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The effects of human resource management on small firms’ productivity and employees’ wages

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Author Info
Andries de Grip
Inge Sieben

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Abstract

This paper analyses whether employees and firms differently benefit from particular human resource (HR) practices. The focus is on small firms that may be badly informed on the impact of HR practices on firm performance. In this study on Dutch pharmacies, it is found that firms do not reward employees’ skills according to their contribution to firms’ productivity, as (1) employees are over-rewarded for their sector-specific skills and under-rewarded for the productivity enhancing effect of their computer skills and (2) employees’ work experience positively affects their wages but does not have real productivity effects. Moreover, it is found that training employees in case of vacancy problems seems to be an adequate HR practice, since it increases productivity without affecting the average wage level. The opposite holds for offering higher wages to newly recruited employees. Furthermore, we find that only the employees benefit from performance evaluation interviews, whereas employing many employees by temporary contracts appears to have a negative effect on productivity, without affecting the wage level.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 37 (2005)
Issue (Month): 9 (May)
Pages: 1047-1054
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Handle: RePEc:taf:applec:v:37:y:2005:i:9:p:1047-1054

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  1. Lazear, Edward P, 1995. "A Jobs-Based Analysis of Labor Markets," American Economic Review, American Economic Association, vol. 85(2), pages 260-65, May.
  2. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June. [Downloadable!] (restricted)
  3. Goux, Dominique & Maurin, Eric, 2000. "Returns to firm-provided training: evidence from French worker-firm matched data1," Labour Economics, Elsevier, vol. 7(1), pages 1-19, January. [Downloadable!] (restricted)
  4. Ottersten, Eugenia Kazamaki & Lindh, Thomas & Mellander, Erik, 1999. "Evaluating Firm Training, Effects on Performance and Labour Demand," Applied Economics Letters, Taylor and Francis Journals, vol. 6(7), pages 431-37, July. [Downloadable!] (restricted)
  5. Paul Osterman, 1994. "How common is workplace transformation and who adopts it?," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(2), pages 173-188, January.
  6. Zwick, Thomas & Wolf, Elke, 2002. "Reassessing the Impact of High Performance Workplaces," ZEW Discussion Papers 02-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  7. Heijke,Hans & Meng,Christoph & Ris,Catherine, 2003. "Fitting to the Job: the Role of Generic and Vocational Competencies in Adjustment and Performance," Research Memoranda 001, Maastricht : ROA, Research Centre for Education and the Labour Market. [Downloadable!]
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  8. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February. [Downloadable!] (restricted)
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  9. Sandra E. Black & Lisa M. Lynch, 1997. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," NBER Working Papers 6120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. John Haltiwanger & Marilyn E. Manser & Robert Topel, 1998. "Labor Statistics Measurement Issues," NBER Books, National Bureau of Economic Research, Inc, number halt98-1.
  11. Michael J. Handel & Maury Gittleman, 2000. "Is there a Wage Payoff to Innovative Work Practices?," Macroeconomics 0004032, EconWPA. [Downloadable!]
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  12. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages F112-42, February. [Downloadable!] (restricted)
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  13. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October. [Downloadable!] (restricted)
  14. Dearden, Lorraine & Reed, Howard & Van Reenen, John, 2000. "Who Gains when Workers Train? Training and Corporate Productivity in a Panel of British Industries," CEPR Discussion Papers 2486, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  15. DiNardo, John E & Pischke, Jorn-Steffen, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 291-303, February.
    Other versions:
  16. Bauer, Thomas K. & Bender, Stefan, 2001. "Flexible Work Systems and the Structure of Wages: Evidence from Matched Employer-Employee Data," IZA Discussion Papers 353, Institute for the Study of Labor (IZA), revised Jul 2002. [Downloadable!]
  17. Casey Ichniowski & Kathryn Shaw, 2003. "Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 155-180, Winter. [Downloadable!] (restricted)
  18. Andy Dickerson & Francis Green, 2004. "The growth and valuation of computing and other generic skills," Oxford Economic Papers, Oxford University Press, vol. 56(3), pages 371-406, July. [Downloadable!] (restricted)
  19. Borghans, Lex & ter Weel, Bas, 2003. "Are Computer Skills the New Basic Skills? The Returns to Computer, Writing and Math Skills in Britain," IZA Discussion Papers 751, Institute for the Study of Labor (IZA). [Downloadable!]
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  20. Hotchkiss, Julie L, 1998. "Cross-Sectional Evidence for the Job-Matching Model," Applied Economics Letters, Taylor and Francis Journals, vol. 5(2), pages 121-25, February. [Downloadable!] (restricted)
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