Hierarchies allow individuals to leverage their knowledge through others' time. This mechanism increases productivity and amplifies the impact of skill heterogeneity on earnings inequality. To quantify this effect, we analyze the earnings and organization of U.S. lawyers and use the equilibrium...

What role do hierarchies play with respect to the organization of production and what determines their structure? We develop an equilibrium model of hierarchical organization, then provide empirical evidence using confidential data on thousands of law offices from the 1992 Census of Services....

What is the role of firms and markets in mediating the division of labor? This paper uses confidential microdata from the Census of Services to examine law firms' boundaries. We find that firms' field scope narrows as market size increases and individuals specialize, indicating that firms'...

A large theoretical literature focuses on the question: What determines firms' boundaries? Recently, Garicano and Santos and Holmstrom and Milgrom have proposed theories in which firms' boundaries reflect the division of labor across individuals. This paper discusses strategies for generating...

This paper exploits empirically a key insight from Lucas (1978) and Rosen (1982): that the organization of production and the distribution of earnings across individuals are jointly determined by the equilibrium assignment of individuals to firms and hierarchical positions. We study how...

Policymakers have hoped that vehicle inspection and maintenance programs would generate air quality improvements at low cost. Existing programs have been unsuccessful because they have failed to provide consumers with incentives to maintain their vehicles so as to have low in-use emissions. This...

President Obama's budget proposal emphasizes the importance of infrastructure investments for the nation's economic health, so now seems a good time to assess the condition of our country's major roads.

We investigate how the contractibility of actions affecting the value of an asset affects asset ownership. We examine this by testing how on-board computer (OBC) adoption affects truck ownership. We develop and test the proposition that adoption should lead to less ownership by drivers,...

This paper examines the demand for on-board computers in trucking, distinguishing between their incentive- and resource-allocation-improving capabilities. I find that monitoring's incentive benefits are high when perquisite-taking is attractive to drivers, driver effort is important, and...