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on Human Capital and Human Resource Management |
| By: | Dohmen, Thomas (University of Bonn and IZA); Shvartsman, Elena (WHU Vallendar) |
| Abstract: | Working time autonomy is often accompanied by output-based incentives to counterbalance the loss of monitoring that comes with granting autonomy. However, in such settings, overprovision of effort could arise if workers are uncertain whether their performance suffices to secure the output-based rewards. Performance feedback can reduce or eliminate such uncertainty. We develop an experiment to show that overprovision of costly effort is more likely to occur in work environments with working time autonomy in the absence of feedback. A key feature of our design is that it allows for a clean measurement of effort overprovision by keeping performance per unit of time fixed, which we achieve by calibrating subjects' productivity on a real effort task ex ante. This novel design can serve as a workhorse for various experiments as it allows for exogenous variation of perfor-mance certainty (i.e., by providing feedback), working time autonomy, productivity, effort costs, and the general incentive structure. We find that subjects provide significantly more costly effort beyond a level necessary to meet their performance targets in the presence of uncertainty, i.e., the absence of feedback, which suggests that feedback shields workers from overprovision of costly effort. |
| Keywords: | working time autonomy, performance uncertainty, feedback provision, incentives, effort, subjective stress |
| JEL: | C91 D90 I10 J81 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16028&r=hrm |
| By: | Dohmen, Thomas (University of Bonn and IZA); Rohde, Ingrid M.T. (Istanbul Bilgi University); Stolp, Tom (SEO Amsterdam) |
| Abstract: | We conduct a laboratory experiment among male participants to investigate whether rewarding schemes that depend on work performance – in particular, tournament incentives – induce more stress than schemes that are independent of performance - fixed payment scheme. Stress is measured over the entire course of the experiment at both the hormonal and psychological level. Hormonal stress responses are captured by measuring salivary cortisol levels. Psychological stress responses are measured by self-reported feelings of stress and primary appraisals. We find that tournament incentives induce a stress response whereas a fixed payment does not induce stress. This stress response does not differ significantly across situations in which winners and losers of the tournament are publically announced and situations in which this information remains private. Biological and psychological stress measures are positively correlated, i.e. increased levels of cortisol are associated with stronger feelings of stress. Nevertheless, neither perceived psychological stress nor elevated cortisol levels in a previous tournament predict a subsequent choice between tournaments and fixed payment schemes, indicating that stress induced by incentives schemes is not a relevant criterion for sorting decisions in our experiment. Finally, we find that cortisol levels are severely elevated at the beginning of the experiment, suggesting that participants experience stress in anticipation of the experiment per se, potentially due to uncertainties associated with the unknown lab situation. We call this the novelty effect. |
| Keywords: | incentives, stress, cortisol, sorting, laboratory experiment |
| JEL: | D23 D87 D91 M52 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16025&r=hrm |
| By: | Irene Ferrari (Department of Economics, University Of Venice CÃ Foscari; Netspar); Jan Kabátek (University of Melbourne, Life Course Centre, IZA; Netspar); Todd Morris (HEC Montreal, Life Course Centre, CEPAR; Netspar) |
| Abstract: | Government policies are encouraging older workers to delay retirement, which may curb younger workers' career advancement. We study a Dutch reform that raised the retirement age by 13 months and nearly tripled employment at age 66. Using monthly linked employer-employee data, we show that affected firms delay and decrease replacement hiring, and coworkers' earnings fall via reductions in hours worked, wages, and promotions. Combined, the hiring and coworker spillovers offset most of the additional hours worked by older workers, disproportionately affect career advancement for younger workers and women, and considerably increase the policy's ratio of welfare costs to fiscal savings. |
| Keywords: | retirement reform, labor demand, internal labor markets, firms, coworker spillovers |
| JEL: | H55 J23 J26 J63 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2023:06&r=hrm |
| By: | Marco Ceccarelli (Maastricht University - Department of Finance); Christoph Herpfer (Emory University - Goizueta Business School); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)) |
| Abstract: | Using data from the US syndicated loan market, we find women to be underrepresented among senior commercial bankers. This gap persists due to unequal promotion rates for men and women at the same institution in the same year, and cannot be explained by different individual or managerial performance. The gap is influenced more by individuals than by institutions, with senior bankers showing assortative matching when changing jobs, and perpetuating the gender gap from their previous workplace. Our findings suggest that the gender gap may be partially attributable to women taking on more family care responsibilities. Hard credentials or female leadership at the top of banks do not alleviate the gender gap, but targeted gender discrimination lawsuits and female leadership on the local level result in increased promotion of women. |
| JEL: | D22 G21 G32 J01 J71 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2323&r=hrm |
| By: | Fleckinger, Pierre; Martimort, David; Roux, Nicolas |
| Abstract: | What is the most efficient way of designing incentives for a group of agents? Over the past five decades, agency theory has provided various answers to this crucial question. This line of research has argued that, depending on the specific organizational context, the best channel for providing incentives involves either relying on collective compen-sations or, on the contrary, employing relative performance evaluations. In the first scenario, cooperation among agents is the key aspect of the organization. In the second, competition among agents prevails. This paper provides a comprehensive overview of this extensive literature, with the aim of understanding the conditions under which one or the other type of incentive scheme is more desirable for the principal of the organiza-tion. To achieve this, we use a flexible workhorse model that is capable of addressing a wide range of scenarios characterized by different technologies, information constraints, and behavioral norms. |
| JEL: | D20 D86 J33 L23 M12 M50 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:127855&r=hrm |
| By: | Sagit Bar-Gill; Erik Brynjolfsson; Nir Hak |
| Abstract: | As more and more activities in the economy become digitized, analytics and data-driven decision-making (DDD) are becoming increasingly important. The adoption of analytics and DDD has been slower in small-to-medium enterprises (SMEs) compared to large firms, and reliable causal estimates of the impacts of analytics tools for small businesses have been lacking. We derive experiment-based estimates of the effect of an analytics tool on SME outcomes, analyzing the randomized introduction of eBay’s Seller Hub (SH), a data-rich seller dashboard. We find that SH adoption is associated with increased DDD, and that access to SH increases e-retailers’ revenues by 3.6% on average, as more items are transacted and service quality increases, without increases in average prices. Our results suggest that analytics and DDD help SMEs establish a competitive advantage. Managerial practices play an important role in reaping the benefits from the analytics dashboard, as over a third of the SH impact is driven by active performance monitoring. This suggests that digital platforms could increase revenues by supporting the adoption of analytics tools by SMEs. Furthermore, policies supporting small businesses' transition to the data era could address gaps in analytics and data-driven decision-making (DDD) by providing access to tools such as SH, as well as offering appropriate managerial training. |
| JEL: | L1 L86 M15 M3 O3 O30 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31089&r=hrm |
| By: | Boeri, Tito (Bocconi University); Garnero, Andrea (OECD); Luisetto, Lorenzo Giovanni (University of Michigan) |
| Abstract: | Non-compete clauses (NCCs) limiting the mobility of workers have been found to be rather widespread in the US, a flexible labour market with large turnover rates and a limited coverage of collective bargaining. This paper explores the presence of such arrangements in a rigid labour market, with strict employment protection regulations by OECD standards and where all employees are, at least on paper, subject to collective bargaining. Based on a representative survey of employees in the private sector, an exam of collective agreements and case law, we find that in Italy i) collective agreements play no role in regulating the use of NCCs while the law specifies only the formal requirements, ii) about 16% of private sector employees are currently bound by a NCC, iii) NCCs are relatively frequent among low educated employees in manual and elementary low paid occupations having no access to any type of confidential information, and iv) in addition to NCCs, a number of other arrangements limit the post-employment activity of workers. Many of the NCCs do not comply with the minimum requirements established by law and yet workers do not consider them as unenforceable and appear to behave as they were effective. Even when NCCs are unenforceable they appear to negatively affect wages when they are introduced without changing the tasks of the workers involved. Normative implications are discussed in the last section of the paper. |
| Keywords: | non-compete clauses, monopsony, labour market concentration |
| JEL: | J31 J41 J42 L40 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16021&r=hrm |