Journal ArticleDOI
Hierarchy, Ability, and Income Distribution
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In this article, the authors studied the effect of minimum wage on the quality and quantity of production workers and the number of supervisors in a competitive hierarchical firm. And they showed that the quality of a worker and his quality increase with the hierarchical position of the employee.Abstract:
Labor allocation and wage-scale formation are studied in the context of competitive hierarchic firms. We show that (1) the wage per effective laborer and his quality increase with the hierarchical position of the employee, and (2) up to a point, the imposition of a minimum wage for production labor increases the quality and quantity of production workers and reduces the wage, quality, and number of supervisors. These results help to explain the skewness of income distribution, and the wage differentials across layers which are inexplicable in terms of differences in labor quality and difficulty of tasks.read more
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Book ChapterDOI
Efficiency Wage Models of the Labor Market: Equilibrium Unemployment as a Worker Discipline Device
Carl Shapiro,Joseph E. Stiglitz +1 more
TL;DR: In this article, the authors show that the information structure of employer-employee relationships, in particular the inability of employers to costlessly observe workers' on-the-job effort, can explain involuntary unemployment as an equilibrium phenomenon.
Journal ArticleDOI
The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey
TL;DR: A survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey, can be found in this article.
Book ChapterDOI
Chapter 2 The theory of the firm
Bengt Holmstrom,Jean Tirole +1 more
TL;DR: The theory of the firm has long posed a problem for economists as discussed by the authors, and the main hypothesis is that contractual designs, both implicit and explicit, are created to minimize transaction costs between specialized factors of production.
Book ChapterDOI
Efficiency Wage Models of Unemployment
TL;DR: A model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear as mentioned in this paper, since involuntary unemployed people, by definition, want to work at less than the going wage rate.
Journal ArticleDOI
Incentives in Principal-Agent Relationships
TL;DR: In this paper, the principal's optimal response to these frictions is explored, taking as given the characteristics of the agents with whom the principal interacts in a non-repeated setting.
References
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Journal ArticleDOI
Hierarchical Control and Optimum Firm Size
TL;DR: There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds as discussed by the authors.
Journal ArticleDOI
Supervision, Loss of Control, and the Optimum Size of the Firm
TL;DR: In this article, the authors show that the limitation of firm size caused by loss of control across hierarchic levels depends crucially on the nature of the supervision process and that if the employees cannot identify the times at which their performance is monitored, there is no limit imposed on the firm size by the heights of the hierarchical structure.
Journal ArticleDOI
The Distribution of Ability and Earnings
TL;DR: In this paper, the authors used the proportional shock mechanism to explain the skewness of the personal income distribution, and showed how chance elements can generate a lognormal, a Pareto, or a similar income distribution.