We examine an economy in which the cost of consuming some goods can be reduced by making commitments to consumption levels that do not vary across states. For example, moral hazard and matching considerations may make it cheaper to produce housing services via owner-occupied than rented housing,...

This paper develops a theory of outside ownership where such an ownership arrangement mitigates an external finance problem. Part of the gains from outside ownership accrue to asset owners which determines the asset value. The theory provides a context to analyze asset ownership and asset values...

Under the standard competitive model, if a tax change affects a group of workers with highly inelastic labor supply, their earnings will fall by essentially the entire nominal employer share of the tax increase. Allowing the wage to play a motivational role but maintaining the market-clearing...

This paper examines the portability of star security analysts’ performance. Analysis from a panel data set of research analysts in investment banks over 1988-1996 reveals that star analysts who switch employers show an immediate decline in performance, which persists for at least five years....

Team size in scientific research and its geographic dispersion are important because research collaboration indicates the division of labor, and because collaboration is one channel of by which knowledge spills over. For both reasons, economic efficiency of the knowledge-creating industries is...

External recruitment has often been viewed as a necessary evil in that it trades off the need for outside talents with the incentives of inside workers. This paper, however, shows that even from an incentive viewpoint, external recruitment has its positive role to play. Specifically, if...

I construct a model of equilibrium unemployment where workers and firms enter into dynamic labor contracts. The model is in the spirit of the models of efficiency wages (e.g. Shapiro and Stiglitz (1984) in that I rely on moral hazard to give rise to involuntary unemployment. Compared the...

What determines the internal organization of law firms? Using previously unused census data, we study the production function of law and the way partnerships structure this production. This paper reports findings on the leverage ratios, on the extent of individual specialization, and on the...

Workers typically perform a variety jobs over the course of their careers in firms. These jobs differ in the skills they require and, thus, may convey different amounts of information about worker ability. In this paper, we develop a theory of learning and job design, and empirically test this...

We use household survey data to construct a direct measure of absolute risk aversion based on the maximum price a consumer is willing to pay to buy a risky asset. We relate this measure to a set of consumers' decisions that in theory should vary with attitude towards risk. We find that elicited...