Findings

Get to Work

Kevin Lewis

November 01, 2010

The Effect of Internal Migration on Local Labor Markets: American Cities during the Great Depression

Leah Platt Boustan, Price Fishback & Shawn Kantor
Journal of Labor Economics, October 2010, Pages 719-746

Abstract:
The Great Depression offers a unique laboratory to investigate the causal impact of migration on local labor markets. We use variation in the generosity of New Deal programs and extreme weather events to instrument for migrant flows to and from U.S. cities. In-migration had little effect on the hourly earnings of existing residents. Instead, in-migration prompted some residents to move away and others to lose weeks of work or access to relief jobs. For every 10 arrivals, we estimate that 1.9 residents moved out, 2.1 were prevented from finding a relief job, and 1.9 shifted from full-time to part-time work.

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Labor Laws and Innovation

Viral Acharya, Ramin Baghai & Krishnamurthy Subramanian
NBER Working Paper, October 2010

Abstract:
Stringent labor laws can provide firms a commitment device to not punish short-run failures and thereby spur their employees to pursue value-enhancing innovative activities. Using patents and citations as proxies for innovation, we identify this effect by exploiting the time-series variation generated by staggered country-level changes in dismissal laws. We find that within a country, innovation and economic growth are fostered by stringent laws governing dismissal of employees, especially in the more innovation-intensive sectors. Firm-level tests within the United States that exploit a discontinuity generated by the passage of the federal Worker Adjustment and Retraining Notification Act confirm the cross-country evidence.

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Learning unethical practices from a co-worker: The peer effect of Jose Canseco

Eric Gould & Todd Kaplan
Labour Economics, forthcoming

Abstract:
This paper examines the issue of whether workers learn productive skills from their co-workers, even if those skills are unethical. Specifically, we estimate whether Jose Canseco, a star baseball player in the late 1980's and 1990's, affected the performance of his teammates by introducing them to steroids. Using panel data, we show that a player's performance increases significantly after they played with Jose Canseco. After checking 30 comparable players from the same era, we find that no other baseball player produced a similar effect. Furthermore, the positive effect of Canseco disappears after 2003, the year that drug testing was implemented. These results suggest that workers not only learn productive skills from their co-workers, but sometimes those skills may derive from unethical practices. These findings may be relevant to many workplaces where competitive pressures create incentives to adopt unethical means to boost productivity and profits. Our analysis leads to several potential policy implications designed to reduce the spread of unethical behavior among workers.

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Employee treatment and firm leverage: A test of the stakeholder theory of capital structure

Kee-Hong Bae, Jun-Koo Kang & Jin Wang
Journal of Financial Economics, forthcoming

Abstract:
We investigate the stakeholder theory of capital structure from the perspective of a firm's relations with its employees. We find that firms that treat their employees fairly (as measured by high employee friendly ratings) maintain low debt ratios. This result is robust to a variety of model specifications and endogeneity issues. The negative relation between leverage and a firm's ability to treat employees fairly is also evident when we measure its ability by whether it is included in the Fortune magazine list, "100 Best Companies to Work For." These results suggest that a firm's incentive or ability to offer fair employee treatment is an important determinant of its financing policy.

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The Neolithic Revolution from a price-theoretic perspective

Ricardo Andrés Guzmán & Jacob Weisdorf
Journal of Development Economics, forthcoming

Abstract:
The adoption of agriculture during the Neolithic period triggered the first demographic explosion in history. When fertility returned to its original level, agriculturalists were more numerous, more poorly nourished, and worked longer hours than their hunter-gatherer ancestors. We develop a dynamic price-theoretic model that rationalizes these events. In the short run, people are lured into agriculture by the increased labor productivity of both adults and children. In the long run, the growth in population overrides the productivity gains, and the later generations of agriculturalists end up being worse off than the hunter-gatherers. Counter-intuitively, the increase in the labor productivity of children causes the long-run reduction in welfare. In the long run, the increase in adult labor productivity only contributes to population growth.

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Substitution and complementarity between managers and subordinates: Evidence from British football

Sue Bridgewater, Lawrence Kahn & Amanda Goodall
Labour Economics, forthcoming

Abstract:
We use data on British football managers and teams over the 1994-2007 period to study substitution and complementarity between leaders and subordinates. We find for the Premier League (the highest level of competition) that, other things being equal, managers who themselves played at a higher level raise the productivity of less-skilled teams by more than that of highly skilled teams. This is consistent with the hypothesis that one function of a top manager is to communicate to subordinates the skills needed to succeed, since less skilled players have more to learn. However, we also find that managers with more accumulated professional managing experience raise the productivity of talented players by more than that of less-talented players. This is consistent with the hypothesis that a further function of successful managers in high-performance workplaces is to manage the egos of elite workers. Such a function is potentially more important the more accomplished the workers are -- as indicated, in our data, by teams with greater payrolls.

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Investment Tournaments: When Should a Rational Agent Put All Eggs in One Basket?

Michael Schwarz & Sergei Severinov
Journal of Labor Economics, October 2010, Pages 893-922

Abstract:
We study "investment tournaments," a class of decision problems involving gradual allocation of investment among several alternatives whose values are subject to shocks. The decision maker's payoff is determined by the final values of the alternatives. An important example of such tournaments is the career choice problem, since a person typically starts by investing in learning several professions. We show that in many cases it is optimal for the decision maker to allocate all resources to the most promising alternative in each time period. We also show that in promotion tournaments the workers optimally exert higher efforts at an early stage in order to capture a larger share of employer's investment, such as mentoring.

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Genetics, the Big Five, and the tendency to be self-employed

Scott Shane, Nicos Nicolaou, Lynn Cherkas & Tim Spector
Journal of Applied Psychology, November 2010, Pages 1154-1162

Abstract:
We applied multivariate genetics techniques to a sample of 3,412 monozygotic and dizygotic twins from the United Kingdom and 1,300 monozygotic and dizygotic twins from the United States to examine whether genetic factors account for part of the covariance between the Big Five personality characteristics and the tendency to be an entrepreneur. We found that common genes influenced the phenotypic correlations between only Extraversion and Openness to Experience and the tendency to be an entrepreneur. Although the phenotypic correlations between the personality characteristics and the tendency to be an entrepreneur were small in size, genetic factors accounted for most of them.

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The evolution of inequality in productivity and wages: Panel data evidence

Giulia Faggio, Kjell Salvanes & John Van Reenen
Industrial and Corporate Change, forthcoming

Abstract:
There has been a remarkable increase in wage inequality in the United States, UK, and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as experience-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. We utilize a UK firm-level panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have typically underestimated this phenomenon because they focus only on the manufacturing sector where inequality has risen much less and which has shrunk rapidly. Most of the increase in individual wage inequality can be accounted for by an increase in inequality between firms (and within industries). Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999, Am. Econ. Rev., 89, 78-102) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics.

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The Retirement Life Course in America at the Dawn of the Twenty-First Century

David Warner, Mark Hayward & Melissa Hardy
Population Research and Policy Review, December 2010, Pages 893-919

Abstract:
As the baby boom cohorts expand the number of U.S. retirees, population estimates of the employment, withdrawal and reentry behaviors of older Americans' remain scarce. How long do people work? How frequently is retirement reversed? How many years are people retired? What is the modal age of retirement? And, how do the patterns for women compare to those for men? Using the 1992-2004 Health and Retirement Study, we estimate multistate working life tables to update information on the age-graded regularities of the retirement life course of men and women in the United States. We find that at age 50 men can expect to spend half of their remaining lives working for pay, while women can expect to spend just one-third. Half of all men and women have left the labor force by ages 63 and 61, respectively. Although the majority of retirement exits are final, variation in the nature and duration of the retirement process is substantial, as about a third of men's and women's exits are reversed. By quantifying these patterns for men and women, we provide a sound empirical basis for evaluating policy designed to address the financial pressures population aging places on public and private pension systems.

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The work-family interface in the United States and Singapore: Conflict across cultures

Adam Galovan et al.
Journal of Family Psychology, October 2010, Pages 646-656

Abstract:
This article examines the work-family interface in a cross-cultural comparison between two nationally representative samples from the United States (n = 1,860) and Singapore (n = 1,035) with emphasis on work-family conflict. Family-to-work conflict was negatively related to marital satisfaction in both Singapore and the United States, although the effect was stronger in the United States. Similarly, family-to-work conflict was positively related to job satisfaction in the United States but was negatively related in Singapore. As expected, schedule flexibility was negatively related to depression in the United States, but in Singapore the relationship was positive. These findings suggest that theoretical relationships in the work-family interface developed in the more culturally individualistic West may need to be adapted when studying populations in the more collectivist East.

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Real Exchange Rates and Competitiveness: The Political Economy of Skill Formation, Wage Compression, and Electoral Systems

Torben Iversen & David Soskice
American Political Science Review, August 2010, Pages 601-623

Abstract:
A major puzzle in the open economy literature is why some countries have persistently higher real exchange rates than others. Even more puzzling is the fact that countries with high real exchange rates are strong export performers. We solve both puzzles with a model that integrates two central debates in the comparative political economy of advanced economies: one linking wage bargaining, incomes policy, and competitiveness, and the other linking partisanship, political institutions, and redistribution. We bring the two together by emphasizing the role of skill formation. We argue that union centralization is necessary for wage restraint and training on a large scale, but this in turn requires a political coalition that subsidizes such training. When both are present, wage restraint generates external competitiveness, whereas wage compression pushes up sheltered prices and hence the real exchange rate, and vice versa. We test the argument on data on export performance and real exchange rates.

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Inequality and Markets: Some Implications of Occupational Diversity

Dilip Mookherjee & Debraj Ray
American Economic Journal: Microeconomics, November 2010, Pages 38-76

Abstract:
This paper studies income distribution in an economy with borrowing constraints. Parents leave both financial and educational bequests; these determine the occupational choices of children. Occupational returns are determined by market conditions. If the span of occupational investments is large, long-run wealth distributions display persistent inequality. With a "rich" set of occupations, so that training costs form an interval, the distribution is unique and the average return to education must rise with educational investment. This finding contrasts with the usual presumption of diminishing returns to human capital. It is the central testable proposition of this paper.

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Incentive Effect of Piece-Rate Contracts: Evidence from Two Small Field Experiments

Lan Shi
B.E. Journal of Economic Analysis & Policy, 2010

Abstract:
We conducted two field experiments in a tree-thinning setting. In one experiment, we switched the pay of a randomly chosen half (the treatment group) from hourly wages to piece-rate pay. Workers in the control group were paid hourly wages throughout. In the second experiment, workers were switched from hourly to piece-rate pay all at once. The difference-in-difference and before-after estimates suggest that the productivity increase was on the order of 20-23 percent. Although the sample size is small, the estimates are statistically significant and robust. While the quality did not drop, the study highlights the measurement costs in setting up the right level of piece rates. We also discuss the strengths and weaknesses of using randomized control (and treatment) groups or not in conducting field experiments within firms.

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Too much of a good thing: Curvilinear relationships between personality traits and job performance

Huy Le, In-Sue Oh, Steven Robbins, Remus Ilies, Ed Holland & Paul Westrick
Journal of Applied Psychology, forthcoming

Abstract:
The relationships between personality traits and performance are often assumed to be linear. This assumption has been challenged conceptually and empirically, but results to date have been inconclusive. In the current study, we took a theory-driven approach in systematically addressing this issue. Results based on two different samples generally supported our expectations of the curvilinear relationships between personality traits, including Conscientiousness and Emotional Stability, and job performance dimensions, including task performance, organizational citizenship behavior, and counterproductive work behaviors. We also hypothesized and found that job complexity moderated the curvilinear personality-performance relationships such that the inflection points after which the relationships disappear were lower for low-complexity jobs than they were for high-complexity jobs. This finding suggests that high levels of the two personality traits examined are more beneficial for performance in high- than low-complexity jobs. We conclude by discussing the implications of these findings for the use of personality in personnel selection.

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Returns to Bilingualism in the Nursing Labor Market-Demand or Ability?

Nicole Coomer
Journal of Socio-Economics, forthcoming

Abstract:
This paper empirically examines the source of the returns to bilingual registered nurses (RNs) in the United States. Bilingual RNs are found to earn higher wages than monolingual nurses. A direct measure of fluency in a language other than English is used to examine the source of the bilingual wage premium. Two avenues for the premium are examined, (1) a response to demand for bilingual workers and (2) a response to accounting for a portion of innate ability and skills that would otherwise have been unobserved by the employer. Regressing interactions of various language regions and fluency indicators provides limited evidence for the premium arising from an increase in demand for bilinguals. The majority of the premium is due to accounting for levels of skill and ability that would otherwise be unknown.

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Predicting adult occupational environments from gender and childhood personality traits

Stephen Woods & Sarah Hampson
Journal of Applied Psychology, November 2010, Pages 1045-1057

Abstract:
To test aspects of a theory of the role of personality and gender on the development of vocational interests and their subsequent effects on adult occupational choices, the authors of this study examined associations among childhood personality traits, gender, and occupational environments more than 40 years later. Participants (N = 587) were assessed on the Big Five by their teachers when the participants were between 6 and 12 years old. In middle-age (late 40s), the participants reported their occupation. Holland's (1997) RIASEC vocational types (Realistic, Investigative, Artistic, Social, Enterprising, Conventional) were used to characterize the job environments of reported occupations. Childhood Openness/Intellect and Conscientiousness, but no other Big Five traits, were associated with occupational environments. For the most strongly sex-typed work environments, associations with Openness/Intellect were moderated by gender. These findings suggest that the roots of the strongest gender-stereotyping effects in occupations may be found not only in the social factors associated with gender but also in the individual differences of children related to Openness/Intellect.

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Public Service Reform and Motivation: Evidence From an Employment At-Will Environment

Paul Battaglio
Review of Public Personnel Administration, September 2010, Pages 341-363

Abstract:
For nearly three decades, traditional public sector management practices have been challenged by proponents of the new public management (NPM). Public human resource management (PHRM) is frequently a target of such reform efforts given the crucial role it plays in the public management function. Traditional civil service systems, based on merit and neutral competence, have frequently been criticized for their intractability, inefficiency, and ineffectiveness. The recent trend of eliminating tenure for public employees through employment at-will (EAW) policies has received considerable attention as a mechanism for improving public sector efficiency. However, recent scholarship suggests that EAW policies have a number of obstacles to overcome. Using a 2005 survey of human resource professionals in the state of Georgia, this article assesses the impact of the EAW environment on public employee motivation. The analysis suggests that EAW policies have a significant negative impact on motivation in the workplace, particularly for minorities. The findings illustrate additional hurdles that decision makers should consider when implementing EAW systems in the public sector.

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Predicting Organizational Actual Turnover Rates in the U.S. Federal Government

Chan Su Jung
International Public Management Journal, July 2010, Pages 297-317

Abstract:
This study expands the level of analysis on turnover in public administration, especially in the U.S. federal government, from the individual level to the organizational level by using organizational actual turnover rates. Some scholars argue that public employees' turnover intention generally reflects actual turnover. However, very little empirical evidence supporting this argument has been provided in public administration, especially in a broad array of public agencies. This study has rejected this argument by showing insignificant or weakly significant correlations between organizational actual turnover and weighted turnover intention rates. In addition, overall, the two regression results for organizational actual turnover and turnover intention also show different results from those in the existing literature on individual-level turnover intention. The significant predictors of organizational actual turnover rates are goal ambiguity, pay satisfaction, and diversity policy satisfaction. The correlation and regression results imply that research on predictors of turnover may need to consider the differences that may result from using different units of analysis and to make a distinction between turnover intention and actual turnover.


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