Are elite universities losing their competitive edge?

We study the location-specific component of research productivity for economics and finance faculty over the last three decades. We find that there was a positive effect of being affiliated with a top 25 university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. The decline in elite university fixed effect is due to the reduced importance of physical access to productive research colleagues, which in turn seems due to innovations in communication technology. One implication is that knowledge-based organizations should find it more difficult to capture rents vis-à-vis workers. We find that faculty salaries increased the most where the estimated spillover dropped the most. Despite the loss in local spillovers, elite universities still enjoy an edge in average productivity because of agglomeration of top researchers in prestigious institutions with high long-term research reputations.     

City size and fund performance

The literature predicts that the average skill level and productivity are higher in larger cities. Prior studies use workers’ wage or education differentials to indirectly link city size and output. This article relates city size and productivity directly, using performance data of U.S. equity mutual funds. On average, funds in financial centers perform better than other funds in terms of both gross and risk-adjusted returns, but this difference is driven only by more experienced managers. Among funds in financial centers there is strong evidence of a positive relation between performance and manager experience in a given city, especially among New York funds. More importantly, we observe performance improvements of the same manager at the same fund in financial centers but not elsewhere. Our tests provide novel evidence of knowledge spillovers and learning in cities.     

Fund Manager Allocation

We show that fund families allocate their most skilled managers to market segments in which manager skill is rewarded best. In efficient markets, even skilled managers cannot generate excess returns. In less efficient markets, skilled managers can exploit inefficiencies and generate higher performance than unskilled managers. Fund families seem to be aware of the relation between skill, efficiency, and performance, and allocate more skilled managers to inefficient markets. They pursue this strategy when hiring new fund managers and when reassigning managers to funds within the family. Overall, we conclude that fund families allocate fund managers in an efficient way.     

The determinants and effects of CEO–employee pay ratios

We study the determinants and effects of the relative compensation of top executives and lower-level employees. First, we show that CEO–employee pay ratios depend on the balance of power between the CEO (relative to the board) and ordinary employees (relative to management). Second, our results suggest that employees do not perceive higher pay ratios as an inequitable outcome to be redressed via costly behaviors that lower productivity. We do not find a negative relation between relative pay and employee productivity, either in our full sample or in subsamples where employees are well-informed about executive pay and are protected against career retributions. Rather, we find that productivity increases with relative pay when the firm has fewer employees who are well-informed, and when promotion decisions are predominantly merit-based. We also find that firm value and operating performance both increase with relative pay. We conclude that ordinary employees appear to perceive an opportunity in higher pay ratios but the extent to which such perception incentivizes them depends on the likelihood of success in a series of sequential promotion tournaments.     

The performance of corporate alliances: Evidence from oil and gas drilling in the Gulf of Mexico

I use data on oil and gas drilling in the Gulf of Mexico to measure how a corporate alliance—a group of firms that jointly develops an offshore tract—performs relative to a solo firm. I employ a regression discontinuity strategy based on bids in first-price sealed-bid auctions for the rights to develop leases. By focusing on leases where one organizational form narrowly outbids the other, I measure drilling outcomes while controlling for the endogenous matching of projects and organizational forms. Solo firm leases are less profitable than alliance leases because alliance members combine their information and expertise.     

A study on long-run inefficiency levels of a panel dynamic cost frontier under the framework of forward-looking rational expectations

This paper aims to provide a theoretical underpinning of the dynamic efficiency model pioneered by [Ahn, S.C., Good, D.H., Sickles, R.C., 2000. Estimation of long-run inefficiency levels: A dynamic frontier approach. Econometric Reviews 19, 461–492]. In the context of a quadratic loss function this paper formulates a multi-period forward-looking rational expectations model on the evolution of the technical inefficiency level, which correctly produces a dynamic panel data model. The model is illustrated using panel data of 112 French banks. Encouraging evidence of superiority in favor of the model is reached. Substantial cost inefficiency prevails in this industry, where the constituent banks are characterized as having volatile adjustment speeds toward their long-run steady states. The sample banks exhibit increasing returns to scale and product-mix economies.     

Welfare to Work,Wages and Wage Growth*

This paper attempts to uncover the effects of a UK welfare‐to‐work programme on individual wage growth by exploiting an expansion to this welfare programme. The conventional wisdom is that such programmes trap recipients into low‐wage, low‐quality work – this comes from the simple argument that the ‘poverty trap’, which a wage subsidy for low‐income workers induces, reduces the benefits to investments, such as on‐the‐job training, and so reduces wage growth. In fact, a wage subsidy will also reduce the costs of, at least, general training because we would normally expect workers to pay for their own general training in the form of lower gross wages. So a wage subsidy is a way of sharing these costs with the taxpayer. Thus, the net effect on wage progression depends on whether it reduces costs by more or less than it reduces the benefits.     

University Tuition Fees and High School Students’ Educational Intentions

This paper studies whether higher education tuition fees influence the intention to acquire a university degree among high school students and, if so, whether the effect on individuals from low‐income households is particularly strong. We analyse the introduction and subsequent elimination of university tuition fees in Germany across states and over time in a difference‐in‐differences setting. Using data from the Youth Questionnaire of the German Socio‐Economic Panel (SOEP), we find a large negative effect of tuition fees on the intentions of 17‐year‐olds to acquire a higher educational degree, with a decrease of around 8 percentage points (10 per cent). Individuals from low‐income households mainly drive the results. This study documents that the introduction of relatively low university tuition fees of €1,000 per academic year can considerably lower young people's educational intentions.     

Inventories, employment and hours

This paper develops a model that integrates inventory and labor decisions. We extend a model of inventory behavior to include a detailed specification of the role of labor input in the production process, distinguishing between employment, hours and effort per worker. We estimate jointly the Euler equations for inventories and employment, a labor compensation schedule, and an hours requirement function with the cross-equation restrictions imposed. The econometric results shed light on several important topics, including the shape of the marginal cost of output, the role of labor hoarding as an explanation of pro-cyclical productivity, and the persistence of inventory stocks.     

Education and Public Policy

This article surveys the literature on education as a matter of public policy. We present international comparisons of expenditure on education and then discuss the contribution of education to economic growth, distinguishing between growth accounting and regression approaches, but concluding that the picture is still confused. We assess the risky nature of investment in higher education and also discuss the link between educational experience and social class. We show that this, when studied in aggregate, accounts for less than half of the persistence of earnings between fathers and sons but it nevertheless does a good job of relating fathers’ and sons’ occupations. Finally, we look at the link between education and earnings in the UK. For most subjects, the private return to university education has held at over 15 per cent p.a. despite the introduction of fees. However, some subjects offer a negative return.     

Early Education and Children's Outcomes: How Long Do the Impacts Last?*

We evaluate the effects of undergoing any early education (before the compulsory starting age of 5) and of pre‐school on a cohort of British children born in 1958. In contrast to most available studies, we are able to assess whether any effects on cognition and socialisation are long‐lasting, as well as to estimate their net impact on subsequent educational attainment and labour market performance. Controlling for a particularly rich set of child, parental, family and neighbourhood characteristics, we find some positive and long‐lasting effects from early education. Specifically, pre‐compulsory education (preschool or school entry prior to age 5) was found to yield large improvements in cognitive tests at age 7, which, though diminished in size, remained significant throughout the schooling years, up to age 16. By contrast, attendance of pre‐school (nursery or playgroup) was found to yield a positive but short‐lived impact on test scores. The effects on socialisation appear to be more mixed: we found some positive, though short‐lasting, effects of pre‐compulsory education on teachers' reports of social adjustment (only at age 7); on the other hand, we found some adverse behavioural effects according to parental reports at age 7 which persisted up to age 11. In adulthood, pre‐compulsory education was found to increase the probabilities of obtaining qualifications and of being employed at age 33. For both pre‐compulsory education and pre‐school per se, we found evidence of a marginally significant 3–4 per cent wage gain at age 33.     

Incorporating risk input into the analysis of bank productivity: Application to the Taiwanese banking industry

This study reappraises banks’ productivity by using 42 Taiwanese banks during 1999–2007 as observations. It introduces an input-oriented generalized metafrontier Malmquist productivity index (I-gMMPI), while considering the latent effect of risk-taking behavior in the analytic framework. We learn that public and private banks should face separate short-term technological frontiers, while the econometric model considering risk input can portray banks’ operating frontiers better. Moreover, neglecting the influence of risk input would bring about distortions of efficiency, technology and TFP dynamic estimations for banks; meanwhile, the degree of scale economies would also be overestimated. The paper concludes that neglecting the risk-taking essence in bank performance evaluation is equal to allowing banks to barter risk-bearing as the term for further output growth. Consequently, the potential cost is that banks may excessively aggrandize their scales of business, implying the possibility of another financial crisis.     

Validez y confiabilidad de la escala de justicia organizational de Niehoff y Moorman en población mexicana

The objective of this research was to perform the adaptation to Spanish of the organizational justice scale of Niehoff and Moorman (1993) focused on measuring three factors of justice: distributive, procedural and interactional. The method used to adaptation the scale consisted of eight stages: translation of the items by reverse translation method, validation by judges, scale integration, application of the scale to a sample of 1296 workers (45.45% female and 54.6% male), items analysis, reliability analysis, construct validity using confirmatory factor analysis and structural equation analysis, and integration of the adapted version of the scale. The results confirm the three-dimensional factor structure of the scale: distributive justice, procedural and interactional, with high internal consistency which ensures the psychometric quality of the scale.     

A note on the psychometric properties of the Learning Styles Questionnaire (LSQ)

The objective of this study is to examine some psychometric properties of Honey and Mumford's (1992 The Manual of Learning Styles. Maidenhead: Peter Honey) Learning Styles Questionnaire (LSQ) and therefore its potential utility for accounting education research. Prior research in other cognate disciplines (managers; US business undergraduates) suggests that the LSQ may be preferable to Kolb's Learning Style Inventory (LSI) and Revised LSI. However, little measurement information exists regarding the application of the LSQ in higher education. The present study uses samples of undergraduate accounting students (N = 127) at a UK university. Evidence of only modest internal consistency reliability is reported. The construct validity of the scores produced by the instrument is not supported by the results of the present study. Limitations and implications for the use of the LSQ by accounting education researchers are discussed.     

Generalists versus specialists: Lifetime work experience and chief executive officer pay

We show that pay is higher for chief executive officers (CEOs) with general managerial skills gathered during lifetime work experience. We use CEOs' résumés of Standard and Poor's 1,500 firms from 1993 through 2007 to construct an index of general skills that are transferable across firms and industries. We estimate an annual pay premium for generalist CEOs (those with an index value above the median) of 19% relative to specialist CEOs, which represents nearly a million dollars per year. This relation is robust to the inclusion of firm- and CEO-level controls, including fixed effects. CEO pay increases the most when firms externally hire a new CEO and switch from a specialist to a generalist CEO. Furthermore, the pay premium is higher when CEOs are hired to perform complex tasks such as restructurings and acquisitions. Our findings provide direct evidence of the increased importance of general managerial skills over firm-specific human capital in the market for CEOs in the last decades.     

Is rising RTS a figment of poor data?

While using detailed firm-level data from the private business sector, this study identifies two empirical puzzles: (i) returns-to-scale (RTS) parameter estimates rise at higher levels of data aggregation and (ii) estimates from the firm level suggest decreasing returns to scale. The analysis shows that, although consistent with rising estimates, neither entry/exit nor the Basu-Fernald [Returns to scale in U.S. production: estimates and implications. Journal of Political Economy 105, 249-283) aggregation-bias effect drives this result. Rather, rising and too low RTS estimates seem to reflect a mixture of random errors in factor inputs at the firm level. It turns out, in fact, that a 7.5-10 percent error in labor (hours worked) can explain both puzzles.     

The evolution of cost-productivity and efficiency among US credit unions

Advances in information-processing technology have eroded the advantages of small scale and proximity to customers that traditionally enabled small lenders to thrive. Nonetheless, the membership and market share of US credit unions have increased, though their average size has also risen. We investigate changes in the efficiency and productivity of US credit unions during 1989–2006 by benchmarking the performance of individual firms against an estimated order-α quantile lying “near” the efficient frontier. We construct a cost analog of the Malmquist productivity index, which we decompose to estimate changes in cost and scale efficiency, and changes in technology. We find that cost-productivity fell on average across all credit unions but especially among smaller credit unions. Smaller credit unions confronted a shift in technology that increased the minimum cost required to produce given amounts of output. All but the largest credit unions also became less scale efficient over time.     

Outsourcing and firm performance nexus: An analysis using the conventional and panel double-bootstrap procedure

Industrial performance is an essential element of economic progress. In this study, we examine the impact of outsourcing on industrial performance using the firm-level data of 191 textile companies in India over the period 2000–2015. First, we follow the conventional non-parametric two-stage procedure and analyse the nexus between outsourcing and firm performance under a single-objective setting. We then test the influence of outsourcing on the performance of multiple-objective firms using reverse directional distance function scores. To address the bias in efficiency estimation and the serial correlation issue in the second-stage regression, we use truncated regression and the double-bootstrap procedure for panel data analysis. Our results show an improvement in industrial performance over the study period. Our analysis following the conventional two-stage procedure shows that the outsourcing of manufacturing activities and professional jobs contributes to industrial performance. The relation between outsourcing and firm performance essentially remains the same in a more reliable analysis using a panel double bootstrap procedure.     

Are there long-run implications of analyst coverage for IPOs?

Analyst coverage has been cited increasingly as an important attribute in the selection of an underwriter for a firm about to go public. However, it has also been alleged that affiliated analysts provide biased research. In this study, we examine these interrelated issues by examining the long-run performance of IPOs with coverage from their managing underwriters in a 1993–2003 sample. We find that (1) analysts’ research coverage from their managing syndicate is not related to long-run performance; (2) long-run performance is not different for firms that receive all-star analyst coverage; and (3) investors are not systematically worse off for following lead underwriter recommendations.