Behavioral and personnel economics

Articles in behavioral economics discuss the emotional and cognitive factors that influence the decisions of actors, in particular employers and employees. Personnel economics analyzes the internal organizational strategy of the firm and the human resource management practices chosen to pursue that strategy.

  • Sexual orientation and labor market outcomes Updated

    Sexual orientation seems to affect job access and satisfaction, earning prospects, and interaction with colleagues

    Nick Drydakis, July 2019
    Studies from countries with laws against discrimination on the basis of sexual orientation suggest that gay and lesbian employees report more incidents of harassment and are more likely to report experiencing unfair treatment in the labor market than are heterosexual employees. Both gay men and lesbians tend to be less satisfied with their jobs than their heterosexual counterparts. Gay men are found to earn less than comparably skilled and experienced heterosexual men. For lesbians, the patterns are ambiguous: in some countries they have been found to earn less than their heterosexual counterparts, while in others they earn the same or more.
    MoreLess
  • Measuring individual risk preferences

    Incentivized measures are considered to be the gold standard in measuring individuals’ risk preferences, but is that correct?

    Catherine C. Eckel, June 2019
    Risk aversion is an important factor in many settings, including individual decisions about investment or occupational choice, and government choices about policies affecting environmental, industrial, or health risks. Risk preferences are measured using surveys or incentivized games with real consequences. Reviewing the different approaches to measuring individual risk aversion shows that the best approach will depend on the question being asked and the study's target population. In particular, economists’ gold standard of incentivized games may not be superior to surveys in all settings.
    MoreLess
  • Gender diversity in teams Updated

    Greater representation of women may better represent women’s preferences but may not help economic performance

    Ghazala Azmat, May 2019
    Women's representation on corporate boards, political committees, and other decision-making teams is increasing, this is in part because of legal mandates. Evidence on team dynamics and gender differences in preferences (for example, risk-taking behavior, taste for competition, prosocial behavior) shows how gender composition influences group decision-making and subsequent performance. This works through channels such as investment decisions, internal management, corporate governance, and social responsibility.
    MoreLess
  • Market competition and executive pay Updated

    Increased competition affects the pay incentives firms provide to their managers and may also affect overall pay structures

    Priscila Ferreira, February 2019
    Deregulation and managerial compensation are two important topics on the political and academic agenda. The former has been a significant policy recommendation in light of the negative effects associated with overly restrictive regulation on markets and the economy. The latter relates to the sharp increase in top executives’ pay and the nature of the link between pay and performance. To the extent that product-market competition can affect the incentive schemes offered by firms to their executives, the analysis of the effects of competition on the structure of compensation can be informative for policy purposes.
    MoreLess
  • Efficient markets, managerial power, and CEO compensation Updated

    CEO pay, often contentious, is the product of many forces

    Michael L. Bognanno, February 2019
    The escalation in chief executive officer (CEO) pay over recent decades, both in absolute terms and in relation to the earnings of production workers, has generated considerable attention. The pay of top executives has grown noticeably in relation to overall firm profitability. The pay gap between CEOs in the US and those in other developed countries narrowed substantially during the 2000s, making top executive pay an international concern. Researchers have taken positions on both sides of the debate over whether the level of CEO pay is economically justified or is the result of managerial power.
    MoreLess
  • Happiness as a guide to labor market policy Updated

    Happiness is key to a productive economy, and a job remains key to individual happiness, also under robotization

    Jo Ritzen, January 2019
    Measures of individual happiness, or well-being, can guide labor market policies. Individual unemployment, as well as the rate of unemployment in society, have a negative effect on happiness. In contrast, employment protection and un-employment benefits or a basic income can contribute to happiness—though when such policies prolong unintended unemployment, the net effect on national happiness is negative. Active labor market policies that create more job opportunities increase happiness, which in turn increases productivity. Measures of individual happiness should therefore guide labor market policy more explicitly, also with substantial robotization in production.
    MoreLess
  • Bosses matter: The effects of managers on workers’ performance

    What evidence exists on whether bad bosses damage workers’ performance, or good bosses enhance it?

    Kathryn L. Shaw, January 2019
    A good boss can have a substantial positive effect on the productivity of a typical worker. While much has been written about the peer effects of working with good peers, the effects of working with good bosses appear much more substantial. A good boss can enhance the performance of their employees and can lower the quit rate. This may also be relevant in situations where it is challenging to employ incentive pay structures, such as when quality is difficult to observe. As such, firms should invest sufficiently in the hiring of good bosses with skills that are appropriate to their role.
    MoreLess
  • Gender quotas on boards of directors Updated

    Gender quotas for women on boards of directors improve female share on boards but firm performance effects are mixed

    Nina Smith, December 2018
    Arguments for increasing gender diversity on boards of directors by gender quotas range from ensuring equal opportunity to improving firm performance. The introduction of gender quotas in a number of countries has increased female representation on boards. Current research does not justify gender quotas on grounds of economic efficiency. In many countries the number of women in top executive positions is limited, and it is not clear from the evidence that quotas lead to a larger pool of female top executives, who are the main pipeline for boards of directors. Thus, other supplementary policies may be necessary if politicians want to increase the number of women in senior management positions.
    MoreLess
  • Anonymous job applications and hiring discrimination

    Blind recruitment can level the playing field in access to jobs but cannot prevent all forms of discrimination

    Ulf Rinne, October 2018
    The use of anonymous job applications (or blind recruitment) to combat hiring discrimination is gaining attention and interest. Results from field experiments and pilot projects in European countries (France, Germany, the Netherlands, and Sweden are considered here), Canada, and Australia shed light on their potential to reduce some of the discriminatory barriers to hiring for minority and other disadvantaged groups. But although this approach can achieve its primary aims, there are also important cautions to consider.
    MoreLess
  • How to reduce workplace absenteeism

    Financial incentives and changes in working conditions are key to many broad and tailor-made programs

    Wolter Hassink, September 2018
    Do workplace programs help reduce worker sickness absence? Many programs are based on the principle that the employee’s decision to report an absence can be influenced if it is costly to be absent. Firms can reduce absenteeism by implementing broad programs, including performance pay, general improvements of working conditions, and strengthening workers’ loyalty to the firm. Specific programs, such as grading partial absence, seem to be effective at reducing long-term absences. However, firms will be less inclined to implement such programs if they can shift the financial burden to social security programs.
    MoreLess
show more