Discrimination,technology and unemployment

I study the interaction between discrimination and investment using a directed search model where firms decide the capital intensity of their production technologies before being matched. Discrimination makes some workers cheap to hire. As a consequence, some firms might save on capital costs adopting labour intensive technologies. This framework allows one to reconcile search models with three well-known facts regarding the labour market outcomes of minority workers: low wages, high unemployment and occupational segregation. Furthermore, the model questions the role of equal pay legislation in reducing inequality since removing this restriction, i.e., allowing firms to post type-contingent wages, eliminates the negative effects of discrimination on investment and wages.     

Knowledge flow and inter-firm networks: The influence of network resources,spatial proximity and firm size

The objective of this paper is to analyse the characteristics and nature of the networks that firms utilize to access knowledge and facilitate innovation. The paper draws on the notion of network resources, distinguishing two types: social capital–consisting of the social relations and networks held by individuals; and network capital–consisting of the strategic and calculative relations and networks held by firms. The methodological approach consists of a quantitative analysis of data from a survey of firms operating in knowledge-intensive sectors of activity. The key findings include: social capital investment is more prevalent among firms frequently interacting with actors from within their own region; social capital investment is related to the size of firms; firm size plays a role in knowledge network patterns; and network dynamism is an important source of innovation. Overall, firms investing more in the development of their inter-firm and other external knowledge networks enjoy higher levels of innovation. It is suggested that an over-reliance on social capital forms of network resource investment may hinder the capability of firms to manage their knowledge networks. It is concluded that the link between a dynamic inter-firm network environment and innovation provides an alternative thesis to that advocating the advantage of network stability.     

In the trenches at the talent wars: competitive interaction for scarce human resources

A number of indicators suggest that the social norms that once deterred labor market competitors from hiring or “poaching” each others' employees are breaking down. This study explores the competitive interaction that results when one firm attempts to hire employees from a competing firm (known as “talent raiding”). Results suggest that attributes of the raiding firm, the targeted firm, and targeted human capital will affect how a targeted firm responds to a talent raid. The study suggests a number of tactics raiding firms can use to avoid retaliation and suggests tactics targeted firms can use to repel would‐be talent raiders. © 2002 Wiley Periodicals, Inc.     

The efficiency of training and hiring with intrafirm bargaining

This paper demonstrates that firms hire and train workers efficiently in a matching and intrafirm bargaining economy when the Hosios condition holds and returns to scale are constant. This conclusion stands in contrast to the prevailing view that training costs are a source of inefficiency in imperfect labor markets. The efficiency of the competitive economy relies on the ability of large firms to take into account the negative impact of the training rate on the wages negotiated inside the firm through intrafirm bargaining: untrained workers accept a wage reduction in compensation for potential training that is accessible only following employment. This intrafirm bargaining process solves efficiency problems associated with training costs that would otherwise lead to inefficient hiring and training decisions. This conclusion holds true for both specific and general human capital.     

The determinants of hiring older workers: UK evidence

This is the first research using UK establishment data to examine the relationship between back loading of compensation, training and the hiring of older workers. Recognizing that many firms employ older workers but do not hire older workers, we argue this may reflect strategic deferred compensation or the role of specific human capital. Using the combined establishment and employee data of the 1998 WERS, we identify that firms which defer compensation hire a smaller share of older workers and present somewhat weaker evidence that firms which require greater specific human capital also hire a smaller share of older workers.     

Investment, expropriation, and unionization

In this paper, I examine an economy where output is produced from labor, capital and public services, and where firms and labor unions bargain over labor conditions and lobby the government over union bargaining power and public services. I compare three institutional cases: (a) competitive wage settlement, (b) bargaining over wages and employment, and (c) bargaining over wages only. I show that in cases (a) and (b) the government expropriates investment rents, but right-to-manage bargaining (c) protects investors from this expropriation.      

Swedish BioTech SMEs: The veiled values in online networks

For many years, sociologists have conceptualized and debated the value of ‘social capital’, the resources embedded in an actor's social network. The notions of network organizations and strategic alliances have become important forms of entrepreneurial venture, yet often the value in these networks is veiled by network complexity. These associations of individuals and organizations are typically undocumented, difficult to identify by third parties, and even pass unrecognized by their constituent members. They consist of informal Internet networks that are extremely valuable because of the strategic social capital embedded in them.Drawing on social network theory, this paper outlines a methodology for viewing and valuing informal Internet networks, using small-to-medium sized enterprises in the Swedish biotechnology arena as a backdrop. It demonstrates that networks can be constructed from the links between the web sites of actor firms, and that it is possible to use social network theory to identify the most prominent actors. Then, using structural hole analysis, the entrepreneurial opportunities surrounding these actors can be unveiled.     

Partner Selection Decisions in Interfirm Collaborations: The Paradox of Relational Embeddedness

By combining insights from relational network theory and agency theory we identify the boundary conditions to the embeddedness approach to partner selection decisions in interfirm collaborations. Employing a longitudinal dataset comprising the investment syndicates for the population of UK management buyouts between 1993 and 2003, we find that relational embeddedness is less important for selecting partners when agency risks are low, allowing firms to expand their networks. Furthermore, reputational capital may act as a partial substitute for relational embeddedness, again permitting firms to expand their networks. Our findings enhance understanding of the boundary conditions associated with the relational network approach to partner selections and network behaviour.     

Commitment, advertising and efficiency of two-sided investment in competitive search equilibrium

Competitive search entails both commitment to and advertising of pay-off relevant aspects of market participants. This paper considers incrementally the implications of each in a labor market where both workers and firms invest prior to market entry. A wide range of institutional arrangements are addressed within the same general framework. When the characteristics of jobs or workers are advertised the efficient outcome pertains. Commitment without advertising typically leads to market unravelling: the Diamond paradox. But, whenever wages and human capital are advertised, firms become residual claimants; the private and social returns to investment coincide. Absent wage commitment, the Hosios condition implies efficiency when investments are advertised.     

State Ownership,Socio-political Factors,and Labor Cost Stickiness

This article examines the effect of state ownership on the labor cost stickiness of firms in 22 European countries. States are more likely to interfere in the decision-making processes of state-owned enterprises (SOEs) and demand firm activities that are desirable from a socio-political perspective. For example, to win political support, politicians may instruct SOEs to avoid layoffs to minimize unemployment rates. The varied objectives of SOEs also make it more difficult to control managers' behavior, leaving more room for managerial discretion and the pursuit of self-interests through empire-building behavior. Both state intervention and managerial self-interest restrain managers from laying off employees or reducing employee wages when sales decrease, which may lead to greater labor cost stickiness. Data from 1993 to 2012 reveal that SOEs exhibit greater labor cost stickiness than private firms, and their labor cost stickiness also varies predictably with socio-political variables such as election years and left-wing governments.     

The evolving pattern of the wage–labor productivity nexus in China: Evidence from manufacturing firm-level data

By employing a large dataset of nation-wide state-owned and non-state-owned manufacturing enterprises in the period 1998–2007, this paper analyzes the evolving pattern of the correlation and spread between wages and labor productivity in China's manufacturing sector and its influence factors. We find that although a significant positive correlation between wages and labor productivity in manufacturing firms exists, this positive nexus has become weak and loose. We also find that, since the 1990s, the labor productivity of Chinese manufacturing enterprises has gained a much greater growth rate than that of the wage level, and therefore the spread between wages and labor productivity has been widening over time. A variety of factors that have influenced the wage–labor productivity nexus of Chinese manufacturing enterprises are identified and discussed with regression models.     

Antecedents of New Director Social Capital

Prior research shows that firms benefit from the social capital of their boards of directors but has not explored the antecedents of new director social capital. We argue that firms can attract directors with social capital by offering more compensation. We also argue that more complex firms (firms with a greater scale and scope of operations) are more attractive to such directors because of the greater experience and exposure that such directorships provide. Similarly, we argue that firms with high‐status directors on their current boards will be more attractive to directors with social capital. We analyse the social capital of new outside directors added to boards of semiconductor firms between 1993 and 2007. Surprisingly, we find no support for the hypothesis that higher compensation is associated with adding directors with high status or board ties. However, firm complexity is associated with the ability to add new directors who have social capital, and the status of current board members is associated with the ability to add new directors who also have high status.     

Should managerial delegation contracts be made before or after union wage setting? A game‐theoretic analysis

This paper analyzes a multiple‐stage game in which, at the final stage, two (managerial) firms compete over quantities in the product market. Prior to this stage, firm‐specific unions set the workers' wages, while the owners of both firms hire managers and provide them with incentive contracts. Owners can freely decide to arrange the managerial contract before or after the (non‐managerial) wage determination stage. Hence, the endogenous choice of the incentive contract stage is derived. The possibility of multiple equilibria arises, where both owners choose managerial contracts before or after unions' wage setting, crucially depending on unions' preferences. Such results also prove to be true for a remarkable degree of asymmetry in preferences over wages vis‐à‐vis employment across unions.     

Intangible investment in people and productivity

Organizational activity, information and communication technology work, and research and development (R&D) can be classified as work that creates intangible capital. We measure the returns to these three types of labor input by accounting for differences in their productivity compared with other labor inputs using Finnish firm-level data from 1998 to 2008. We apply a novel idea to use hiring as one proxy for productivity and demand shocks. We find that organizational workers increase total factor productivity and improve the profitability of high-productivity firms. R&D workers account for a large share of intangible capital; however, the returns to R&D are low. Investments in organizational competence are more likely to result in more rapid productivity growth. Firms with performance-related pay or domestically owned firms with extensive foreign activities have been among the highest performers with respect to the use of organizational work.     

Structural social capital and knowledge acquisition: implications of cluster membership

This paper analyzes the implications of belonging to a cluster through the relationship between structural social capital and knowledge acquisition. The findings suggest structural social capital only indirectly affects knowledge acquisition through the relational and cognitive dimensions of firms’ membership of a cluster. However, the structural dimension also has a direct impact on knowledge for external firms outside a cluster. This paper contributes to the cluster literature with a better contextualization and understanding of the relationship between structural social capital and knowledge acquisition. In addition, the paper also consolidates the inter-organizational approach to social capital theory by helping to understand how and in what context social capital dimensions are interrelated. The study analyzes how firms can acquire valuable knowledge from their networks, filling the gap in the literature on how this process occurs inside and outside clusters. This works also proposes recommendations for companies and institutions, and new complementary lines of research.     

Human capital revisited: The role of experience and education when controlling for performance and cognitive skills

Human capital theory predicts that differences in wages arise because of differences in human capital. The latter can be accumulated in two ways: through experience and education. Using matched firm–worker data for the Ghanaian Manufacturing sector we first test whether changes in wages over the life cycle reflect changes in performance, following the methodology of Medoff and Abraham [Medoff, J.L., &; Abraham, K.G. (1980). Experience, Performance, and Earnings. Quarterly Journal of Economics, 95(4), 703-736; Medoff, J.L., &; Abraham, K.G. (1981). Are Those Paid More Really More Productive? The Case of Experience. Journal of Human Resources, 16(2), 186–216]. We find that wage–seniority profiles are independent of performance – a result that holds when controlling for firm fixed effects. Extending the analysis, we include a control for on-the-job-training and find that it does not attenuate the seniority profile, which is also at odds with human capital theory. We do find however that firm characteristics play an important role. Wage–seniority profiles are steeper in large firms, but performance profiles are not, suggesting that the results from Medoff and Abraham are specific to large firms. We then assess the role of education. Our results confirm that education is important for the allocation to job levels. Using data on cognitive ability, we also find that the effect of education on wages is at least partially because it signals cognitive ability. We also find evidence that the returns to education are not related to performance, while the returns to cognitive ability are.     

The provision of public goods in a growing urban economy

The growth path of a mixed open urban economy is considered. In the private sector profit maximizing firms produce an all-purpose output with labor, capital and public infrastructure. Workers move between the urban area and the rest of the nation so as to increase their real income which is the sum of wages and income derived from the use of the urban infrastructure. The public sector determines infrastructure investments so as to maximize the current value of future per capita felicity. Infrastructure has public good characteristics and is used jointly by firms and workers. The urban growth path is derived and public sector policies are analyzed.     

The China effect: Evidence from data at firm level in Thailand

This study investigates how competition with Chinese imports affects firms in Thailand. Using World Bank data on Thailand and United Nations trade data from 2003 to 2006, the empirical results show that there is no significant impact of Chinese import competition on employment, wages, or labor income share. However, further checks show that for firms with lower productivity, the impact on employment and labor income share is more likely to be negative. The impact of Chinese import competition on profit margins is significantly positive. Considering the impact on labor income share and profit margins, we conclude that because of Chinese import competition, income distribution possibly goes in disfavor of labor. Our study shows that the impact of Chinese import competition on the skilled labor ratio is positive and significant. This result suggests that Thai firms are on the path to skill upgrading as a result of Chinese import competition, which is helpful for Thailand’s long-run economic growth. As firms with low productivity are more likely to be negatively affected by Chinese import competition, improving productivity is still an efficient way to counter such competition.     

Work Recognition and Labor Productivity: Evidence from French Data

We empirically investigate whether labor productivity is related to work recognition. Using survey data about a large sample of French firms (N = 5309), we find that firms in which employees think their work is recognized are likely to report higher labor productivity, compared with firms where employees do not feel recognized. Our estimation results also suggest that labor productivity is strongly related to wages. Copyright © 2014 John Wiley & Sons, Ltd.     

Job hopping, earnings dynamics, and industrial agglomeration in the software publishing industry

This paper investigates the implications of industrial clustering for labor mobility and earnings dynamics in one large and increasingly important high-technology sector. Taking advantage of longitudinal employee-employer matched data, I exploit establishment-level variation in agglomeration to explore how clustering in the software publishing industry affects labor market outcomes. The results show that clustering makes it easier for workers to job hop within the sector. Higher earnings levels in more agglomerated areas are partly attributable to sorting across locations among workers and firms in the industry on the basis of observable and unobservable characteristics. Controlling for this heterogeneity, workers in clusters have relatively steep earnings-tenure profiles, accepting lower wages early in their careers in exchange for stronger earnings growth and higher wages later. These findings are consistent with theoretical models in which agglomeration improves labor market coordination and facilitates greater learning and human capital formation.