The Use of Management Control Mechanisms to Mitigate Moral Hazard in the Decision to Outsource

Using archival data from the U.S. passenger airline industry, this study examines whether management control mechanisms aimed at mitigating moral hazard explain outsourcing decisions over and above transaction cost economics (TCE) determinants documented in prior research. Consistent with TCE theory, we find that in‐house production efficiencies and our proxy for transaction risk (i.e., deriving from transaction infrequency, transaction complexity, and relationship‐specific investments) significantly explain the extent of outsourcing of aircraft maintenance. We extend TCE insights to show that incentive delta (i.e., the sensitivity of CEO portfolio holdings to stock price changes) strengthens the negative association between production efficiencies and outsourcing while incentive vega (i.e., the sensitivity of CEO holdings to stock return volatility) weakens the negative association between transaction risk and outsourcing. Monitoring strengthens the negative association between in‐house production efficiencies and outsourcing, but has no effect on the transaction risk–outsourcing relation. The results suggest that the use of outsourcing to achieve cost savings is promoted through both incentive contracts and monitoring, but outsourcing to achieve the desired risk level is promoted only through incentive contracts.     

How Much Are Car Purchases Driven by Home Equity Withdrawal?

Previous research indicates that changes in housing wealth affect consumer spending on cars. We find that home equity extraction plays only a small role in this relationship. Consumers rarely use funds from equity extraction to purchase a car directly, even during the mid‐2000s’ housing boom; this finding holds across three nationally representative household surveys. We find in credit bureau data that equity extraction does lead to a statistically significant increase in auto loan originations, consistent with equity extraction easing borrowing constraints in the auto loan market. This channel, though, accounts for only a tiny share of overall car purchases.     

Men, Women and the Hiring Function

This paper examines the idea of ranking of groups and genders of unemployed labour force participants in terms of their hiring probabilities.We find a clear ranking of men over women in the hiring process in Australia. We also find that amongst males, employed job seekers are ranked above those unemployed and, in turn, above those not in the labour force. For women, the unemployed and employed are not found to be competing with each other, whilst those not in the labour force are ranked below the unemployed.     

The Role of Supplemental Disability Benefits in Income Security for Injured Workers

Using a stratified random sample from the Michigan Bureua of Workers' Disabilitys Compensation claims files, the author examined the distribution of disability benefits across injured workers to detemine which workers have access to disability benefits in addition to workers' compensation. Using a ligit model, the result indicate that low-income workers employed by smaller, less financially stable firms are more likely to depend exclusively on workers' compensation for income while disabled The policy implication is that the burden of the problems with workers' compensation is more likely to fall on those workers who are least able to bear it.     

Organizational differences in recruiting older department store workers in the US

Department store retailers need a reliable and stable labour resource, particularly for entry-level positions. Older workers may be an alternative labour pool for these positions. The goal of this study is to learn whether department store attributes and recruitment representative characteristics affect the use of formal and informal recruiting strategies in developing an older applicant pool. The findings indicate that small sales volume stores used both formal and informal recruiting practices significantly less than medium or large stores. Further, younger respondents and human resource support staff relied upon informal methods more than formal ones. Finally, highly educated recruiting representatives used formal recruiting methods more than those with less education.     

PRODUCTIVE TIME OF HOUSEHOLD HEADS

This study is an analysis of the utility value of time. Time is viewed on a productivity continuum with activities that result in measurable products such as income or home sewing at one extreme of the continuum and activities such as sleep at the other extreme. The use of time by unemployed and employed heads of households was the basis for this analysis. Four measures of time were constructed to determine the amount of time spent in market, household, leisure and personal activities. Unemployed heads of households spent more time in household and leisure activities than employed heads. Assuming that household activities have productive value, time spent in child care, shopping, house cleaning, etc., were viewed as having utility value for the household. Thus, reallocated time had utility value for the household. In addition, it was found that a significant relationship existed between employment status and use of time, regardless of position on the productivity continuum. From this study comes a better understanding of how time is reallocated during unemployment so that the economic loss for the household as well as the economy can be minimized.     

The Links between Early‐Life Cognition and Schooling and Late‐Life Financial Knowledge

Using the Wisconsin Longitudinal Study, a sample of Wisconsin high school graduates from the class of 1957, we explore the relationship between late‐life financial knowledge and human capital formed in early life. Specifically, we examine the associations between early‐life cognition and schooling experiences—such as academic performance and coursework—and late‐life financial knowledge. Financial knowledge is measured as individuals' knowledge of their own financial situations, which we argue is a prerequisite for good financial behavior. We find that those with lower early‐life cognitive functioning, especially those without college degrees, have lower levels of financial knowledge in late life. We find more limited evidence for independent associations of academic performance and math course work with late‐life financial knowledge.