Many have observed that individuals perform worse after having received a promotion. The most famous statement of the idea is the Peter Principle, which states that people are promoted to their level of incompetence. There are a number of possible explanations. Two are explored. The most...

We explore the implications of trade liberalization in economies with State Owned enterprises (SOEs) and shirking. SOEs are modelled as controlled by the members of the enterprise who determine output and effort levels, while facing output prices and wage rates set by government. Enterprise...

We examine the impact of wage stickiness when employment has an effort as well as hours dimension. Despite wages being predetermined, the labor market clears through the effort margin. We compare this model quantitatively to models with flexible and sticky wages, but no effort margin. Allowing...

In The Bell Curve, Herrnstein and Murray argue that the U.S. economy is a meritocracy in which differences in wages (including differences across race and gender) are explained by differences in cognitive ability. In this paper we test their claim for wages conditional on occupation using a...

We have used a proprietary data set of newly hired semi-skilled production workers at one location of a large unionized firm to investigate several issues in labor economics. This data set is unique in several respects: the workers in our sample faced the same wage schedules, had the same...

This paper makes three contributions to the literature on private provision of public goods. First, we identify limitations of the frequently used specification test that distinguishes between the standard models of pure and impure altruism based on the extent of crowding out. While the...

In three sets of experiments involving over 4,200 subjects, we show that agents motivated to be selfish make systematic decision errors of the kind generally attributed to cognitive limitations or behavioral biases. We show that these decision errors are eliminated (or dramatically reduced) when...

We provide the first evidence that cumulative heat exposure inhibits cognitive skill development and that school air conditioning can mitigate this effect. Student fixed effects models using 10 million PSAT-takers show that hotter school days in the year prior to the test reduce learning, with...

This paper investigates the causal effect of high school curriculum on various student outcomes including academic performance at the university, happiness, physical and mental health, self-confidence, confidence in academic ability, and attitudes towards studying and learning. We exploit a...

This paper studies the effect of employment protection on worker productivity and firm output in the context of a public school system. In 2004, the Chicago Public Schools (CPS) and Chicago Teachers Union (CTU) signed a new collective bargaining agreement that gave principals the flexibility to...