence that social pressure can reduce free riding. In this paper we report an attempt to reproduce the findings of Mas and Moretti in a lab experiment. Lab experiments have the advantage that they can shut down alternative channels through which workers can influence the productivity of colleagues whom they observe. Although the subjects in our experiment are aware of the productivity of others and although there is sufficient scope for subjects to vary their productivity, we find no evidence of the type of peer effects reported by Mas and Moretti. This suggests that their findings are less generalizable than has been assumed. |
| Keywords: | peer effects, experiment, laboratory experiment |
| JEL: | C91 J24 |
| Date: | 2014–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140051&r=hrm |
| By: | Sander Hoogendoorn (CPB Netherlands Bureau for Economic Policy Analysis, the Netherlands); Simon C. Parker (Ivey Business School, Western University, London, Canada); Mirjam van Praag (Copenhagen Business School, Denmark) |
| Abstract: | What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team’s performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real companies under identical circumstances. We ensured exogenous variation in — otherwise random — team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output. |
| Keywords: | Ability dispersion, team performance, field experiment, entrepreneurship |
| JEL: | C93 D83 J24 L25 L26 M13 M54 |
| Date: | 2014–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140053&r=hrm |
| By: | Heiner Schmittdiel (Erasmus University Rotterdam) |
| Abstract: | In this paper, we test empirically whether there is a relationship between corporate income taxes and CEO bonus payments. Using Compustat and ExecuComp data from 1992 to 2010, we find mixed results. Looking at the whole sample, the average bonus contract rewards tax savings excessively in comparison to other determinants of corporate net income. A possible explanation is that managers require to be compensated for the additional risk inherent in running an aggressive tax strategy. In accordance with previous literature, we document a substantial heterogeneity in compensation practices across industries. It appears that our main result is driven by firms in the Industrial and Retail sectors. We further find that companies with greater tax planning opportunities, for example by virtue of size or operations abroad, are more likely to condition the CEO’s bonus on corporate income taxes. |
| Keywords: | CEO incentives, executive compensation, tax avoidance |
| JEL: | H25 H26 M41 M52 |
| Date: | 2014–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140048&r=hrm |
| By: | Kuhn, Peter J. (University of California, Santa Barbara); Shen, Kailing (Xiamen University) |
| Abstract: | We study urban Chinese employers' preferences between workers with and without a local residence permit (hukou) using callback information from an Internet job board serving private sector employers. We find that employers prefer migrant workers to locals who are identically matched to the job's requirements; these preferences are especially strong at low skill levels. We argue that migrants' higher work hours and effort help to account for employers' preferences, and present evidence that efficiency wage and intertemporal labor substitution effects might explain these hours/effort gaps. |
| Keywords: | temporary migration, China, hukou, undocumented migrants |
| JEL: | O15 R23 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8289&r=hrm |
| By: | Mendolia, Silvia (University of Wollongong); Walker, Ian (Lancaster University) |
| Abstract: | This paper investigates the relationship between personality traits in adolescence and performance in high school using a large and recent cohort study. In particular, we investigate the impact of locus of control, self-esteem and work ethics at age 15, on test scores at age 16, and on subject choices and subsequent performance at age 17-18. In particular, individuals with external locus of control or with low levels of self-esteem seem less likely to have good performance in test scores at age 16 and to pursue further studies at 17-18, especially in mathematics or sciences. We use matching methods to control for a rich set of adolescent and family characteristics and we find that personality traits do affect study choices and performance in test scores - particularly in mathematics and science. The results are stronger for adolescents from disadvantaged socio-economic backgrounds. We establish the robustness of our results using the methodology proposed by Altonji et al. (2005) that consists in making hypotheses as to the correlation between the unobservables that determine test scores and subjects' choices and, the unobservables that influence personality. |
| Keywords: | personality, education, locus of control, self-esteem |
| JEL: | I10 I21 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8269&r=hrm |
| By: | Gomes, Pedro Maia (Universidad Carlos III de Madrid); Kuehn, Zoë (Universidad Autónoma de Madrid) |
| Abstract: | Countries that have relatively fewer workers with a secondary education have smaller firms. The shortage of skilled workers limits the growth of more productive firms. Two factors influence the availability of skilled workers: i) the education level of the workforce and ii) large public sectors that predominantly hire individuals with a better education. We set up a model economy with a government and private firm formation where production requires unskilled and skilled jobs. Workers with a secondary education are pivotal as they can perform both types of jobs. We find that level of education and public sector employment account for 40-45% of the differences between the United States and Mexico in terms of average firm size, GDP per capita, and GDP per hour worked. We also show that the impact of public employment on skill premiums and productivity measures depends on the skill bias in public hiring. |
| Keywords: | firm size, educational attainment, skill complementarities, public employment, college premium, high school premium |
| JEL: | J24 J45 E24 H30 O11 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8268&r=hrm |
| By: | Cory Koedel (Department of Economics, University of Missouri-Columbia); Rajeev Darolia; Paco Martorell; Katie Wilson; Francisco Perez-Arce |
| Abstract: | This paper reports results from a resume-based field experiment designed to examine employer preferences for job applicants who attended for-profit colleges. For-profit colleges have seen sharp increases in enrollment in recent years despite alternatives such as public community colleges being much cheaper. We sent almost 9,000 fictitious resumes of young job applicants who recently completed their schooling to online job postings in six occupational categories and tracked employer callback rates. We find no evidence that employers prefer applicants with resumes listing a for-profit college relative to those whose resumes list either a community college or no college at all. |
| Keywords: | for profit college, 2-year college, returns to education, resume field experiment, sub-baccalaureate degree |
| JEL: | J24 H52 I28 |
| Date: | 2014–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1411&r=hrm |
| By: | Piero Gottardi (European University); Atsushi Kajii (Kyoto University); Tomoyuki Nakajima (Kyoto University and CIGS) |
| Abstract: | We consider an economy where individuals face uninsurable risks to their human capital accumulation, and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that in the presence of such risks it is beneficial to tax both labor and capital income and to have positive government debt. |
| Keywords: | incomplete markets; Ramsey equilibrium; optimal taxation; optimal public debt. |
| JEL: | D52 D60 D90 E20 E62 H21 O40 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:897&r=hrm |
| By: | Ruffle, Bradley (Ben Gurion University); Tobol, Yossi (Jerusalem College of Technology (JTC)) |
| Abstract: | We report the results of a field experiment on honesty conducted on 427 Israeli soldiers fulfilling their mandatory military service. Each soldier rolled a six-sided die in private and reported the outcome to the unit's cadet coordinator. For every point reported, the soldier received an additional half hour early release from the army base on Thursday afternoon. We find that the higher a soldier's military entrance score, the more honest he is on average. Moreover, to the extent that honesty is a valued trait, regression discontinuity analysis reveals that the Israeli military has optimally set the threshold score to qualify to be an officer. Our results bear important implications for the design of screening tests that evaluate employee honesty. |
| Keywords: | experimental methods, honesty, personnel selection, soldiers, high non-monetary stakes, regression discontinuity design |
| JEL: | C93 M51 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8286&r=hrm |
| By: | Huber, Martin; Lechner, Michael; Wunsch, Conny |
| Abstract: | This paper investigates the average effects of (firm-provided) workplace health promotion measures in form of the analysis of sickness absenteeism and health circles/courses on labour market outcomes of the firms’ employees. Exploiting linked employer-employee panel data that consist of rich survey-based and administrative information on firms, workers and regions, we apply a flexible propensity score matching approach that controls for selection on observables as well as on time-constant unobserved factors. While the effects of analysing sickness absenteeism appear to be rather limited, our results suggest that health circles/courses increase tenure and decrease the number of job changes across various age groups. A key finding is that health circles/courses strengthen the labour force attachment of elderly employees (51-60), implying potential cost savings for public transfer schemes such as unemployment or early retirement benefits. |
| Keywords: | Firm health policies, health circles, health courses, analysis of sickness absenteeism, matching |
| JEL: | I10 I19 J32 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2014:17&r=hrm |
| By: | Maloney, William F. (World Bank); Sarrias, Mauricio (Cornell University) |
| Abstract: | Using detailed survey data on management practices, this paper uses recent advances in unconditional quantile analysis to study the changes in the within country distribution of management quality associated with country convergence to the managerial frontier. It then decomposes the contribution of potential explanatory factors to the distributional changes. The US emerges as the frontier country, not because of on average better management, but because its best firms are far better than those of its close competitors. Part of the process of convergence to the frontier across the development process represents a trimming of the left tail, much is movement of the central mass and, for rich countries, it is actually the best firms that lag the frontier benchmark. Among potential explanatory variables that may drive convergence, ownership and human capital appear critical, the former especially for poorer countries and that latter for richer suggesting that the mechanics of convergence change across the process. These variables lose their explanatory power as firm and average country management quality rises. Hence, once in the advanced country range, the factors that improve management quality are less easy to document and hence influence. |
| Keywords: | management practices, convergence, development, quantile regression, RIF decomposition |
| JEL: | C21 L2 M2 O33 O47 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8272&r=hrm |