Essays in Labor and Personnel Economics PDF Download

Author: Benjamin Uwe Rolf Friedrich
Publisher:
ISBN:
Category :
Languages : en
Pages : 356

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Author: Emre Ekinci
Publisher:
ISBN:
Category :
Languages : en
Pages : 196

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This dissertation is a collection of three essays on personnel economics. The first essay studies bonus payments in a hierarchical firm. A well-documented finding in the internal labor markets literature is that the size of bonus payments increases as one moves up the corporate ladder. Two existing theories that can be used to explain this finding cannot fully capture the empirical patterns of the size of bonus payments. I develop a unified framework that can better match the empirical findings. Using a dynamic tournament model augmented with an asymmetric learning structure in which the current employer has an informational advantage over its competitors regarding the worker's productivity, my model offers an economic rationale for the employer's decision on the size of bonus payments by identifying two counteracting mechanisms that determine bonuses. Specifically, the size of bonus payments increases with the level of effort the employer aims to induce, but decreases with the size of the worker's career-concern incentives. I test the model's predictions using data from the personnel records of a medium-sized firm in the financial services industry. The results provide direct evidence for the model's predictions. The second essay investigates how salaries and bonus payments are related to turnover. In contrast with the existing literature, this study treats bonus payments as a distinct type of compensation, rather than aggregating them with salaries. The first part of the empirical analysis focuses on data coming from the personnel records of a medium-sized U.S. firm. I find that earning a bonus in the current period, as well as the size of the bonus, is negatively related to the probability of turnover after controlling for the size of salary or the growth rate of salary. These results also indicate that the growth rate of salary is negatively related to turnover, while results concerning the effect of the size of salaries are mixed. The second part of the empirical analysis uses a sample drawn from the Panel Study of Income Dynamics (PSID). The results show that salary, both in terms of size and growth rate, has a negative effect on the probabilities of quits and layoffs; whereas the negative effect of bonus payments is more evident in layoffs than quits. This third essay examines conditions under which employee referrals serve a screening function. Unlike the existing theoretical work, the possibility of a conflict of interest arising between the firm and current employees during the referral process is investigated. I consider two potential mechanisms that lead to a conflict of interest. First, I examine how the employee's social connections relate to his referral decision. I show that the employee finds it optimal to refer applicants with whom he has a strong social connection rather than applicants of high ability. Second, I examine how the employee's promotion prospects affect his referral decisions. Specifically, I posit that the current employee will have incentives to refer an applicant of lower ability if he faces any possibility of competition for promotions between himself and the newly hired worker. In either of these situations, employee referrals may not provide screening of more able workers. Finally, I show that the firm can make use of referral bonuses, which are contingent on the referral's performance, to align incentives of the employee with those of the firm.

Author: Charles J. Whalen
Publisher: W.E. Upjohn Institute
ISBN:
Category : Business & Economics
Languages : en
Pages : 317

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This book honors Vernon Briggs's professional contributions. This book contains important discussions on issues of human resource economics, which is now often described as workforce development. This book offers much research information and policy analysis that can be used to develop what is needed for an active set of national human resource policies.

Author: Pietro Garibaldi
Publisher: OUP Oxford
ISBN: 9780191535727
Category : Business & Economics
Languages : en
Pages : 284

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Personnel economics, the use of economics for studying human resource issues, is becoming a standard course in business and economics departments around the world. Indeed, after being successfully introduced in North American business schools, the teaching of personnel economics is now growing in Europe and in the rest of the world. Yet, most of the traditional analysis of personnel economics assumes a perfectly competitive labour market, a situation in which wages are fully flexible and dismissals can take place at no cost. Such a setting is inappropriate for most European markets, where wage rigidity and wage compression are widespread phenomena, and where employment protection legislation is very stringent. Personnel Economics in Imperfect Labour Markets aims to describe key personnel issues when firms and human resource managers act in highly regulated labour markets. Written to be accessible to students, the book provides original answers to questions which have previously been left to specialized academic journals. Should hiring take place under temporary or permanent contracts? How can we provide compensation related incentives when minimum wages are binding? How de we solve the employment/hours trade-off? These questions and more are discussed within the text.

Author: Christina L. Brown
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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A key question in personnel economics is how best to motivate and incentivize workers. In this dissertation, I investigate how different incentive systems affect workers' effort and decision on where to work. Rewarding different aspects of workers' performance may allow firms to prioritize certain outcomes and may attract and retain different types of employees who are more or less drawn to particular contracts. Finally, certain incentive schemes may benefit or harm certain sub-groups of employees, especially when there is subjectivity introduced into the evaluation scheme.In the first chapter, joint with Tahir Andrabi, we study whether performance incentives lead to sorting of teachers. Attracting and retaining high-quality teachers has a large social benefit, but it is challenging for schools to identify good teachers ex-ante. We use teachers' contract choices and a randomized controlled trial of performance pay with 7,000 teachers in 243 private schools in Pakistan to study whether performance pay affects the composition of teachers. Consistent with adverse selection models, we find that performance pay induces positive sorting: both among teachers with higher latent ability and among those with a more elastic effort response to incentives. Teachers also have better information about these dimensions of type than their principals. Using two additional treatments, we show effects are more pronounced among teachers with better information about their quality and teachers with lower switching costs. Accounting for these sorting effects, the total effect of performance pay on test scores is twice as large as the direct effect on the existing stock of teachers, suggesting that analyses that ignore sorting effects may substantially understate the effects of performance pay.In the second chapter, joint with Tahir Andrabi, we investigate how different types of incentive pay affect employee behavior. A central challenge facing schools is how to incentivize teachers. While high-powered incentives can motivate effort, they can lead teachers to distort effort away from non-incentivized outcomes. This is one reason why most performance incentives allow for manager subjectivity. However, this subjectivity can introduce new concerns, including favoritism and bias. We study the effect of subjective versus objective performance incentives on teacher productivity using the same randomized controlled trial discussed in chapter 1. We estimate the effect of two performance raise treatments versus a control condition, in which all teachers receive the same raise. The first treatment arm is a "subjective" raise, in which principals evaluate teachers; the second treatment arm an "objective" raise based on student test scores. First, we show that both subjective and objective incentives are equally effective at increasing test scores. However, objective incentives decrease student socio-emotional development. Second, we show that these effects are likely driven by the types of behavior change we observe from teachers during classroom observations. In objective schools, teachers spend more time on test preparation and use more punitive discipline, whereas, in subjective schools, pedagogy improves. Finally, we investigate the mechanisms of these effects through the lens of a moral hazard model with multi-tasking. We exploit variation within each treatment to isolate the causal effect of contract noisiness and distortion on student outcomes. We then show that teachers perceive subjective incentives as less noisy and less distorted, and these contract features affect student outcomes, serving as key channels to explain the reduced form effects we see.Finally, in the third chapter, I explore whether managers show gender bias in their evaluation of employees, and, if so, under what circumstances. Pakistan ranks in the lowest decile in female labor force participation, and even in sectors where women are more prevalent, such as teaching, they earn 70 cents for each dollar men earn. In this chapter, I test the extent to which statistical versus financial discrimination explains these pay gaps. I use the experiment from chapter 1 and 2, which has two important random variations: i). how often managers observe a given employee and ii). whether manager evaluations affect employee's pay or are just used for feedback and see whether this changes how managers evaluate their employees. I find that managers have less gender bias the more frequently they observe a given employee and more gender bias if there is a financial stake of the manager's evaluation. While all three chapters use the same randomization design and data, each chapter is intended to be a stand-alone set of research questions, so the respective design and data description is included within each chapter.

Author: Richard Barry Freeman
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 374

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Author: Edward P. Lazear
Publisher: John Wiley & Sons
ISBN: 111820672X
Category : Business & Economics
Languages : en
Pages : 416

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Personnel Economics in Practice, 3rd Edition by Edward Lazear and Michael Gibbs gives readers a rigorous framework for understanding organizational design and the management of employees. Economics has proven to be a powerful approach in the changing study of organizations and human resources by adding rigor and structure and clarifying many important issues. Not only will readers learn and apply ideas from microeconomics, they will also learn principles that will be valuable in their future careers.

Author: David Jonathan Brlan
Publisher:
ISBN:
Category :
Languages : en
Pages : 206

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Author: Douglas Staiger
Publisher:
ISBN:
Category : Employment (Economic theory)
Languages : en
Pages : 144

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Author: Edward P. Lazear
Publisher: MIT Press
ISBN: 9780262121880
Category : Business & Economics
Languages : en
Pages : 196

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Book Description
This text provides an introduction to personnel economics, showing how economists can make specific predictions and prescriptions for personnel issues that arise in business on a daily basis. The author focuses on compensation and its relation to worker motivation, selection and teamwork.