the determinants of the management hierarchy evidence from italian plants abstract the paper aims to test some of the predictions of economic theory on the organizational architecture by looking at the relation between the depth of the management hierarchy of plants and plant and industry specific variables i test this relation through the estimates of an ordered logit econometric model on a sample of 438 italian manufacturing plants the findings show that the plant size the characteristics i e vintage and extent of use of the production and communication technology in use the plant s ownership status i e state versus private ownership and differences in the nationality of firms to which plants belong figure prominently in explaining the complexity of a plant s organization

collective bargaining in the public sector the effect of legal structure on dispute costs and wages this paper examines the impact of collective bargaining legislation on dispute costs and wages using a panel of canadian public sector contracts the authors results suggest that policymakers designing collective bargaining legislation face a trade off between reducing dispute costs and increasing wages dispute costs are lower under compulsory arbitration than under the right to strike or when no collective bargaining legislation exists hence a switch to compulsory arbitration could potentially make both the union and the employer better off by reducing dispute costs however the authors find that wages are higher under compulsory arbitration than under other legal structures copyright 1991 by american economic association

union effects on municipal employment and wages a longitudinal approach this article examines municipal union employment and wage effects in a sample of police fire sanitation streets and highways and finance and control departments from approximately 900 u s cities during 1977 80 cross section results for 1980 suggest positive union contract effects on fire fighter and sanitation employment and wages consistent with demand shifts due to union political influence in municipal bargaining i then model potential omitted variables as nonstationary fixed effects and apply longitudinal models to estimation of employment and wage changes between 1977 and 1980 the longitudinal results provide little support for the demand shift hypothesis

cash rents and land values in u s agriculture a firm level land valuation model is deduced which depends on the expected growth rate in net cash returns to land inflation expectations and property income and capital gains taxes it is then aggregated to obtain an aggregate two sector land valuation model that model is then estimated for twenty four individual states for the period 1960 81 in addition a pooled cross sectional regression model is estimated combining the twenty four state data the model results demonstrate that significant state differences exist in the land market and that in many states agricultural land values are influenced by nonagricultural demand for land

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

social exclusion causes people to spend and consume strategically in the service of affiliation when people s deeply ingrained need for social connection is thwarted by social exclusion profound psychological consequences ensue despite the fact that social connections and consumption are central facets of daily life little empirical attention has been devoted to understanding how belongingness threats affect consumer behavior in four experiments we tested the hypothesis that social exclusion causes people to spend and consume strategically in the service of affiliation relative to controls excluded participants were more likely to buy a product symbolic of group membership but not practical or self gift items tailor their spending preferences to the preferences of an interaction partner spend money on an unappealing food item favored by a peer and report being willing to try an illegal drug but only when doing so boosted their chances of commencing social connections overall results suggest that socially excluded people sacrifice personal and financial well being for the sake of social well being

incentives and loss of control in an optimal hierarchy this paper studies incentives and loss of control in a hierarchy model which combines and generalizes the models of williamson calvo wellisz and keren levhari in our model of the hierarchy the levels of effort from managers and workers the wage scales the span of control and in particular the total number of tiers are all endogenous using optimal control techniques we show that in the optimal hierarchy the wage scales and effort levels decrease as one moves down the hierarchy as the hierarchy expands with no technological progress workers exert less effort and are paid less top managers work harder and are paid more and the wage distribution becomes increasingly skewed

a life course trajectory framework for understanding the intracohort pattern of wage inequality much research has been devoted to cross sectional and intercohort patterns of wage inequality but relatively little is known about the mechanisms for the intracohort pattern of wage inequality to fill this intellectual gap this article establishes a life course trajectory lct framework for understanding the intracohort pattern of wage inequality first the author proposes and conceptualizes three essential properties of the lct framework random variability trajectory heterogeneity and cumulative advantage that are used to establish a mathematical formalization of the lct framework both the conceptualization and the formalization imply that intracohort wage inequality will increase over the life course due to random variability trajectory heterogeneity and cumulative advantage finally the author combines the lct framework with the multilevel growth curve model then applies the model to data from the nlsy79 and finds support for the significance of random variability trajectory heterogenei

the rise of intra occupational wage inequality in the united states 1983 to 2002 wage inequality has increased dramatically in the united states since the 1980s this article investigates the relationship between this trend and occupational structure measured at the three digit level using the current population survey from 1983 to 2002 we find that the direct association between occupations and wage inequality declined over this period as within occupational inequality grew faster than betweenoccupational inequality we estimate multilevel growth models using detailed occupational categories as the unit of analysis to assess how the characteristics of occupations affect changes in mean wages and levels of wage inequality across this time period the results indicate that changes in mean wages across occupations vary depending on the characteristics of individuals in those occupations and that intraoccupational inequality is difficult to predict using conventional labor force data these findings seem largely inconsistent with the common sociological view of occupation as the most fundamental feature of the labor market correspondingly a more comprehensive approach one that incorporates the effects of organizational variables and market processes on rising wage inequality in the new economy is warranted

allocating decision rights on the shop floor a perspective from transaction cost economics and organization theory this paper explores the links that the allocation of decision rights on the shop floor maintains with labor transaction attributes and several structural traits of the firm the approach is based on the transaction cost apparatus and harnesses the theoretical and empirical background provided by organization theory data are presented from a wide field survey in the spanish food and electronics industries standard industry classification sic 20 and 36 evidence not only verifies the influence of firm size property age and unionism but also shows that the allocation of decision rights is related to a particular mix of labor transaction traits specifically one of the most important results is that employer opportunism offers greater explanatory power than employee opportunism

the demand for monitoring technologies the case of trucking this paper examines the demand for on board computers in trucking distinguishing between their incentive and resource allocation improving capabilities i find that monitoring s incentive benefits are high when perquisite taking is attractive to drivers driver effort is important and verifying drivers actions to insurers is valuable these results are consistent with agency theory and suggest that networking applications will raise the productivity and pay of difficult toevaluate workers i also find that monitoring s benefits are disproportionately resource allocation related when managerial decisions are least constrained this suggests that networking applications monitoring capabilities raise the returns to delegation when resource allocation decisions are routine and lower them when they are not

consumer preference for a no choice option the traditional focus in the decision making literature has been on understanding how consumers choose among a given set of alternatives the notion that preference uncertainty may lead to choice deferral when no single alternative has a decisive advantage is tested in seven studies building on recent research the article shows that the decision to defer choice is influenced by the absolute difference in attractiveness among the alternatives provided and is not consistent with trade off difficulty or the theory of search these findings are then extended to show that choice deferral can also be modified for the same alternatives by manipulations that make them appear more similar in attractiveness or that decrease the need to differentiate among them the results are consistent with the notion that preference uncertainty results in a hesitation to commit to any single action since small differences in attractiveness among the alternatives are potentially reversible consistent with this premise the effect of attractiveness difference on choice deferral decreased significantly when subjects were first allowed to practice making monetary trade offs among the available alternatives

union organizing costs and benefits this paper examines the costs and benefits to current union members in manufacturing of programs to organize the unorganized the marginal cost of organizing an additional employee in constant dollars is estimated for a sample of unions between 1964 and 1977 the primary benefit of organizing that is quantifiable is the extent to which the maintenance or extension of union coverage permits the maintenance of or increase in the union wage estimates of this benefit are derived from previous econometric research linking the union wage to the percentage of the industry organized this single benefit is found to be larger than the estimated marginal cost of extending union coverage in 19 of 20 manufacturing industries

the decentralization of information processing in the presence of interactions we propose a model of organizational decision making in which information processing is decentralized our model incorporates two features of many actual organizations aggregation entails a loss of useful information and the decision problems of different agents interact we assume that an organization forms a portfolio of risky assets following a hierarchical procedure agents decision rules and the organization s hierarchical structure are derived endogenously typically in the optimal hierarchical structure all agents have one subordinate and returns to ability are at least as high at the bottom as at the top however these results can be reversed in the presence of returns to specialization

face to face communication in organizations communication is integral to organizations and yet field evidence on the relation between communication and worker productivity remains scarce we argue that a core role of communication is to transmit information that helps co workers do their job better we build a simple model in which workers choose the amount of communication by trading off this benefit against the time cost incurred by the sender and use it to derive a set of empirical predictions we then exploit a natural experiment in an organization where problems arrive and must be sequentially dealt with by two workers for exogenous reasons the first worker can sometimes communicate face to face with their colleague consistently with the predictions of our model we find that 1 the second worker works faster at the cost of the first worker having less time to deal with incoming problems when face to face communication is possible 2 this effect is stronger when the second worker is busier and for homogenous and closely located teams and 3 the career incentives of workers determine how much they communicate with their colleagues we also find that workers partially internalise social outcomes in their communication decisions our findings illustrate how workers in teams adjust the amount of mutual communication to its costs and benefits

social norms of work ethic and incentives in organizations abstract in this paper i model the relation between the dissemination of social norms of work effort work ethic in a given society and the choice of incentives by firms and i motivate it by presenting evidence from three different datasets that suggests that work ethic is correlated with the intensity of firms incentives when the effort choices of different agents in a firm are complementary having hard working coworkers makes an agent more productive therefore in equilibrium she will work harder foreseeing that a work ethic is more useful to hard working agents parents will be more willing to transmit it in societies in which the probability that their offspring will have coworkers with strong work ethic is higher i then expand the model to incorporate the firm technology choice allowing firms to decide between complementary and separable production processes in societies with wide dissemination of work ethic firms will want effort to be complementary as in modern production processes while the opposite is true when the dissemination of work ethic is narrow finally i investigate the comparative dynamics of the model

technical change wage inequality and taxes this paper considers the normative implications of technical change for tax policy design a task to talent assignment model of the labor market is embedded into an optimal tax problem technical change modifies equilibrium wage growth across talents and the substitutability of talents across tasks the overall optimal policy response is to reduce marginal income taxes on low to middle incomes while raising those on middle to high incomes the reform favors those in the middle of the income distribution reducing their average taxes while lowering transfers to those at the bottom jel d31 h21 h23 h24 j31 o33

cultural transmission and discrimination workers can have good or bad work habits these traits are transmitted from one generation to the next through a learning and imitation process which depends on parents investment in the trait and the social environment where children live if a sufficiently high proportion of employers have taste based prejudices against minority workers we show that their prejudices are always self fulfilled in steady state and minority workers end up having on average worse work habits than majority workers this leads to a ghetto culture affirmative action can improve the welfare of minorities whereas integration can be beneficial to minority workers but detrimental to workers from the majority group

coordination organizational boundaries and fads in business practices management literature focuses on two modes of coordination formal and informal structures informal structure grants significant discretion to individual actions yet two impediments are related to such flexibility those created by opportunism and those created by convergent expectations impediments arising from convergent expectations exist when the expectations of all members of an interdependent system are not properly aligned we use non cooperative game theory to provide a foundation for the study of convergent expectations we argue that the incentive to free ride on the contributions of others is not a necessary condition for generating a lack of convergent expectations and apply the issue of convergent expectations to both the organizational issues of optimal group and firm boundaries and to the role of managerial practices such as total quality management tqm building on research from organization theory social psychology and game theory the paper ties the idea of convergent expectations to the grouping dilemma of the trade off between higher coordination within groups and lower coordination between groups we argue that this grouping dilemma can serve as a basis for determining the actual boundaries of both groups in organizations and the organization itself examining the role of fads in business practices we conclude that however suspect their underlying value as decision aids may be these practices can serve as useful coordination mechanisms

social class and income inequality in the united states ownership authority and personal income distribution from 1980 to 2010 this study outlines a theory of social class based on workplace ownership and authority relations and it investigates the link between social class and growth in personal income inequality since the 1980s inequality trends are governed by changes in between class income differences changes in the relative size of different classes and changes in within class income dispersion data from the general social survey are used to investigate each of these changes in turn and to evaluate their impact on growth in inequality at the population level results indicate that between class income differences grew by about 60 since the 1980s and that the relative size of different classes remained fairly stable a formal decomposition analysis indicates that changes in the relative size of different social classes had a small dampening effect and that growth in between class income differences had a large inflationary effect on trends in personal income inequality

the architecture of economic systems hierarchies and polyarchies the authors present new ways of looking at economic organizations andsystems individuals judgments entail errors they sometimes reject good projects and accept bad projects the architecture of an economicsystem specifying how the decision making units are organized togetherwithin a system who gathers what information and who communicates what with whom affects its performance both because it influences thenature of errors that individuals make within the system and becauseit has a critical effect on the aggregation of individuals errors theperformance of two polar architectures decentralized polyarchical versus centralized hierarchical decision making authorities are analyzed and compared copyright 1986 by american economic association

occupational choice and the spirit of capitalism the british industrial revolution triggered a socioeconomic transformation whereby the landowning aristocracy was replaced by industrial capitalists rising from the middle classes as the economically dominant group we propose a theory of preference formation under financial market imperfections that can account for this pattern parents shape their children s preferences in response to economic incentives middle class families in occupations requiring effort skill and experience develop patience and a work ethic whereas upper class families relying on rental income cultivate a refined taste for leisure these class specific attitudes which are rooted in the nature of preindustrial professions become key determinants of success once industrialization transforms the economic landscape i introduction the industrial revolution was more than capital accumulation and growth it also set off a social and political transformation that redefined hierarchies in society and reshaped the distribution of income and wealth before the onset of industrialization in eighteenth century britain wealth and political power were associated with the possession of land over the course of the nineteenth century a new class of entrepreneurs and businessmen emerged as the economic elite for the most part the members of this class rose from humble beginnings and had their social origins in the urban middle classes the landed elite was left behind and eventually lost its political and economic predominance many observers of the time linked this reversal in economic fortunes to differences in values attitudes and ultimately preferences across social classes there are countless examples both in scholarly and in fictional writing of portrayals of members of the landowning class as averse to work unwilling to save ill disposed tocommercialactivity andunabletoconsidermoneyassomething

das human kapital a theory of the demise of the class structure this paper suggests that the demise of the capitalists workers class structure was a socio economic transformation orchestrated by the capitalists in reaction to the increasing importance of human capital in sustaining their profit rates physical capital accumulation in the process of industrialization enhanced the importance of human capital in production and generated incentives for capitalists to support the provision of public education for the masses triggering the demise of the existing class structure the implications of the theory are consistent with the voting patterns on england s education reform of 1902

the polarization of the u s labor market this paper analyzes a marked change in the evolution of the u s wage structure over the past fifteen years divergent trends in upper tail 90 50 and lower tail 50 10 wage inequality we document that wage inequality in the top half of distribution has displayed an unchecked and rather smooth secular rise for the last 25 years since 1980 wage inequality in the bottom half of the distribution also grew rapidly from 1979 to 1987 but it has ceased growing and for some measures actually narrowed since the late 1980s furthermore we find that occupational employment growth shifted from monotonically increasing in wages education in the 1980s to a pattern of more rapid growth in jobs at the top and bottom relative to the middles of the wage education distribution in the 1990s we characterize these patterns as the u201cpolarization u201d of the u s labor market with employment polarizing into high wage and low wage jobs at the expense of middle wage work we show how a model of computerization in which computers most strongly complement the non routine abstract cognitive tasks of high wage jobs directly substitute for the routine tasks found in many traditional middle wage jobs and may have little direct impact on non routine manual tasks in relatively low wage jobs can help explain the observed polarization of the u s labor market this abstract was borrowed from another version of this item

decentralization aggregation control loss and costs in a hierarchical model of the firm abstract we study the multi divisional firm with the help of a model which links organizational structure and performance we add to our previous model an ability to delegate decisions at the cost of control loss and study its effects on both the structure and the average costs of the firm our technique involves the aggregation of observations and disaggregation of commands the aggregation while simplifying the calculations by superiors and saving time introduces error into their decisions the tradeoff between time and error is taken into account in the construction of the hierarchy

gifts as economic signals and social symbols gift giving has often puzzled economists especially because efficient gifts like cash or giving exactly what a person asks for seem crass or inappropriate it is shown in a formal game theoretic model that gifts serve as signals of a person s intentions about future investment in a relationship and inefficient gifts can be better signals other explanations for the inefficiency of gift giving are advanced and some stylized facts about gift giving practices are described many of which are consistent with the signaling view of gifts

match bias from earnings imputation in the current population survey the case of imperfect matching this article examines match bias arising from earnings imputation wage equation parameters are estimated from mixed samples of workers reporting and not reporting earnings the latter assigned earnings of donors regressions including attributes not used as imputation match criteria e g union are severely biased match bias also arises with attributes used as match criteria but matched imperfectly imperfect matching on schooling age flattens earnings profiles within education age groups and creates jumps across groups assuming conditional missing at random a general analytic expression correcting match bias is derived and compared to alternatives reweighting a respondent only sample proves an attractive approach

bargaining laws as a cause and consequence of the growth of teacher unionism this study analyzes state level data for 1959 78 to determine whether the rapid growth of teacher unionism during those years was primarily a result or a cause of the public sector bargaining laws adopted during the same period the author finds contrary to the view of some scholars that the enactment of laws requiring public sector employers to bargain with majority representatives of their employees was the single most important cause of the growth in the proportion of teachers covered by union contracts although the growth in teacher unionism in turn encouraged the adoption of some new or stronger bargaining laws this effect was relatively weak more important predictors of new bargaining laws included the extent of political patronage in a state and the bargaining laws adopted by neighboring states

social status education and growth this paper investigates the implications of social rewards on the allocation of talent in society and consequently on the process of economic growth we consider two sources of heterogeneity among workers nonwage income and innate ability a greater emphasis on status may induce the wrong individuals that is those with low ability and high wealth to acquire schooling causing workers with high ability and low wealth to leave the growth enhancing industries this crowding out effect taken alone discourages growth growth may be enhanced by a more egalitarian distribution of wealth which reduces the demand for status

two moment decision models and expected utility maximization two moment decision models are consistent with expected utility maximization only if the choice set or the agent s preferences are restricted this paper identifies a restriction which is sufficient to ensure this consistency and confirms that it holds in many economic models the implications for economic analysis are then derived two different approaches to representing an agent s preferences over strategies yielding random payoffs are in wide use under the mean standard deviation ms approach the agent is assumed to rank the alternatives according to the value of some function defined over the first two moments of the random payoff while the expected utility eu criterion assumes that the expected value of some utility function defined over payoffs is used instead the fact that there are these two competing approaches has generated a considerable literature some authors are concerned with the advantages and disadvantages of each while others deal with conditions under which the potentially different approaches would yield the same results or at least approximately so space does not

collective bargaining laws threat effects and the determination of police compensation this article demonstrates that state collective bargaining laws are important determinants of union and nonunion public employee compensation state laws that provide stronger bargaining rights and ensure closure to the bargaining process increase the direct effect of police unions on compensation moreover indirect threat effects on the pay of nonunion police also increase with stronger bargaining laws in each law category investigated nonunion police receive most of the compensation premium enjoyed by unionized police previous studies that have not adequately controlled for these effects of bargaining laws have therefore underestimated the full effect of public sector unions on compensation

self control and the rise and fall of factory discipline abstract we propose a dynamic general equilibrium model that accounts for the historical pattern of the rise and fall of factory discipline in the course of economic development firms have two alternative means to increase work effort discipline and control vs monetary incentives a key ingredient of our model lies in the fact that workers suffer from present bias we show that this lack of self control makes discipline relatively cheap when workers outside option is low even in the absence of moral hazard then as one economy develops it endogenously goes through three stages where firms successively use low powered monetary incentives factory discipline and then high powered monetary incentives when moral hazard is introduced multiple development paths may emerge

complementarity and cumulative learning effects in early diffusion of multiple technologies this paper concentrates on the contextual diffusion of flexible automation production and design engineering technologies in the italian metalworking industry the authors use duration data analysis with explanatory covariates to point out the role of complementarities between the technologies examined and learning by using effects matured with experience of previously available technologies in shaping diffusion paths the impact of industry and plant specific control variables as well as that of the stock of previous adopters on adoption probabilities is also taken into account in addition the authors analyze duration versus calendar time dependence of adoption probabilities copyright 1995 by blackwell publishing ltd

public sector unions and municipal employment using 1980 data for a large sample of u s cities the author reexamines recent empirical findings of a positive association between public sector unionization and municipal employment several researchers have interpreted this correlation as evidence that public employee unions successfully exert political pressure to raise the demand for municipal services structural estimates of labor demand and the determinants of police and fire unionization reveal however that economies of scale in union formation are at least partly responsible for any positive association between public sector unionization and municipal employment the author concludes that previous studies overstate the amount of political clout wielded by municipal labor unions

industry and firm effects on it diffusion processes firm level evidence in italian enterprises this article examines the antecedents and performance consequences of capabilities developed from the use of information technology it in a sample of 186 italian large enterprises attention is given to the influence of industry and firm characteristics on the creation of capabilities and on the returns from it investments our work makes three principal contributions first the it diffusion patterns reveal that these technologies have a dual nature some capabilities derived from it use i e administrative capabilities diffuse evenly across industries because the underlying technologies easily adapt to industry and firm specific conditions in contrast the use of it in supporting other capabilities such as those related to product development is less developed and more concentrated in the high tech and information service sectors second using a resource based perspective this articles shows the positive effects that firm specific preconditions have on the accumulation of it resources and capabilities that exhibit a rare diffusion at the industry level third given industry level differences in competitive environments we show how the value appropriation of capabilities that firms have developed using it depends on industry type with hi tech and information services industries exhibiting lower profit returns

the aggregate effects of risk in the agricultural sector the theory of the firm facing a random output price is extended to include industry equilibrium conditions in a way particularly important for agriculture land prices adjust to maintain industry equilibrium the comparative statics and the effects of policy for the firm are significantly altered the main finding is that risk and other parameter changes are capitalized into the price of land and yield wealth or income effects rather than substitution effects this often simplifies the analysis

bargaining laws and unionization in the local public sector this paper analyzes the effects of bargaining law characteristics on rates of unionization in over 10 000 local government departments representing five different government services that were without bargaining units in 1977 duty to bargain laws significantly increased the probability of bargaining union formation between 1977 and 1982 the results of the analysis reject the hypotheses that this effect reflects only underlying union strength the release of pent up demand for unionization or the transformation of nonbargaining unions into bargaining unions the changes in unionization attributable to duty to bargain laws are so large that they account for nearly all of the differences in average unionization rates between states with and without these laws

the effect of unions on wage inequality in the u s labor market this study uses current population survey micro data for 1973 74 and 1993 to evaluate the effect of changing union membership on trends in male and female wage inequality unionization rates of men fell between the two sample periods with bigger declines among lower skill groups these trends account for 15 20 of the rise in male wage inequality union membership rates of low wage women also declined while unionization increased among higher wage women on balance shifting unionization accounts for very little of the rise in female wage inequality economy wide trends in unionization mask a sharp divergence between the private sector where unionism was declining and the public sector where it was rising comparisons across sectors suggest that unionization substantially slowed the growth in wage inequality in the public sector

public sector earnings and the extent of unionization many studies have examined the influence of union density union members as a percentage of all workers on earnings in the private sector but few such studies have looked at the public sector using data from the 1991 current population survey this study estimates the determinants of earnings for state and local government employees in both the union and nonunion sectors the extent of public sector unionization appears to be positively correlated with earnings for both state and local government workers and for those covered and not covered by collective agreements although the effect for non covered employees is smaller than that for covered employees both effects are larger than those typically found in similar estimates for the private sector the authors also find that bargaining structure has some influence on earnings with the most consistent effect being a positive influence of arbitration on the earnings of local government workers

wage effects of increased union coverage methodological considerations and new evidence although many studies show a positive relationship between extent of unionization and union members wages some analysts suggest that this relationship could reflect a concentration of labor organization in industries with potentially high wage gains rather than unions efficacy in raising wages consistent with that speculation studies across occupations or geographic areas generally show a much weaker relationship between unionization and wages than do studies across industries the authors of this study argue however that the weakness of the relationship found in some empirical research is due to the use of data sets mixing local market industries characterized by local bargaining with national market industries characterized by national bargaining an empirical analysis supports this hypothesis wages are positively correlated with the extent of unionization in a local market industry supermarkets but not in a national market industry aerospace

why do some occupations pay more than others social closure and earnings inequality in the united states1 this article elaborates and evaluates the neo weberian notion of social closure to investigate positional inequality in the united states it argues that social and legal barriers around occupations raise the rewards of their members by restricting the labor supply enhancing diffuse demand channeling demand or signaling a particular quality of service hypotheses derived from the closure perspective are evaluated using new data that map five institutionalized closure devices licensing educational credentialing voluntary certification association representation and unionization onto 488 occupations results from multilevel models demonstrate that closure practices particularly those that generate tangible restrictions on the labor supply shape the contemporary structure of occupational earnings returns to these strategies vary across occupations but are not tightly linked to the complexity of the occupation s knowledge base if suitably elaborated closure theory thus offers a promising complemen

the internal economics of the firm evidence from personnel data we analyze twenty years of personnel data from one firm the hierarchical structure is quite simple and stable career movements suggest that the employee s rate of learning and the firm s learning about ability are important there are promotion fast tracks exit rates vary little with tenure or salary the firm has personnel policies like those described in the internal labor markets literature although several theoretical preconditions for ilms such as ports of entry and exit are lacking job levels are important to compensation but there is also substantial individual variation in pay within levels our companion paper in this issue explores the wage policy of this firm

work organization preferences dynamics and the industrialization process abstract in this article the industrialization process can be regarded as the transition from traditional to modern and more coercive work organizations workers are heterogeneous autonomous or non autonomous and according to their preferences they choose between these two organizational forms in addition preferences evolve through intergenerational transmission mechanisms this setting allows for a reciprocal interplay between the evolution of workers autonomy and the industrialization process that generates multiple development paths thus the initial degree of autonomy within the workforce may have long run implications for the level of industrialization finally taking into account a complementarity between autonomy and incentives to invest in human capital we conclude to a non monotonic impact of workers autonomy on the growth process

the new closed shop the economic and structural effects of occupational licensure during the past few decades licensure a state enforced mechanism for regulating occupational entry quickly became the most prevalent form of occupational closure broad consensus among researchers holds that licensure creates wage premiums by establishing economic monopolies this article demonstrates that contrary to established wisdom licensure does not limit competition nor does it increase wages results are based on a new occupational dataset covering 30 years that exploits interstate variability in licensure across the 300 census identified occupations i argue that licensure instead of increasing wages creates a set of institutional mechanisms that enhance entry into the occupation particularly for historically disadvantaged groups while simultaneously stagnating quality

the u shapes of occupational mobility using administrative panel data on the entire danish population we document a new set of facts characterizing occupational mobility for most occupations mobility is u shaped and directional not only low but also high wage earners within an occupation have a particularly large probability of leaving their occupation and the low high earners tend to switch to new occupations with lower higher average wages exceptions to this pattern of two sided selection are occupations with steeply rising declining productivity where mainly the lower higher paid workers within this occupation tend to leave the facts conflict with several existing theories that are used to account for endogeneity in occupational choice but it is shown analytically that the patterns are explained consistently within a theory of vertical sorting under absolute advantage that includes learning about workers abilities

some stylized facts on organization and its evolution abstract there is a striking difference between the large number of theoretical papers on firm organization and the lack of quantitative empirical evidence if on the one side economists are increasingly concerned with organization of firms on the other side organization still remains an ambiguous concept hardly analyzed empirically in this paper we develop a new empirical methodology based upon business history and previous theoretical works which allows us to describe some aspects of the organization of firms in quantitative terms this approach is instrumental to analyzing the hierarchical structure and the allocation of decision making activities in a sample composed of 438 italian metalworking plants we also study the dynamics of firm organization in the period 1975 1997 the results of the analysis show that the static choice of the organizational form crucially relies upon the loss of control phenomenon they also illustrate that the dynamics of hierarchical structure follows an inertial process characterized by incremental adjustments lastly both the organization of firms and more interestingly its evolution differ from one category of firms to another depending crucially on firm size

hedging under output price randomness in a recently published paper meyer notes that the maximization of expected utility eu and choosing among random alternatives based on their first two moments are equivalent procedures if a location and scale ls condition is satisfied this condition is shown to hold in a variety of economic models and has not been fully recognized or exploited in previous studies in this article the above result is used to examine the hedging model developed by feder just and schmitz and by holthausen two basic reasons underlie this analysis first two dimensional mean standard deviation ms techniques can provide more intuition for the rather strong conclusions obtained by feder just and schmitz and by holthausen simplify the proofs of their propositions and indicate certain weaknesses in the hedging model the second purpose is methodological the analysis illustrates the importance and usefulness of recognizing the ls condition when constructing a model by selecting a familiar model in agricultural economics we do this without going into great detail concerning the model itself the article is organized as follows first the hedging model and the ls condition are briefly reviewed and the hedging model is shown to satisfy the ls condition this result is then used to analyze the hedging model graphically the hedging model and the location and scale condition feder just and schmitz and holthausen each develop a hedging model which extends sandmo s work concerning a competitive firm facing a random output price although the two hedging models differ in minor details

on the cultural transmission of preferences for social status abstract we study the formation of preferences for social status as the result of intergenerational transmission of cultural traits we characterize the behavior of parents with preferences for status in terms of socialization of their children to this particular cultural trait we show that degenerate distributions of the population whereby agents have either all status preferences or all non status preferences are dynamically unstable moreover under some conditions there exists a unique stationary distribution which is non degenerate in which both status and non status preferences co exist in the population and this distribution is locally stable finally we study the dependence of the stable stationary distribution of status preferences on institutional technological and policy parameters which affect agents economic conditions

the three worlds of inequality1 recent inequality scholarship fixates on trends in the amount of inequality and largely ignores trends in the form of inequality the authors describe three ideal typical inequality regimes big class microclass and gradational and identify the mechanisms driving a shift toward or away from each of them using gss and cps data on 39 measures of life chances attitudes and behaviors the authors find that big class inequality is in decline whereas microclass inequality has remained stable moreover big classes are simplifying into largely economic aggregates whereas microclasses remain more complicated moral configurations that cannot be understood in terms of economic standing

reorganization of firms and labor market inequality much of the history of economic enterprise has involved reaping the benefits from specialization of labor by dividing increasingly fragemented tasks among different employees as vividly described already by adam smith in his wealth of nations this development was greatly facilitated through the rise of tayloristic organizations where standardized inputs are processed to yield standardized outputs and where different functional tasks e g administration production marketing design are performed in different departments coordinated through a hierarchy of managers these organizations common in both the manufacturing and service sectors testified to the importance of specialization of work in production as well as organization this pervasive organizational structure is now in retreat charlie chaplin at the conveyor belt in the movie modern times is no longer the prototype worker with hindsight the wave of change began well over a decade ago it has accelerated in recent years and may be expected to gather even more pace over the next decade the organization of many firms in both the manufacturing and service sectors is being progressively restructured this process calls into question the need for extreme specialization by skill specific occupation creates demands for new combinations of skills and thereby leads to new patterns of wage inequality the restructuring process is characterized by a number of complementary features first the organizational structure of firms is becoming flatter the new structure is built around teams that report to the central management with few if any intermediaries second production processes are being transformed the application of computer technology flexible tools and programmable multi task equipment reduces returns to scale and permits greater production flexibility third the flow of information within firms has been revolutionized the introduction of computerized data systems permits more individualilzed treatment of employess and customers facilitates the decentralization of decision making and enables employees to perform multiple tasks and exploit complementarities among them fourth firms offer broader product lines in smaller quantities responding more readily to customers requirements customer participation in product design is growing and there is greater emphasis on product quality and ancillary services and fifth the nature of work is changing occupational boundaries are breaking down as workers engage in multi tasking and work rotation these various aspects distinguish the traditional tayloristic organizations from what we shall call holistic organizations recent technological advances and improvements in physical and human capital have undoubtedly played a central role in driving the process whereby tayloristic organizations restructure into holistic ones the increasing use of computers to transmit information within firms and the rising versatility and programmability of equipment have increased the complementarities across tasks e g production marketing customer service product design that a given employee can exploit furthermore the growing amounts of all round knowledge that has been disseminated through the education systems over the past few decades has made young people increasingly capable of performing multiple tasks this accumulation of human capital has also changed people s preferences away from the monotonous single purpose tayloristic jobs to the frequently more varied and stimulating holistic ones in what follows we examine the consequences of these developments for the reorganization of work the move towards multi tasking and the consequent break down of occupational barriers the transformation of job opportunities and the implications for inequality in the labor market

the firm as a communication network this paper analyzes how organizations can minimize costs of processing and communicating information communication is costly because it takes time for an agent to absorb new information sent by others agents can reduce this time by specializing in the processing of particular types of information when these returns to specialization outweigh costs of communication it is efficient for several agents to collaborate within a firm it is shown that efficient networks involve centralization that individuals delegate tasks to subordinates only if they are overloaded and that the number of transits to the top tends to be equalized across individual information items

occupations and the structure of wage inequality in the united states 1980s to 2000s occupations are central to the stratification systems of industrial countries but they have played little role in empirical attempts to explain the well documented increase in wage inequality that occurred in the united states in the 1980s and 1990s we address this deficiency by assessing occupation level effects on wage inequality using data from the current population survey for 1983 through 2008 we model the mean and variance of wages for each occupation controlling for education and demographic factors at the individual level to test three competing explanations for the increase in wage inequality 1 the growth of between occupation polarization 2 changes in education and labor force composition and 3 residual inequality unaccounted for by occupations and demographic characteristics after correcting for a problem with imputed data that biased kim and sakamoto s 2008 results we find that between occupation changes explain 66 percent of the increase in wage inequality from 1992 to 2008

does firm size matter anymore the new economy and firm size wage effects researchers have long known that large firms pay higher wages than small firms for workers with similar measured characteristics however an agreed upon explanation for this firm size wage effect fswe has not been reached recent changes in the economy provide new leverage for testing competing theories for the effect while questions about the existence and nature of the new economy provide new motivation for exploring this topic this study uses the 1988 2003 current population survey and finds that the fswe has declined by about one third over the study period examining the competing explanations for the fswe this study finds that while the sorting of workers by traits unions and industry factors all contribute to some portion of the effect in cross section they fail to explain why it has declined over time market power explanations also fail to find support shifts in organizational structures particularly a decline of internal labor markets appear to best fit the results these findings

high performance work practices decentralization and profitability evidence from panel data the aim of this article is to test the effects on firm profitability of the adoption of both high performance work practices hpwps and changes in organizational design relating to the depth of the corporate hierarchy and the allocation of decision authority for this purpose we resort to panel estimates based on a longitudinal data set that includes information relating to 109 italian manufacturing single plant firms observed in the 1990s during 7 years the econometric results show that the adoption of hpwps leads to better performances especially when it is associated with the delegation of decision authority downward the corporate hierarchy copyright 2007 oxford university press

wage size relation and the structure of work force composition in italian manufacturing firms in this paper we study the impact of firms productivity and scale of activity on the cost of labour for italian manufacturing firms investigating how the work force composition affects the total expenditures for wages our analysis reveals that once productivity differences among firms are accounted for size still retains a positive effect on cost of labour we show that the source of this phenomenon is the relatively higher proportion of non production workers in bigger firms which results in a cost of labour for white collar workers that increases with increasing firm size copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

nominal and real union wage differentials and the effects of industry and smsa density 1973 83 many studies have examined the influence of union density union members as a percentage of all workers on earnings in the private sector but few such studies have looked at the public sector using data from the 1991 current population survey this

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

the impact of hierarchies on wages abstract hierarchical production theory has only one consistent prediction that wages increase with level in a hierarchy theoretical disagreement exists as to what causes this wage premium and how it might be affected by the number of levels of superiors above an employee by empirically analyzing these issues we find that i level one supervisors receive a premium due to some unobserved characteristic ii higher level supervisors receive a premium through higher rates of return on human capital and iii the marginal effect on wages of increasing the level of an employee declines with the number of levels above the employee

public employee pensions and the local labor budget abstract this paper examines the causes and consequences of public employee pension funding by local governments the pension funding decision is analyzed within the context of two models one where current taxpayers stay and pay employees future retirement benefits and a second model where current taxpayers move and thereby hope to avoid paying future retirement benefits the empirical results test the alternative models for a sample of 60 large u s cities using data for local police and fire services the effects of underfunding on local wages and employment is then examined and found to be significant implications for national pension funding policy are drawn

hierarchies of processors with endogenous capacity abstract capacity is defined as the number of information items a processor can handle in a given time this note studies the properties of a hierarchy of processors in which the capacities of processors are choice variables the hierarchy must pay each processor it decides to employ a wage which is an increasing function of the processor s capacity it is shown that efficient hierarchies tend to be characterized by three simple properties i within any given level capacity is uniform ii across levels the higher the level the higher the capacity and iii no skip level reporting occurs journal of economic literatureclassification numbers d21 j31 l23

bounded rationality indeterminacy and the theory of the firm two issues have become increasingly apparent in attempts to apply the prevailing notions of economic rationality to the theory of the organisation of business firms the first goes under the rubric of bounded rationality this is hardly a new idea and has been forcefully brought to our attention in the work of simon and others although awareness of the problem in economics goes back at least to clark i9i8 i shall try to provide a more detailed taxonomy of bounded rationality than is usually done in particular it is important to distinguish between i costly rationality like the costs of observation communication and even computation that require only an extension of the standard savage paradigm and 2 truly bounded rationality like not knowing the implications of everything that one knows which as far as i know goes far beyond the savage paradigm the second issue which i shall call indeterminacy arises in attempts to apply the theory of strategic games to models of organisations namely one often faces a very large multiplicity of solutions which significantly weakens or even destroys the predictive power of the theory by solution i mean here the socalled non cooperative equilibrium usually associated with the names of auguste cournot and john nash and extended and refined byjohn harsanyi reinhard selten and others to cover games in which the players have incomplete information although indeterminacy can arise even in static games with complete information it seems to be especially prevalent in dynamic games and or games with incomplete information both of these issues have profound implications for the organisation of the firm in discussions of this topic it has become commonplace to set up the straw figure of the firm as a black box mysteriously choosing production and investment plans to maximise profits it is true that there are still undergraduate price theory textbooks that present this picture but economists have long been familiar with the phenomenon of the separation of ownership and management at least since the publication of the book by berle and means i932 if not before in fact adam smith had some trenchant comments on it i776 pp 264 5 this phenomenon is also referred to as the separation of ownership and control see fama and jensen i983 today one is likely to see this analysed in terms of the principal agent model with the owner s cast as the principal and the manager s as the agent

queues and hierarchies this paper examines the optimal structure of hierarchies when workers differ in the range of tasks they can perform a hierarchical system may reduce costs by allowing most tasks to be handled by unskilled workers this may however increase delay for those tasks which must pass through several layers before reaching the appropriate level the paper characterises an optimal hierarchy when such a trade off exists organizations typically have a hierarchical structure in recent years economists have investigated a number of explanations for this for example the need to monitor workers the desire to exploit parallel processing by having agents work simultaneously on a project 2 the need to coordinate decisions 3 and so on this paper explores another explanation for the prevalence of hierarchies the desire to economize on skilled workers a firm typically has many problems flowing in that require decisions many of which do not need the attention of senior management by employing relatively unskilled workers to deal with tasks initially one may therefore be able to employ relatively few senior managers for example in a shop most customer queries can be dealt with by low paid assistants with only the more important problems passed on to supervisors the drawback of such a hierarchy is that it may delay some decisions by making them pass through more than one layer of control rather than being dealt with immediately the paper aims to explore the implications of this trade off between cost and delay for the structure of hierarchies there are of course many aspects of hierarchies this paper focuses on a particular one which has been previously neglected in the model considered workers differ in their ability to make decisions abler workers are capable of making good decisions in a wider range of tasks than less able ones there is no horizontal specialization into different jobs and so the only motivation for employing less able workers is that they command lower wages tasks pass through the levels of the hierarchy until they can be dealt with software support fits this framework well typically when one contacts a company because of a problem with a package the enquiry is initially dealt with by low level staff if they cannot solve the problem they hand it on to the next level who in turn hand it on to the next level if they cannot solve it and so on until it is dealt with a large number of levels may create considerable delay similarly in hospitals in the u k routine deliveries of babies are usually dealt with by mid wives a junior doctor will be brought in if there is a problem and he in turn will call

life course risks mobility regimes and mobility consequences a comparison of sweden germany and the united states1 the analysis of intergenerational mobility has primarily used measures of social position that are functions of an individual s occupation occupation based models of social mobility however have limitations that arguably have grown in recent decades meta analysis of available evidence for sweden western germany and the united states concerning occupational mobility household income mobility job displacement union dissolution and poverty dynamics shows the limitations of the individual level occupation based career trajectory approach to life course mobility this article develops an alternative formulation at the household level which focuses on cross national variation in the extent to which societal institutions influence the rate of events with the potential to change a household s life conditions via the manipulation of incentives for mobility generating events and the extent to which they mitigate the consequences of these events through social insurance the combination of these institut

persistence of occupational segregation the role of the intergenerational transmission of preferences this article provides an explanation of the evolution and persistence of the women s segregation in jobs with less on the job training opportunities within the framework of an overlapping generations model with intergenerational transmission of preferences job priority and family priority preferences are considered firms policy and the distribution of women s preferences are endogenously and simultaneously determined in the long run the results show though the gender gap in training will diminish it will also persist over time this is because both types of women s preferences coexist at the steady state due to the socialisation effort of parents to preserve their own cultural values

cutting calories the preference for lower caloric density versus smaller quantities among restrained and unrestrained eaters the marketplace includes many attractive high calorie indulgent food offerings despite their appeal consumers may often be prompted to consider lower calorie package offerings instead e g 100

some implications of growth for organizational form and ownership structure building on previous modeling of the separation between formal and real authority in organizations the paper investigates some implications of growth for the scope of integration and the internal organization of firms it stresses the role of headquarters overload and the differential and unmeasured cost of internal and external units in terms of their use of a scarce corporate resource namely headquarters attention the paper first shows how growth or other factors leads to restructuring for example through spin offs move of units to the periphery and refocus on core competencies it then looks at the internal allocation of tasks and studies whether overload considerations may induce a firm to create profit centers and abandon a functional or unitary form u form in favor of a multidivisional form m form

match bias in wage gap estimates due to earnings imputation about 30 of workers in the current population survey have earnings imputed wage gap estimates are biased toward zero when the attribute being studied e g union status is not a criterion used to match donors to nonrespondents an expression for match bias is derived in which attenuation equals the sum of match error rates attenuation can be approximated by the proportion with imputed earnings union wage gap estimates with match bias removed are presented for 1973 2001 estimates for recent years are biased downward 5 percentage points bias in gap estimates accompanying other non match criteria public sector industry etc is examined

growing apart the changing firm size wage premium and its inequality consequences wage inequality in the united states has risen dramatically over the past few decades prompting scholars to develop a number of theoretical accounts for the upward trend this study argues that large firms have been a prominent labor market institution that mitigates inequality by compensating their low and middle wage employees with a greater premium than their higher wage counterparts large u s firms reduced overall wage dispersion yet broader changes to employment relations associated with the demise of internal labor markets and the emergence of alternative employment arrangements have undermined large firms role as an equalizing institution using data from the current population survey and the survey of income and program participation we find that in 1989 although all private sector workers benefited from a firm size wage premium the premium was significantly higher for individuals at the lower end and middle of the wage distribution compared to those at the higher end between 1989 and

collective bargaining in the public sector comment in a recent paper janet currie and sheena mcconnell 1991 hereafter cm provide evidence from the canadian public sector suggesting that requiring binding wage arbitration as opposed to granting the right to strike reduces dispute costs but increases wage costs disputes are defined as either an arbitration or a strike this leads them to conclude that compulsory arbitration pareto dominates other forms of legal structure both parties could potentially be made better off from the reduction in dispute costs associated with compulsory arbitration and those responsible for designing collective bargaining legislation face a trade off between reducing dispute costs and changing the division of the rent p 714 they base these important policy conclusions on their empirical evidence on the following relationships

malthus to solow a unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies our theory also explains the industrial revolution which is the transition from an era when per capita incomes are stagnant to one with sustained growth the authors use a standard growth model with several technologies the first denoted the malthus technology requires land labor and reproducible capital as inputs the second denoted the solow technology does not require land the authors show that in the early stages of development only the malthus technology is used and due to population growth living standards are stagnant despite technological progress eventually technological progress causes the solow technology to become profitable and both technologies are employed at this point living standards improve since population growth has less influence on per capita income growth in the limit the economy behaves like a standard solow growth model excerpt