factor endowments factor proportions and the allocative efficiency of u s interregional trade the heckscher ohlin h o theory of trade has been subjected to numerous international tests based upon the empirical evidence presented in the literature it appears that the theory s explanatory power of the actual pattern of international trade is somewhat limited this may not be surprising however when one considers a host of extraneous factors such as tariffs quotas and other policy and institutional barriers to trade which distort the pattern of trade on the other hand some of the requisites of the h o theory are more nearly satisfied in interregional trade within a nation the extent of policy distortions on the overall pattern of commodity trade should be far less in interregional trade than in international trade likewise both production technologies and demand conditions assumed to be identical between nations in the h o theory should be more nearly so among regions within a nation while the theoretical basis of regional trade is of course the same as that of international trade it is primarily for these reasons that a number of researchers have more recently turned to interregional trade for the purpose of testing the h o theory the current literature on the u s regional comparative advantage includes the contributions by moroney and walker 1966 moroney 1972 1975 estle 1967 and klaasen 1973 whereas these studies focused primarily on the pattern of regional production as revealed by value added concentration ratios for the u s south the major objectives of this paper are i to design and perform factor proportion tests based upon the actual interregional pattern of trade and ii to investigate one neglected empirical aspect of the h o theory bearing upon the substitutive role that commodity trade plays for direct factor mobility in section ii we present estimates of the regional distribution of major input supplies in the united states the input classes considered are capital equipment human capital labor and renewable and nonrenewable natural resources in particular we have found that there are fairly distinct differences among u s census regions pertaining to relative aggregate input supplies defined by physical capital labor ratio human capital labor ratio renewable natural resource labor ratio and nonrenewable resource labor ratio section iii presents the methodology and major empirical findings of the factor proportions test as adapted to interregional trade section iv extends the analysis to consider an alternative hypothesis of the h o theory based on the substitutive relationship between direct factor movements and commodity trade as embedded in the original h o theory this aspect of the theory has not been explicitly dealt with in the empirical literature and we consider its practical implication concerning the allocative efficiency of trade a summary section concludes the paper

the male marital wage premium sorting vs differential pay the authors examine whether male marital and parenthood premia arise due to differential pay by employers or from differential sorting of employees on occupations and establishments they investigate these premia using matched employee employer data from the period 1979 96 in norway a country with increased pressures on men to be more active in the family sphere and in which public policy has aimed at remaking the family institution we find that the effect of marriage and to a lesser extent of children occurs mostly through sorting on occupations and occupation establishment units the role of differential pay from employers is marginal in explaining the marital and parenthood premia results assessing within individual changes in wages suggest that about 80 of the marital premium is due to selection the men who eventually marry and or have children sort into the higher paying occupations and occupation establishment units even prior to marriage and parenthood

collateral damage for r d manufacturers how patent sharks operate in markets for technology patent sharks small firms that exploit information asymmetries in markets for technology to gain patent based competitive advantages challenge established theory by which i markets for technology benefit large firms and ii intellectual property rights systems strictly support markets for technology empirically linking the sharks different assault strategies to the patents they deploy we illustrate that patent sharks will likely be an enduring phenomenon in markets for technology we discuss policy and strategy implications copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

on sharks trolls and their patent prey unrealistic damage awards and firms strategies of being infringed abstract patent trolls or sharks are patent holding individuals or often small firms who trap r d intensive manufacturers in patent infringement situations in order to receive damage awards for the illegitimate use of their technology while of great concern to management their existence and impact for both corporate decision makers and policy makers remains to be fully analyzed from an academic standpoint in this paper we show why patent sharks can operate profitably why they are of growing concern how manufacturers can forearm themselves against them and which issues policy makers need to address to do so we map international indemnification rules with strategic rationales of small patent holding firms and large manufacturers within a theoretical model our central finding is that the courts unrealistic consideration of the trade offs faced by inadvertent infringers is a central condition for sharks to operate profitably

executive compensation strategic competition and relative performance evaluation theory and evidence we examine compensation contracts for managers in imperfectly competitive product markets we show that strategic interactions among firms can explain the lack of relative performance based incentives in which compensation decreases with rival firm performance the need to soften product market competition generates an optimal compensation contract that places a positive weight on both own and rival performance firms in more competitive industries place greater weight on rival firm performance relative to own firm performance we find empirical evidence of a positive sensitivity of compensation to rival firm performance that is increasing in the degree of competition in the industry

energy price shocks input price changes and developmental implications a translog model applied to puerto rico the energy shocks of the 1970s that altered the relative price relationships between factor inputs and induced structural changes are analysed with the use of a translogarithmic cost function that incorporates the inputs capital labour and energy the developmental implications of these structural changes on a small open and energy capital importing region are emphasized taking the case of puerto rico as an example in terms of the partial elasticities of substitution the capital labour relationship moved from highly substitutable in the pre 1973 period to weakly complementary thereafter the energy labour association was transformed from high to low substitutability and that of energy capital from highly complementary to substitute

intellectual property rights strategic technology agreements and market structure the case of gsm this paper investigates the role of intellectual property rights iprs in shaping the gsm industry this industry is an example of a high tech industry in which standards play a large role in the process of designing the gsm standard a lot of attention has been given to iprs mainly to avoid a situation in which a single ipr holder could hamper or even totally block the development of the standard nevertheless the ultimate gsm standard contains a large amount of so called essential iprs i e iprs without which the implementation of gsm products is impossible the paper starts with a general discussion of the development of gsm and the role of firm strategy and iprs in this process next we present a database on the essential iprs in the gsm standard this database has been compiled on the basis of international patent statistics and the data that manufacturers have supplied to etsi the european standardization body re sponsible for defining the gsm standard we use this database to assess the dynamic ipr position of firms in the original gsm standard and its subsequent development in a next part of our analysis we relate the firm s ipr p osition to the trends in strategic technology agreements in the mobile telecommunications field we ask the question whether firms that are powerful in terms of iprs are also the firms that are central in the technology agreements network or vice versa we also investigate whether developments over time in the technology agreements data follow from the dynamic movements in the ipr position of a firm and which other factors play a role in this

patent trolls on markets for technology an empirical analysis of npes patent acquisitions abstract patent trolls or npes appropriate profits from innovation solely by enforcing patents against infringers they are often characterized as relying on low quality patents an assessment that if correct would imply that eradicating such patents would effectively terminate the npe business in this paper we shed light on this issue by empirically analyzing npes patent acquisitions we draw on a unique dataset of 392 u s patents acquired by known npes between 1997 and 2006 which we compare to three control groups of 784 u s patents each acquired by practicing firms we find that the probability that a traded patent is acquired by an npe rather than a practicing entity increases in the scope of the patent in the patent density of its technology field and contrary to common belief in the patent s technological quality our findings thus support recent theoretical propositions about the npe business model showing that npes procure patents that are more likely to be infringed harder to substitute for and robust to legal challenges the fact that npe acquired patents are of significantly higher quality than those in the control group implies that elevating minimum patent quality will not put an end to the npe business and suggests that this business is sustainable in the long run we furthermore discuss the fact that npes are peculiar players on markets for technology insofar as they are solely interested in the exclusion right not in the underlying knowledge we posit that transactions involving npes may only be the tip of the iceberg of patent only transactions a conjecture with strong implications for the efficiency and the study of markets for technologies managerial and policy implications are discussed

accuracy of response in labor market surveys evidence and implications this paper examines the extent of response errors in labor market survey data and explores the implications of such errors for economic analysis explicitly examined are responses to questions on industry occupation union status hours worked and wages analyses are based on two sources 1 a special supplement to the january 1977 current population survey that obtained data from workers and their employers and 2 an exact match of workers and their employers interviewed in the employment opportunity pilot project survey the dual nature of these surveys provides a basis for analyzing the effect of response error on a variety of economic analyses including the trade off between wages and risk the wage impact of unionism and the sensitivity of wage determination models to alternative responses to earnings questions

persistence of interindustry wage differentials a reexamination using matched worker firm panel data we estimate interindustry wage differentials using new french longitudinal data that allow a tracking of workers and their firms over time we find that when measured on a cross sectional basis they primarily reflect the interindustry variations in unmeasured labor quality however interindustry wage differentials are only a minor component of interfirm wage differentials the average differential in wages paid to the same workers by different firms is about 20 30 in a given industry wage policies are more favorable to workers in large capital intensive firms

litigation and settlement in patent infringement cases a patent grants its owner the right to sue intruders that have been identified the patentholder must then supervise the market and react in case of infringement his reaction may be to go to court to settle or to accept entry we investigate how intensive the monitoring effort should be and how it will influence the entry decision in a simultaneous game even if the penalty paid by the infringer in case of a finding of liability is high the patentholder may prefer a settlement to a trial the likelihood of entry may increase with the penalty in sequential games regardless who plays first entry occurs comparatively less often than in the simultaneous game

tilting the table the use of preliminary injunctions abstract this paper examines the economic role of preliminary injunctions in legal disputes we present a model in which differences in financing costs drive the use of preliminary injunction and explore the implications of this legal remedy for ex post efficiency and ex ante incentives controlling for the nature of the dispute we examine the relationships between the financial status of litigating parties and whether a preliminary injunction is requested the empirical analysis uses detailed data compiled for a sample of 252 patent suits and reveals patterns generally consistent with those suggested by the model

the transition to the knowledge economy labor market institutions and income inequality in advanced democracies the transition from fordism to the knowledge economy in the world s advanced democracies was underpinned by the revolution in information and communications technology ict the introduction and rapid diffusion of ict pushed up wages for college educated workers with complementary skills and allowed top managers and ceos to reap greater rewards for their own talents despite these common pressures income inequality did not rise to the same extent everywhere income in the anglo saxon countries remains particularly unequally distributed to shed new light on this puzzle the authors carry out a panel data analysis of eighteen oecd countries between 1970 and 2007 their analysis stands apart from the existing empirical literature by taking a comparative perspective the article examines the extent to which the relationship between the knowledge economy and income inequality is influenced by national labor market institutions the authors find that the expansion of knowledge employment is positively associated with both the 90 10 wage ratio and the income share of the top 1 percent but that these effects are mitigated by the presence of strong labor market institutions such as coordinated wage bargaining strict employment protection legislation high union density and high collective bargaining coverage the authors provide robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy

global markets for technology evidence from patent transactions abstract the paper analyses the recent evolution of international markets for technology by examining changes in ownership of us granted patents we study the effects of the geographical origin of patents proxied by their first priority country on the probability of patents being traded on the timing of the transaction and on the probability of observing a cross border transaction while controlling for the characteristics of the patents the time and sector specificities the analyses are based on a comprehensive dataset that covers all the patents granted by the uspto over the 2002 2012 period the data from the us patent reassignment database have been cleaned and processed and a subset of 95 542 granted patents that have been traded has been identified we obtain evidence from survival models that there has been an increase in the rate of patent transactions in recent years the obtained results indicate that patents with a first non us original applicant have less probability of being traded and show a longer time to transaction than us first priority patents we also find that more science based patents which are usually characterized by a higher technological uncertainty are more likely to be traded but are much less likely to be involved in cross border deals the results are discussed in light of the impact of asymmetric information and search costs on international patent transactions

the impact of parental income on early schooling transitions a re examination using data over three generations abstract this paper applies new semi parametric techniques to estimate the effects of parental income on the probability of being held back in elementary school in france we use information on grandparents past socioeconomic status and parents education level to separate the parental income effects from the effects of the unmeasured determinants of children s performance at school that are correlated with parental income when considering the probability of being held back in elementary school we find that the effects of parental poverty are much larger than the effects of a child s sex or age age within his her class or of the parents education level our findings suggest that policy decisions that increase income transfers to relatively poor families have a potentially very large impact on children s early performance at school

damages and injunctions in protecting intellectual property we investigate how liability rules and property rules protect intellectual property infringement might not be deterred under any of the enforcement regimes available however counterintuitively a credible threat of infringement can actually benefit the patentholder we compare the two doctrines of damages lost profit lost royalty and unjust enrichment and argue that unjust enrichment protects the patentholder better than lost royalty in the case of proprietary research tools both can be superior to a property rule depending on how much delay is permitted before infringement is enjoined for other proprietary products end user products cost reducing innovations these conclusions can be reversed

worktime regulations and spousal labor supply we study interdependencies in spousal labor supply by exploiting the design of the french workweek reduction which introduced exogenous variation in one s spouse s labor supply at constant earnings treated employees work on average two hours less per week husbands of treated women respond by reducing their labor supply by about half an hour consistent with substantial leisure complementarity and specifically cut the non usual component of their workweek leaving usual hours unchanged women s response to their husband s treatment is instead weak and rarely statistically significant possibly due to heavier constraints in the organization of their workweek

ceo pay and appointments a market based explanation for recent trends ceos increased from an average of 700 000 in 1970 in 2002 constant dollars to over 2 2 million in 2000 1 during the same period the ratio of ceo cash compensation to average pay for production workers increased from about 25 in 1970 to nearly 90 in 2000 2 the most prevalent explanation in the popular press for this trend is the fat cat theory a variant of which has been espoused among academics by lucian bebchuk et al 2002 3 accord

uncertainty risk and incentives theory and evidence uncertainty has qualitatively different implications than risk in studying executive incentives we study the interplay between profitability uncertainty and moral hazard where profitability is multiplicative with managerial effort investors who face greater uncertainty desire faster learning and consequently offer higher managerial incentives to induce higher effort from the manager in contrast to the standard negative risk incentive trade off this learning by doing effect generates a positive relation between profitability uncertainty and incentives we document empirical support for this prediction this paper was accepted by wei jiang finance

a survey of the economics of patent systems and procedures the last several decades have seen increases in patenting activity worldwide as well as growing issues related to patent quality in response to these quality issues a recent patent literature has emerged that investigates the behavior and incentives of patent examiners applicants and third parties in this paper we provide an overview of patent procedures patent systems and a survey of the new economic literature on patent systems both theoretical and empirical papers are considered policy implications coming from this literature are presented

interfuel substitution a meta analysis interfuel substitutability has been of longstanding interest to the energy economics and policy community however no quantitative meta analysis has yet been carried out of this literature this paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector manufacturing industry or subindustries or macro economy of a variety of developed and developing economies publication bias is controlled for by including the primary study sample size in the meta regression results for the shadow elasticities of substitution between coal oil gas and electricity for forty six primary studies show that at the level of the industrial sector there are easy substitution possibilities between all the fuel pairs with the exception of gas electricity and coal electricity substitution possibilities seem more constrained at the macro level and less constrained in sub industries estimates also vary across countries publication bias does not seem to be present but model and data specification issues very significantly affect the estimates derived by each individual study estimates from cross section regressions are generally largest fixed effects panel estimates intermediate in magnitude and time series estimates are mostly much smaller econometric research suggests that the fixed effects estimates are likely the best among the existing studies though biased downwards

of age sex and money insights from corporate officer compensation on the wage inequality between genders this paper shows that the gender and age of the wage setter are crucial determinants of the disparity in wages between sexes we document our findings using a data set on compensation of corporate officers that is uniquely suited for this analysis because officer wages are set by chief executive officers ceos we show that ceos pay officers of the opposite gender less than officers of their own gender even when controlling for job characteristics older and male ceos exhibit the greatest propensity to differentiate on the basis of sex female officers receive smaller raises if the firm is headed by a man our results suggest that ceo gender and age are economically more important determinants of officer compensation than are firm stock performance stock volatility or return on assets this paper was accepted by uri gneezy behavioral economics

endogenous matching and the empirical determinants of contract form empirical work on contracts typically regresses contract choice on observed principal and agent characteristics if i some of these characteristics are unobserved or partially observed and ii there are incentives whereby particular types of agents end up contracting with particular types of principals estimated coefficients on the observed characteristics may be misleading we address this endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early renaissance tuscany controlling for endogenous matching has an impact on parameters of interest and tenants risk aversion appears to have influenced contract choice

measuring firm size in empirical corporate finance abstract in empirical corporate finance firm size is commonly used as an important fundamental firm characteristic however no research comprehensively assesses the sensitivity of empirical results in corporate finance to different measures of firm size this paper fills this hole by providing empirical evidence for a measurement effect in the size effect in particular we examine the influences of employing different proxies total assets total sales and market capitalization of firm size in 20 prominent areas in empirical corporate finance research we highlight several empirical implications first in most areas of corporate finance the coefficients of firm size measures are robust in sign and statistical significance second the coefficients on regressors other than firm size often change sign and significance when different size measures are used unfortunately this suggests that some previous studies are not robust to different firm size proxies third the goodness of fit measured by r squared also varies with different size measures suggesting that some measures are more relevant than others in different situations fourth different proxies capture different aspects of firm size and thus have different implications therefore the choice of size measures needs both theoretical and empirical justification finally our empirical assessment provides guidance to empirical corporate finance researchers who must use firm size measures in their work

factor substitution and economies of scale and utilisation in kuwait s crude oil industry abstract the cost structure of the crude oil industry in kuwait has been examined with specific focus on factor substitution and economies of scale and utilisation this has been done by estimating translog cost functions both long run and short run using time series data covering the period from 1976 to 1996 the results indicate that the implied production structure is non homothetic and the pattern of scale effect is labour saving but capital and material using the evidence also supports the presence of an induced exogenous technical change which is non neutral labour and capital using and material saving the elasticity of substitution between capital and labour is positive implying that the two inputs are substitute the results also indicate the existence of diseconomies of scale in the production of crude oil but no economies or diseconomies of utilisation

characteristics of patent litigation a window on competition we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid 1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms copyright 2001 by the rand corporation

inter industry wage differentials in eu countries what do cross country time varying data add to the picture this paper documents the existence and main patterns of inter industry wage differentials across a large number of industries for 8 eu countries belgium germany greece hungary ireland italy netherlands and spain at two points in time in general 1995 and 2002 and explores possible explanations for these patterns the analysis uses the european structure of earnings survey ses an internationally harmonised matched employer employee dataset to estimate inter industry wage differentials conditional on a rich set of employee employer and job characteristics after investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials a hypothesis which cannot be accepted the paper investigates the role of institutional industry structure and industry performance characteristics in explaining inter industry wage differentials the results suggest that inter industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm level collective agreements and with higher collective agreement coverage jel classification j31 j41 j51

has moral hazard become a more important factor in managerial compensation we estimate a principal agent model of moral hazard with longitudinal data on firms and managerial compensation over two disjoint periods spanning 60 years to investigate increased value and variability in managerial compen sation we find exogenous growth in firm size largely explains these secular trends in compensation in our framework exogenous firm size works through two channels first conflicts of interest between shareholders and managers are magnified in large firms so optimal compensation plans are now more

on the effectiveness of patenting strategies in innovation races which if any of a firm s inventions should it patent should it patent at all many companies engaged in an innovation race seek a patenting strategy that balances protection of their intellectual property against the knowledge spillovers resulting from disclosure requirements not much is known about factors that determine the patenting strategy best able to resolve this trade off although scholars in various management economics and engineering disciplines have researched patents and patenting regimes little work has addressed the normative issues that pertain to forming an appropriate firm level patenting strategy we develop an inventory of real life patenting strategies and integrate them into a coherent framework our simulation model characterizes the optimal patenting choices for different environmental and firm level contingencies while capturing the dynamics between competing firms we identify the firm s research and development strategy as the most salient determinant of its optimal patenting strategy our research contributes to establishing a contingency theory of patenting strategies this paper was accepted by david hsu entrepreneurship and innovation

firming up inequality earnings inequality in the united states has increased rapidly over the last three decades but little is known about the role of firms in this trend for example how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay and how much is due to rising wage dispersion among workers within firms similarly how did rising inequality affect the wage earnings of different types of workers working for the same employer men vs women young vs old new hires vs senior employees and so on to address questions like these we begin by constructing a matched employer employee data set for the united states using administrative records covering all u s firms between 1978 to 2012 we show that virtually all of the rise in earnings dispersion between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals in contrast pay differences within employers have remained virtually unchanged a finding that is robust across industries geographical regions and firm size groups furthermore the wage gap between the most highly paid employees within these firms ceos and high level executives and the average employee has increased only by a small amount refuting oft made claims that such widening gaps account for a large fraction of rising inequality in the population

do common inherited beliefs and values influence ceo pay abstract we use the ethnicity of ceos across 31 countries as a proxy for their common inherited beliefs and values and find an ethnicity effect in ceo variable pay we find that the ethnicity effect in variable pay is not driven by the ethnicity effects in corporate policy decisions and that changes in ceo compensation are significantly larger when ceos are replaced with a person from a different ethnicity our estimated ethnicity effect captures the future time reference and religion of ceos ancestors finally we find an ethnicity effect in performance firing sensitivities i e the sensitivity to being fired due to poor performance

what is behind the recent surge in patenting abstract we investigate the cause of an unprecedented surge of us patenting over the past decade conventional wisdom points to the establishment of the court of appeals of the federal circuit by congress in 1982 we examine whether this institutional change which has benefited patent holders explains the burst in us patenting using both international and domestic data on patent applications and awards we conclude that the evidence is not favorable to the conventional view instead it appears that the jump in patenting reflects an increase in us innovation spurred by changes in the management of research

do peers influence occupational preferences evidence from randomly assigned peer groups at west point abstract there is substantial variation across occupations in outcomes such as earnings job satisfaction and health yet little is known about how occupational preferences are shaped and evolve this paper assesses a channel that may influence occupational preferences peer effects by exploiting unique institutional features and a natural experiment at west point to document the way students i e cadets occupational preferences evolve and to test for peer effects after graduation cadets must enter the u s army as an officer in one of 16 occupational branches and are required to rank order their preferences for the branches repeatedly over four years west point randomly assigns cadets to social groups both at broad company and narrow roommate levels we leverage the timing of the randomization and preference elicitations to test for peer effects at the company roommate and older peer levels with the possible exception of the first few weeks of exposure we find little evidence of peer effects we also use a survey of cadets to explore mechanisms and find evidence that peer information may not be credible in this case but rather cadets rely on mentors and job characteristics when making this decision

overconfidence compensation contracts and capital budgeting a risk averse manager s overconfidence makes him less conservative as a result it is cheaper for firms to motivate him to pursue valuable risky projects when compensation endogenously adjusts to reflect outside opportunities moderate levels of overconfidence lead firms to offer the manager flatter compensation contracts that make him better off overconfident managers are also more attractive to firms than their rational counterparts because overconfidence commits them to exert effort to learn about projects still too much overconfidence is detrimental to the manager since it leads him to accept highly convex compensation contracts that expose him to excessive risk

the effect of competition on executive compensation and incentives evidence from a quasi natural experiment the research was partially funded by fundacao para a ciencia e a tecnologia through the applied microeconomics research unit nima award no pest oe ege ui3181 2014

motives to patent empirical evidence from germany abstract against the background of the patent upsurge we first analyse the role of patenting and alternative instruments to protect intellectual property based on a sample of german companies active in patenting in a second step we investigate the motives to patent considering sector and company size effects we find that company size matters both for the importance of instruments and the motives to patent especially important are the new strategic motives to patent like using patents to improve a company s own position in negotiations with partners licensees and the financial sector or to use patents as incentives for r d personnel or performance indicators these correlate positively with company size we derive some possible challenges for future patent policies from these insights

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

where to go workers reasons to quit and intra vs interindustry job mobility we show that workers reasons for quitting their job affect their decision to stay in or leave their industry using survey data among public sector employees in the netherlands workers quitting for e g pay work pressure or job duties move relatively often to another industry in contrast to workers quitting for commuting time or the atmosphere at work this suggests that workers use their experience in the initial job to update their expectations on other jobs in the industry as the first set of job aspects is more likely to be related among jobs within an industry than the latter furthermore it is shown that workers reasons to quit fully explain the differences in wage growth between intra and interindustry job movers lastly we find that workers who quit for pay or management often leave the public sector altogether the data used in this article are proprietary

determinants of management compensation with risk averse agents and dispersed ownership of the firm abstract the salaries of top managers consist of two parts one part depending on profits the other being constant in a model of management compensation schemes with risk averse agents holmstrom and milgrom 1987 predict that an increasing variance in profits should reduce the profit relatedness of salaries using data from germany we show that indeed a larger variance of profits reduces the pay performance sensitivity moreover we analyze the relative influence of profits as compared to firm size on managerial compensation in general as well as the relationship between pay performance sensitivity and ownership structure

overoptimism and the performance of entrepreneurial firms recent theoretical and empirical research on cognitive bias in decision making suggests that overoptimism critically influences entrepreneurs decisions to establish and sustain new ventures we investigate whether such cognitive bias influences entrepreneurial venture performance using data on commercialization efforts for university inventions in contrast to prior studies our results suggest that entrepreneurial overoptimism does not appear to be the determining factor in the decision to found a firm we do find that entrepreneurs continue unsuccessful development efforts for longer periods of time than do established firms which is consistent with entrepreneurial overoptimism in the development of technologies with uncertain market prospects this latter finding is also consistent with rationality based models of decision making behavior however we find that the economic returns associated with many of the technologies in our sample are realized after the start up has been acquired by an established firm suggesting that start ups may serve as a transitional organizational form in the market for technology commercialization

patent litigation with endogenous disputes the recent explosion of patenting and patent disputes has sparked a growing literature on the economics of patent litigation generally models in this literature take the existence of a dispute as given this assumption is troubling because it hampers the interpretation of empirical studies of patent litigation and the assessment of many patent policy reforms disputes would not arise if all technology adopters obtained ex ante licenses from patent owners this suggests that two stories could explain the origin of patent disputes in one the technology adopter observes a patented technology but chooses to imitate inventing around and or hiding the infringement in the other the adopter develops his own technology and is unaware of another firm s putative patent rights this kind of innocent infringement occurs because patent rights often have uncertain boundaries or questionable validity in addition the sheer number of patents facing a typical innovator makes careful assessment quite burdensome furthermore patent claims are often hidden sometimes strategically until after firms have made technology investments these two accounts suggest that a model of disputes should consider the decisions of patent owners to invent to patent and to monitor use of the patented technology by others and the decisions of potential infringers to monitor extant patents and develop and adopt new technology claude crampes and corinne langinier 2002 endogenize disputes by focusing on a patent owner s monitoring activity and imitative behavior by potential infringers our model includes this behavior but it also includes defendants who invent around a patent and defendants who are unaware of the patented technology we find that this richer model generates testable implications that better match empirical evidence on patent litigation

the patent paradox revisited an empirical study of patenting in the u s semiconductor industry 1979 1995 we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms

inter industry wage premiums and industry specific productivity in taiwan by using taiwan s manpower utilization survey data for the 1978 2000 period different inter industry wage premiums in taiwan are observed and the impact of workers industry specific productivity on the wage explored the empirical results show that industry specific skills result in industry stayers having higher wages than industry switchers through their reservation wages it is also found that the pre displacement industry affiliations that are associated with the post displacement wages are explained by the workers unobserved abilities furthermore by comparing the different residual means between industry switchers and stayers based on each industry s wage equation it is found that the switchers are low wage workers who tend to be located in the high wage industries the high wage industry leavers are also found to have higher post displacement wage residuals than the low wage industry leavers these results suggest that the differences in industry wage premiums may be explained by the industry

market forces and ceo pay shocks to ceo demand induced by ipo waves i develop a simple competitive equilibrium model and derive the prediction that ceo pay size elasticity increases when more firms compete for an inelastic supply of managers using industry level ipo waves as a proxy for increased competition for ceos i find that pay size elasticity increases by 6 with a one standard deviation increase in ipo activity this effect is stronger in specialized industries in addition increased ipo activity leads to a greater likelihood of executive transitions between firms these findings indicate that market forces play a key role in the determination of ceo pay received august 6 2015 editorial decision september 24 2016 by editor francesca cornelli

how broad should the scope of patent protection be i explore the trade off between a patent s length that is its lifetime and its width that is its scope of coverage a wider patent generally reduces the distortion of consumers choices between the patented brand of the product and unpatented lower priced varieties sold by competitors but also permits higher prices which increase relative to profits the deadweight losses from consumers switching consumption out of the product class i show under what conditions infinitely lived but very narrowly focused patents are the socially efficient way to reward innovation and under what conditions very short lived but very broad patents are optimal

energy substitution in u s manufacturing a regional approach one response of economists to energy market developments of the 1970s was to launch a series of studies in which the objective was to estimate energy substitution parameters characterizing important sectors of the u s economy relatively high substitution elasticities between energy and other inputs would permit firms to mitigate the effects of energy price increases by shifting to less energy intensive factor proportions the seminal work in this effort was carried out by berndt and wood 5 griffin and gregory 14 pindyck 28 halvorsen 16 and fuss 12 the research was substantially abetted by developments in production theory where the work of mcfadden 23 diewert 8 and christensen jorgenson and lau 6 yielded new and flexible production and cost function forms empirical work on energy substitution has continued 2 for the most part the data analyzed have been highly aggregative applying to say total u s manufacturing or perhaps to the various two digit sectors comprising that total to date little effort has been given to investigating energy substitution relationships at the regional level in the u s this is unfortunate since we know that the u s economy is actually composed of regions which are differently endowed with resources have developed at different rates and are comprised of different sectoral mixes the distinct possibility exists that regions differ in terms of the way in which energy inputs relate to other inputs in production furthermore even though the energy crisis may seem to be a national phenomenon national policy responses are worked out within a context of shifting and colliding regional conflicts stemming in large part from real or imagined perceptions of how energy market developments impact different regions it would seem especially important therefore to identify

managers with and without style evidence using exogenous variation in a large panel of compustat firms we find that firm policy changes after exogenous ceo departures do not display abnormally high levels of variability casting doubt on the presence of idiosyncratic style effects in policy choices after endogenous ceo departures we do detect abnormally large policy changes these changes are larger when the firm is likely to draw from a deeper pool of replacement ceo candidates suggesting the presence of causal style effects that are anticipated by the board our evidence suggests that managerial styles are not transferred across employers and that standard f tests are inappropriate for identifying style effects the author 2013 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

patent enforcement a review of the literature without the confidence that patent rights can be enforced quickly and efficiently when needed the patent system will not stimulate innovation for this reason governments academics international institutions and the private sector have poured significant resources into gathering and analysing statistics on patent enforcement over the last two decades this paper reviews these studies and finds that while infringement is relatively common much enforcement occurs informally and less than 1 2 of patents incur litigation new strategic uses of the enforcement system especially by nonpracticing entities are the major emerging enforcement issue especially in the united states while the old problem of litigation costs attracts the lion s share of empirical attention it has produced remarkably few solutions to date

managerial attributes and executive compensation we study the role of firm and manager specific heterogeneities in executive compensation we decompose the variation in executive compensation and find that time invariant firm and especially manager fixed effects explain a majority of the variation in executive pay we then show that in many settings it is important to include fixed effects to mitigate potential omitted variable bias furthermore we find that compensation fixed effects are significantly correlated with management styles i e manager fixed effects in corporate policies finally the method used in the article has a number of potential applications in financial economics the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

managerial overconfidence and accounting conservatism managerial overconfidence overconfident managers overestimate ixwxuhuhwxuqviurpwkhluilupv lqyhvwphqwv 7kxv zh predict that overconfident managers will tend to accelerate good news recognition delay loss recognition and generally use less conservative accounting furthermore we test whether external monitoring helps to mitigate this effect using measures of both conditional and unconditional conservatism we find robust evidence of a negative relation between ceo overconfidence and accounting conservatism we further find that external monitoring does not appear to mitigate this effect our findings add to the growing literature on overconfidence and complements findings in schrand and zechman 2011 that overconfidence affects financial reporting behavior

testing patent value indicators on directly observed patent value an empirical analysis of ocean tomo patent auctions the valuation of patents is an important albeit challenging task extant research to identify patent value indicators has so far relied on expert estimates of patent value exploited patent renewal data or depended on more indirect measures of patent value recently specialized market places for patent transactions have emerged that allow us for the first time to directly observe patent s private value one of the most prominent market places for patents is ocean tomo a platform that offers periodical patent auctions we make use of this auction data to empirically test predictions on patent value identifiers on real world auction prices we find empirical support for forward citations and the patent s family size however both indicators explain only a small variance in patent value in contrast our full model explains a large share of variance making us optimistic that with increased directly observed patent value such models can be useful tools in patent valuation

managerial talent motivation and self selection into public management the quality of public management is a recurrent concern in many countries calls to attract the economy s best and brightest managers to the public sector abound this paper studies self selection into managerial and non managerial positions in the public and private sector using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation we find that if demand for public sector output is not too high the equilibrium return to managerial ability is always highest in the private sector as a result relatively many of the more able managers self select into the private sector since this outcome is efficient our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private sector levels is not cost efficient

foreign ownership and wages evidence from hungary 1986 2008 this article estimates the wage effects of foreign direct investment fdi using firm level and linked employer employee panel data containing a large number of foreign acquisitions over a long per

energy capital substitutability complementarity the dichotomy abstract changes in the price of energy affect not only the demand for energy but also the rates of capital formation and labour utilization these changes depend on the functional relationship between energy and the primary factor inputs in particular the relationship between energy and capital has been characterized by major conflicting evidence time series data classify the two inputs as complements by contrast pooled cross section studies conclude that capital and energy aresubstitutes in the production process in this case higher priced energy will stimulate the demand for investment while several reconciliation attempts on this disparity deserve marked attention the most prominent explanation is that time series studies reflect short term relationships and cross section analyses capture long term effects

does tax policy affect executive compensation evidence from postwar tax reforms abstract the trends in executive pay and labor income tax rates since the 1940s suggest a high elasticity of taxable income with respect to tax policy by contrast the level and structure of executive compensation have been largely unresponsive to tax incentives since the 1980s however the relative tax advantage of different forms of pay was small during this period using a sample of top executives in large firms from 1946 to 2005 we also find a small short run response of salaries qualified stock options and bonuses paid after retirement to changes in tax rates on labor income even though tax rates were significantly higher and more heterogeneous across individuals in the first several decades following wwii we explore several potential explanations for the conflicting impressions given by the long run and short run correlations between taxes and pay including changes in social norms and concerns about pay equality

do volatile firms pay volatile earnings evidence from linked worker firm data abstractdespite the importance of earnings instability little is known about its correlates or causes this article seeks to better understand earnings instability by studying whether volatile firms pay volatile earnings and is the first to directly test the relationship using us linked employer employee data the article finds a positive and statistically significant relationship using within firm variation in addition this article finds that lower earning workers are passed significantly more volatility from their employing firms than are higher earning workers

why are ceos rarely fired evidence from structural estimation i evaluate the forced ceo turnover rate and quantify effects on shareholder value by estimating a dynamic model the model features learning about ceo ability and costly turnover to fit the observed forced turnover rate the model needs the average board of directors to behave as if replacing the ceo costs shareholders at least 200 million this cost mainly reflects ceo entrenchment rather than a real cost to shareholders the model predicts that shareholder value would rise 3 if we eliminated this perceived turnover cost all else equal the model also helps explain the relation between ceo firings tenure and profitability

within firm human capital externalities in tunisia this case study exploits matched firm employee tunisian data in order to underline the role played by within firm human capital in worker remuneration the estimated returns to human capital in wage equations remain unchanged when the dummies representing firm heterogeneity are replaced in the list of regressors with three firm variables a textile industry dummy within firm mean education and firm age we find that part of what is usually considered as return to education may be due to within firm externalities

the labor market in the art sector of baroque rome we analyze the labor market for painters in baroque rome using unique data on primary sales of portraits still lifes genre paintings landscapes and figurative paintings in line with the traditional artistic hierarchy of genres average price differentials between them were high the matched painter patron nature of the dataset allows us to evaluate the extent to which price heterogeneity is related to unobservable characteristics of painters and patrons we find that the market allocated artists between artistic genres to the point of equalizing the marginal return of each genre residual price differences at the employer level can be explained in terms of incentive mechanisms to induce effort in the production of artistic quality and compensating wage differentials jel c23 d8 j3 z11

high wage workers match with high wage firms clear evidence of the effects of limited mobility bias abstract limited mobility bias explains why positive assortative matching is not observed in the empirical literature using german social security records we estimate the correlation between worker and firm contributions to wage equations and find that it is unambiguously positive

executive compensation a modern primer this article studies traditional and modern theories of executive compensation bringing them together under a simple unifying framework accessible to the general interest reader we analyze assignment models of the level of pay and static and dynamic moral hazard models of incentives and compare their predictions to empirical findings we make two broad points first traditional theories find it difficult to explain the data suggesting that compensation results from rent extraction by ceos however more modern shareholder value theories that arguably better capture the ceo setting do deliver predictions consistent with observed practices suggesting that these practices need not be inefficient second seemingly innocuous features of the modeling setup often made for tractability or convenience can lead to significant differences in the model s implications and conclusions on the efficiency of observed practices we close by highlighting apparent inefficiencies in executive compensation and additional directions for future research