Job Characteristics and Labor Market Discrimination in Promotions

We extend promotion signaling theory to generate new testable implications concerning racial differences in promotions. In our model, promotions signal worker ability. When tasks differ substantially across job levels, the opportunity cost of not promoting qualified non‐whites/non‐Asians is large, so employers are less likely to inefficiently withhold their promotions. Thus, given prepromotion performance, the extent to which non‐whites/non‐Asians have lower promotion probabilities decreases when tasks vary more across levels. Racial differences in wage increases at promotion diminish when tasks vary more across levels. Evidence from a single firm's personnel records supports the model's predictions concerning promotion probabilities.     

Firm ownership and internal labour practices in a transition economy

One feature common to many post‐socialist transition economies is a relatively compressed wage structure in the state‐owned sector. We conjecture that this compressed wage structure creates weak incentives for work effort and worker skill acquisition and thus presents adverse consequences for the entire transition economy if a substantial portion of the labour force works in the state sector. We explore firm wage incentives and worker training, as well as other labour practices and outcomes, in a transition setting with matched firm and worker data collected in one of the largest provinces of Vietnam – Ho Chi Minh City. The Vietnamese state sector exhibits a compressed wage distribution in relation to privately owned firms with foreign ownership. State wage practices stress tenure over worker productivity and their wage policies result in flatter wage–experience profiles and lower returns to education. The state work force is in greater need of formal training, a need that is in part met through direct government financing. In spite of the opportunities for government financed training and at least partly due to inefficient worker incentives, state firms, by certain measures, exhibit lower levels of labour productivity. The private sector comparison group to state firms for all of these findings is foreign owned firms. The internal labour practices of foreign firms are more consistent with a view of profit‐maximizing firms operating with no political constraints. This is not the case for Vietnamese de novo private firms that exhibit much more idiosyncratic behaviour and whose labour practices are often indistinguishable from state firms. The exact reasons for this remain a topic of on‐going research yet we conjecture that various private sector constraints, including limited access to formal capital, play an important role.     

STRATEGIC SHIRKING: A THEORETICAL ANALYSIS OF MULTITASKING AND SPECIALIZATION

We provide a new theory to explain why firms multitask workers instead of specializing them. Workers overperform in tasks they like and underperform in tasks they dislike to favorably influence future job assignments. Anticipating this, firms may find it optimal to commit to future multitasking to induce workers to appropriately allocate effort early in the employment relationship. We show that when the product market is volatile, so that future product prices are uncertain, the firm's ability to credibly commit to a multitasking strategy diminishes. This generates a negative relationship between multitasking and product market volatility, consistent with recent empirical evidence.     

Two perspectives on multiskilling and product-market volatility

We study the effect of product-market volatility on a firm's choice between multiskilling and specialization. We construct a theoretical model that captures the tradeoff between multiskilling (which gives greater flexibility to reassign workers in production) and specialization (which provides workers with the expertise to respond to product market signals in their area of specialty). Using data from a nationally-representative cross section of British establishments, we find that greater volatility is associated with greater specialization. This result holds both inside and outside of manufacturing, but consistent with our model, it holds only in multi-product establishments and not in single-product ones.     

The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology

Analyzing the distributional impacts of economic crises is anever more pressing need. If policymakers are to intervene tohelp those most adversely affected, they need to identify thosewho have been hurt most and estimate the magnitude of the harmthey have suffered. They must also respond in a timely manner.This article develops a simple methodology for measuring theseeffects and applies it to analyze the impact of the Indonesianeconomic crisis on household welfare. Using only pre-crisishousehold information, it estimates the compensating variationfor Indonesian households following the 1997 Asian currencycrisis and then explores the results with flexible nonparametricmethods. It finds that virtually every household was severelyaffected, although the urban poor fared the worst. The abilityof poor rural households to produce food mitigated the worstconsequences of the high inflation. The distributional consequencesare the same whether or not households are permitted to substitutetoward relatively cheaper goods. The geographic location ofthe household matters even within urban or rural areas and householdincome categories. Households with young children may have suffereddisproportionately large adverse effects.     

The Relationship between Delegation and Incentives Across Occupations: Evidence and Theory

A large literature suggests that incentive pay and delegation of worker authority are positively related. Using data from a large cross section of British establishments, we show that the positive relationship found in the empirical literature masks a stark difference across jobs. Classifying jobs into two categories (complex jobs, including professional, technical and scientific occupations, and simple jobs, consisting of all other non‐managerial occupations) we find a positive relationship for simple jobs and a negative relationship for complex jobs. To explain this negative relationship, we develop a model where stronger incentives distort a worker's decisions towards low risk‐return tasks.     

Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning

In a multitask, market‐based promotion tournament model, under different environments concerning employer learning about worker ability, it is shown that: (a) asymmetric learning in multitask jobs is a necessary condition for “strategic shirking” (i.e., underperforming on certain tasks to increase the promotion probability); (b) when learning becomes increasingly symmetric on one task, the effort allocated to that task could increase or decrease, but effort on the other task increases; (c) strategic shirking does not occur in equilibrium in single‐task models; and (d) promotions signal worker ability even when there is symmetric learning on one task, if learning is asymmetric on another.     

Broadband and local growth

I find a positive relationship between broadband expansion and local economic growth. This relationship is stronger in industries that rely more on information technology and in areas with lower population densities. Instrumenting for broadband expansion with slope of terrain leans in the direction of a causal relationship, though not definitively.The economic benefits of broadband expansion for local residents appear to be limited. Broadband expansion is associated with population growth as well as employment growth, and both the average wage and the employment rate—the share of working-age adults that is employed—are unaffected by broadband expansion. Furthermore, expanding broadband availability does not change the prevalence of telecommuting or other home-based work. Like other place-based policies, expanding broadband availability could raise property values and the local tax base, but without more direct benefits for residents in the form of higher wages or improved access to jobs.The analysis relies on the uneven diffusion of broadband throughout the United States, allowing comparisons between areas with greater and less growth in broadband availability. I combine broadband data from the Federal Communications Commission, employment data from the National Establishment Time-Series database, and other economic data from the US Census and BLS to examine broadband availability and economic activity in the US between 1999 and 2006.     

A new measure of US residential broadband availability

The only comprehensive published indicator of residential broadband availability in the US is number of providers in each ZIP code, as reported by the Federal Communications Commission (FCC). This measure has been widely used in academic and policy research to assess availability and to identify under-served areas, but it is acknowledged to be flawed and is often misinterpreted.