A spillover‐based theory of credentialism

I propose a model in which credentials, such as diplomas, are instrumentally valuable to workers. The model avoids an important criticism of standard job market signalling models by tying a worker's wage to their output. A worker's productivity is influenced by the skills of their co‐workers, where such skills arise from an ability‐augmenting investment that is made prior to matching with co‐workers. Credentials allow workers to demonstrate their investment to the labour market, thereby allowing them to match with high‐skill co‐workers in equilibrium. Despite the positive externality associated with a worker's investment, I show how overinvestment is pervasive in equilibrium.     

Performance Pay,Productivity and Morale*

This paper incorporates the notion of worker morale into an economic model of pay and performance, and examines its implications for the efficacy and design of performance-based pay schemes. A worker's morale is determined by his relative pay status. A contract that rewards only individual performance can therefore undermine the morale of the least skilled workers in a firm and thereby adversely affect their productivity. On the other hand, competition for relative pay status tends to boost the productivity of highly skilled workers in the firm. The net effect on productivity depends on the composition of the firm's workforce. If the workforce is sufficiently heterogeneous then the inclusion of a profit-sharing component in the pay contract, which reduces the pay differential across workers, can sufficiently boost the morale of the least skilled workers as to improve overall productivity and profitability.     

Job satisfaction and co-worker pay in Canadian firms

One reason to be concerned about income inequality is the idea that people care about not only their own absolute income but also their income relative to various reference groups (co-workers, friends, neighbours, relatives, etc.). We use Canadian linked employer–employee data to estimate the casual effect of co-worker pay on a worker's reported job and pay satisfaction. Since worker satisfaction can affect the worker's productivity, organizational commitment, turnover, creativity and innovation as well as the firm's productivity and profitability, this is an issue that requires more attention and careful examination. In models that control for a rich set of workplace characteristics, we find that co-worker pay has a large positive and significant effect on both pay and job satisfaction. In our preferred models with establishment-level fixed effects, the effect of co-worker pay on pay satisfaction is half as large and the effect on job satisfaction completely disappears, suggesting that part (all) of what previous studies attribute to the effect of co-worker pay on worker pay (job) satisfaction is driven by unobserved heterogeneity across firms or establishments. Our results also suggest that the effect of co-worker pay on worker satisfaction is much stronger for workers who leave their job during the following year. Finally, we find that while co-worker pay has a positive effect on pay satisfaction among Canadian-born whites, it has a negative effect among immigrants and Canadian-born visible minorities.     

Do good workers hurt bad workers—or is it the other way around?*

I study the effect of worker heterogeneities on wages and unemployment in a directed search model. A worker's productivity in a given firm depends both on his type and on a worker–firm specific component. Firms advertise unconditional wage offers only. The resulting equilibrium is inefficient, with a too high wage premium for high‐type workers, and too few high‐type jobs. This reduces the welfare of high‐type workers. My findings contrast with the findings in the literature on labor market segmentation, where it is argued that the existence of high‐type workers forces down wages and reduces welfare for low‐type workers.     

Productivity growth and biased technical change in French higher education

This paper analyses the nature of technical change in the French labour market. Data Envelopment Analysis (DEA) is adopted to investigate productivity change in a sample of higher education leavers over the period 1999 and 2004. In a first step, the Luenberger Productivity Indicator (LPI) is used to estimate and to decompose productivity change. Following LPI, a better productivity is found for the workers in Paris and the well-qualified occupations in France. In analysing the nature of the technical change by the concept of parallel neutrality, technical progress seems to have influenced all professions. In particular, biased inputs of human capital component benefit more for the well qualified professions with an upper increase of the efficiency scores for executives and teachers. Furthermore, some evidences show the key role of “learning by doing” in the worker's adaptation to technical change. Policy implications are then derived from our results.     

Towards a More Complete Efficiency Wage Theory

The efficiency wage is an important topic in the theory of employment. In a traditional efficiency wage model, only the representative firm is optimizing against an assumed S‐shaped effort supply function. This S‐shaped supply curve is critical for the model and the absence of a derivation of the curve in the literature means that it is an incomplete theory. In the present paper, we extend the model by specifying a worker's representative utility function so that the corresponding argmax function will be the S‐shaped effort supply curve. This will make the worker's decision process endogenous and will produce a more complete model. The importance of this extension is clear. The characterization of the utility function will make explicit the necessary conditions and crucial assumptions of the traditional model. More importantly, the extension will allow researchers to introduce employment compensation factors into the worker's utility function for analysis. This has important bearings on future development in employment theory. For example, a worker's satisfaction from shirking (net of dismissal risks), or his or her willingness to search for jobs (net of search cost), can now be included in his or her utility function to form an optimal work or search strategy. Incorporating the worker's optimization behaviour into the model will also enable researchers to study policy directed not just towards firms but also towards the worker's decision process. Furthermore, this approach provides a framework for researchers to generate comparative statics. These comparative statics can lead to interesting topics for econometric models or to further research within this field.     

CRIME AND POVERTY: A SEARCH‐THEORETIC APPROACH*

Numerous studies document that criminal activity is positively related to unemployment and negatively related to educational attainment levels within given communities. We study this phenomenon in the context of a search‐equilibrium model, in which agents choose between formal employment and pursuing crime‐related activities (theft). Prior to their “occupational choices,” agents undertake costly schooling, raising their productivity. Crime acts, in essence, as a tax on human capital by affecting the probability that a worker's earnings (possessions) are subsequently appropriated. There are multiple equilibria. High crime, low levels of educational attainment, long spells of unemployment, and poverty are correlated across them.     

WAGE SIGNALING: A DYNAMIC MODEL OF INTRAFIRM BARGAINING AND ASYMMETRIC LEARNING*

The article analyzes the effect of employer–worker bargaining on wage dynamics in the presence of asymmetric information between current and potential employers. A failure to reach an agreement leads to output loss. Because the disagreement points depend upon the worker's productivity, productive workers separate themselves from less productive workers and signal their ability through wages. In existing models of asymmetric learning, wages are attached to publicly observable characteristics and wage growth occurs only when there is a change in observable characteristics. This model, in contrast, generates an increase in earnings dispersion in cohorts of workers with similar observable characteristics.     

Career concerns and firm – sponsored general training

This article studies the provision of firm-sponsored general training in the presence of workers' career concerns. The model builds on the argument that the provision of general training reduces the employer's monopsony power. In this context, it is shown that the worker's implicit incentives to provide effort increase with the level of acquired general skills. The employer takes this reciprocal effect into account and becomes more willing to invest in general human capital. When the positive effect of training on worker's effort incentives is strong enough, the equilibrium outcome may involve overinvestment relative to the first-best. It is also shown that a sharper increase in worker's power associated with additional training may either strengthen or weaken the employer's investment incentives and can have either beneficial or detrimental effects on welfare.     

Promises in contract design

In this paper, we propose a new channel of contract design to boost efficiency. If deviating from one's own words induces a self-imposed moral burden, the optimal contracting procedure with regard to cheap talk shall assign the responsibility for installing the nonbinding promise in the contract to whoever has the residual right to break such promise, in the spirit of Grossman and Hart (1986) and Hart and Moore (1990). To study whether a worker's own promise of effort level governs his real choice of effort in a gift exchange game, we implement four treatments in our experiments by varying two factors: (1) who (the firm or the worker) takes the position of the proposer to propose the contract and (2) whether the proposed contract includes a nonbinding specification of the worker's effort level. Our key finding is that when it is the worker who proposes the contract and the contract includes the worker's promised effort level, both the worker's actual effort choice and the aggregate profits are significantly higher than in each of the other three treatments (and there is little difference in worker effort otherwise).     

Life Expectancy Heterogeneity and the Political Support for Collective Annuities

Individuals, differing in productivity and life expectancy, vote over the size and type of a collective annuity. Its type is represented by the fraction of the contributive (Bismarckian) component (based on the worker's past earnings) as opposed to the non‐contributive (Beveridgean) part (based on average contribution). The equilibrium collective annuity is either a large mostly Bismarckian program, a smaller pure Beveridgean one (in accordance with empirical evidence), or nil. A larger correlation between longevity and productivity, or a larger average life expectancy, both make the equilibrium collective annuity program more Beveridgean, although at the expense of its size.     

DOES MARKET‐ORIENTED ECONOMIC TRANSITION ENHANCE ENTERPRISE PRODUCTIVITY? EVIDENCE FROM CHINA'S ENTERPRISES

Using a panel of China's enterprises from 1999 to 2007, this paper examined how market‐oriented economic transition affects the productivity of China's enterprises given the various stages of enterprises in the commercialization process and given the market segmentation among Chinese different regions. The main findings are that: (i) enterprises with higher degrees of commercialization have relatively higher productivity, whereas enterprises with higher degrees of market segmentation have relatively lower productivity; (ii) the commercialization process and market segmentation act indirectly affect productivity through enterprises' capacity to export, innovate and obtain business loans; and (iii) the indirect effects are found to be significantly different between the commercialization process and market segmentation, highlighting the effects of the market‐oriented economic transition on enterprises' productivity. This paper provides reliable enterprise‐level evidence regarding the sources and evolution of enterprise productivity during different stages of market‐oriented economic transition in China.     

Markups,productivity and external market development of the service SMEs

During the last decade, economists and policy makers have extensively discussed what types of firms can exploit external markets by exporting and what happens to domestic firms if external competitors penetrate into the home market. Although both theoretical and empirical studies have been dedicated to these issues, few have been carried out for the service sector. Since the service sector accounts for the lion’s share of GDP, the lack of those studies indicates that a large part of the actual economy still remains veiled. Our study fills this gap. We examine whether or not the Melitz and Ottaviano (2008) model remains satisfied in the service sector, using data from Japanese SMEs. From our analysis, we confirm that larger market sizes are associated with higher productivity levels. On the other hand, firms with higher markups tend to develop their business in smaller markets, conditional of the simultaneity between production and consumption. These results reveal that further productivity growth in the service sector also requires markets to be larger and more integrated. In addition, the markup levels become lower in those markets.     

Search,Concave Production,and Optimal Firm Size

This paper demonstrates that in a free entry search and bargaining economy with concave production firms over-employ. Bargaining allows the worker's wage to depend upon marginal productivity. As such, with strictly concave production, the wage declines as firms employ more labor. Firms react to this declining wage function by choosing an inefficiently large number of workers. However, in equilibrium, fewer firms are likely to enter causing aggregate employment and vacancies to fall.Journal of Economic LiteratureClassification Numbers: J30, J41, J50.     

信息化水平对生产率的直接效应和间接效应——劳动力技能结构的中介作用

构建了关于信息化水平、劳动力技能结构以及生产率的理论框架,探讨了信息化水平对生产率的直接和间接影响,以及劳动力技能结构在其中的中介作用,并利用中国省际面板数据对理论框架进行验证。结果表明:信息化水平对生产率同时具有直接影响和间接影响;信息化水平对生产率的直接影响呈现出动态的阶段性特征,两者之间存在U形关系,信息技术对生产率的促进作用只有在信息化水平达到一定程度后才能显现;信息化水平对生产率的间接影响通过劳动力技能结构的中介作用来实现:信息化水平的提升对低技能劳动者有明显的挤出效应,并带来了中、高技能劳动力需求上升,导致劳动力技能结构升级,从而促进劳动生产率以及资本生产率的提高;劳动力技能结构在信息化水平与全要素生产率之间的中介作用不显著。要使信息化更好地发挥作用,必须匹配较高水平的人力资本,劳动者需要进行持续学习与提升,以适应不断变化的社会需求。     

New implications of Lazear's skill-weights approach

A new approach to the theory of specific human capital, proposed by Lazear (2009), assumes that all skills are general but that firms use them with different weights attached. In Lazear's analysis, the decision to invest in the worker's acquisition of various skills is assumed to maximize the expected net joint surplus of the worker and the employer. This paper explores new implications of the skill-weights approach when the worker and the firm independently and non-cooperatively invest in the worker's skills.     

ADVERSE SELECTION,LEARNING, AND COMPETITIVE SEARCH

I develop a model that allows for an analysis of the effects of time on adverse selection in the presence of search frictions. I find that, as a firm takes longer to adjust a worker's contract in response to learning about his type, inefficient overwork during the time before wage adjustment (probation) decreases. This provides a rationale for an optimal (minimum) probation period of about one month in the baseline scenario. Optimal probation duration varies with the degree of search frictions, the cost of effort, the relative productivity of different types of workers, and minimum wage regulations.     

不同类型负面事件对上市公司市场价值的损害差异

选取2006—2015年中国沪深两市A股上市公司中被各级人民法院、证券监管机构采取过执法行动的918家上市公司为研究对象,将负面事件分为政治负面事件、市场负面事件、产品负面事件和混合负面事件,采用事件研究法考察了不同类型的负面事件对公司市场价值的损害差异和影响期差异。研究发现:四种类型的负面事件均对公司市场价值产生负向影响;相比市场负面事件,政治负面事件、产品负面事件和混合负面事件对公司市场价值的损害程度更大、影响期更长。     

Vertical Integration,Firms’ Entry,Exit, Strategic Shifts,Age, and The Productivity Growth in Korea's Core Growth‐Leading Industries

This study attempts to measure the impact of firms’ entry, exit, strategic shifts, and age on the productivity growth of Korea's three core growth‐leading industries and their vertical integration with capital share (VI) firms and non‐VI (NVI) firms in view of the 2008 global financial crisis and the institutional push by the Korean Government. A stochastic frontier production model was applied to firm‐level panel data from 2006 to 2011 for Korea's automobile, electronics and general machinery industries. The results show that exogenous shocks to the market triggered large‐scale resource reallocations from firms with declining productivity to firms with less declining or rising productivity, and market share reallocation between VI firms and NVI firms. The Korean Government's institutional push led the productivity growth of NVI firms to reach their highest levels in 2010. In a VI structure, a structure comprising VI firms only, the agency problem dominated the synergies of secure supply chains and saving on transaction costs, while NVI firms endeavoured to raise their productivity to step into a VI structure to secure stable supply chains, only to find their R&D initiatives stagnated once they took on the VI structure. Therefore, efficient resource reallocation is hindered by the agency problem within the bounds of vertically integrated industrial structures.     

VALUING LOST HOME PRODUCTION OF DUAL EARNER COUPLES*

Using a life‐cycle model in which women divide their time between home and market work, we establish a link between retirement wealth and the value of forgone home production. We use data from the Health and Retirement Study to estimate the model's parameters and adjust the growth rate of GDP to reflect reductions in nonmarket output. We find that the value of forgone home production is modest—about 25% of women's measured earnings.