Showing papers on "Earnings published in 2019"
TL;DR: In this article, the authors constructed a matched employer-employee data set for the United States using administrative records and found that virtually all of the rise in inequality between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals.
Abstract: Earnings inequality in the United States has increased rapidly over the last three decades, but little is
known about the role of firms in this trend. For example, how much of the rise in earnings inequality
can be attributed to rising dispersion between firms in the average wages they pay, and how much is
due to rising wage dispersion among workers within firms? Similarly, how did rising inequality affect
the wage earnings of different types of workers working for the same employer—men vs. women,
young vs. old, new hires vs. senior employees, and so on? To address questions like these, we begin
by constructing a matched employer-employee data set for the United States using administrative
records. Covering all U.S. firms between 1978 to 2012, we show that virtually all of the rise in
earnings dispersion between workers is accounted for by increasing dispersion in average wages paid
by the employers of these individuals. In contrast, pay differences within employers have remained
virtually unchanged, a finding that is robust across industries, geographical regions, and firm size
groups. Furthermore, the wage gap between the most highly paid employees within these firms (CEOs
and high level executives) and the average employee has increased only by a small amount, refuting
oft-made claims that such widening gaps account for a large fraction of rising inequality in the
population.
318 citations
TL;DR: In this paper, the authors examine an important source of uncertainty that likely cannot be influenced by most managers and investors: uncertainty about government economic policy and find that this uncertainty is associated with increased bid-ask spreads and decreased stock price reactions to earnings surprises.
260 citations
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TL;DR: In this article, the authors define quality as characteristics that investors should be willing to pay a higher price for, and provide a tractable valuation model that shows how stock prices should increase in their quality characteristics: profitability, growth, and safety.
Abstract: We define quality as characteristics that investors should be willing to pay a higher price for. Theoretically, we provide a tractable valuation model that shows how stock prices should increase in their quality characteristics: profitability, growth, and safety. Empirically, we find that high-quality stocks do have higher prices on average but not by a large margin. Perhaps because of this puzzlingly modest impact of quality on price, high-quality stocks have high risk-adjusted returns. Indeed, a quality-minus-junk (QMJ) factor that goes long high-quality stocks and shorts low-quality stocks earns significant risk-adjusted returns in the United States and across 24 countries. The price of quality varies over time, reaching a low during the internet bubble, and a low price of quality predicts a high future return of QMJ. Analysts’ price targets and earnings forecasts imply systematic quality-related errors in return and earnings expectations.
258 citations
TL;DR: This article found that manager sentiment is a strong negative predictor of future aggregate stock market returns, with monthly in-sample and out-of-sample R2s of 9.75% and 8.38%, respectively, which is far greater than the predictive power of other previously studied macroeconomic variables.
227 citations
TL;DR: In this paper, the authors provide evidence on child penalties in female and male earnings in different countries based on event studies around the birth of the first child, using the specification proposed by Kleven et al.
Abstract: This paper provides evidence on child penalties in female and male earnings in different countries. The estimates are based on event studies around the birth of the first child, using the specification proposed by Kleven et al. (2018). The analysis reveals some striking similarities in the qualitative effects of children across countries, but also sharp differences in the magnitude of the effects. We discuss the potential role of family policies (parental leave and child care provision) and gender norms in explaining the observed differences.
206 citations
TL;DR: This paper found that the fraction of gender inequality caused by child penalties has featured a dramatic increase over the last three to four decades and that child penalties are transmitted through generations, from parents to daughters, suggesting an influence of childhood environment on gender identity.
Abstract: Using Danish administrative data, we study the impacts of children on gender inequality in the labor market. The arrival of children creates a long-run gender gap in earnings of around 20 percent driven by hours worked, participation, and wage rates. We identify mechanisms driving these "child penalties" in terms of occupation, sector, and firm choices. We find that the fraction of gender inequality caused by child penalties has featured a dramatic increase over the last three to four decades. Finally, we show that child penalties are transmitted through generations, from parents to daughters, suggesting an influence of childhood environment on gender identity.
205 citations
TL;DR: In this article, the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy were studied using newspaper coverage, firms' earnings calls, and tariff rates.
163 citations
TL;DR: Human capital theory assumes that education determines the marginal productivity of labour and this determines earnings and has dominated the economics, and policy and public under-approximation has been studied.
Abstract: Human capital theory assumes that education determines the marginal productivity of labour and this determines earnings. Since the 1960s, it has dominated the economics, and policy and public under...
159 citations
TL;DR: How patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of U.S. patent applications to U.s. business and worker tax records is analyzed to interpret earnings responses as reflecting the capture of economic rents by senior workers, who are most costly for innovative firms to replace.
Abstract: This article analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of U.S. patent applications to U.S. business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex ante value patents yield no detectable effects on firm outcomes. Patent allowances lead firms to increase employment, but entry wages and workforce composition are insensitive to patent decisions. On average, workers capture roughly 30 cents of every dollar of patent-induced surplus in higher earnings. This share is roughly twice as high among workers present since the year of application. These earnings effects are concentrated among men and workers in the top half of the earnings distribution and are paired with corresponding improvements in worker retention among these groups. We interpret these earnings responses as reflecting the capture of economic rents by senior workers, who are most costly for innovative firms to replace.
138 citations
TL;DR: This paper found that firms experiencing improvements in crowdsourced employer ratings significantly outperform firms with declines and that the return effect is concentrated among reviews from current employees, stronger among early firm reviews, and also stronger when the employee works in the headquarters state.
136 citations
25 Apr 2019
TL;DR: The authors assesses challenges for social protection policies in a changing world of work and presents evidence of support gaps in public policies affecting different types of workers. But support gaps are small in some countries that adopt fairly different social protection strategies, suggesting that accessible support can be achieved with different blends of social insurance and means-tested assistance.
Abstract: This chapter assesses challenges for social protection policies in a changing world of work and presents evidence of support gaps in public policies affecting different types of workers. Key policy challenges include a greater need for support resulting from greater employment instability or lower earnings among some groups; a reduced accessibility or adequacy of social protection measures that were designed around stable forms of dependent employment; and sustainability challenges, e.g. due to opportunities for avoiding participation in risk-sharing provisions. Accessing adequate support can be especially difficult for workers in less secure forms of employment. But support gaps are small in some countries that adopt fairly different social protection strategies, suggesting that accessible support can be achieved with different blends of social insurance and means-tested assistance. The chapter discusses alternative reform avenues and illustrates country approaches to prepare income support and reintegration measures for the future of work.
TL;DR: This paper examined the effect of investor information processing costs on firms' disclosure choice and found that firms increase their quantitative footnote disclosures after adoption of XBRL detailed tagging requirements designed to reduce investor processing costs.
Abstract: This paper examines the effect of investor information processing costs on firms’ disclosure choice. Using the recent eXtensible Business Reporting Language (XBRL) regulation as an exogenous shock to investors’ processing costs, but not to firms’ disclosure requirements, I find that firms increase their quantitative footnote disclosures after adoption of XBRL detailed tagging requirements designed to reduce investor processing costs. These results hold in a difference-in-difference design using non-adopting firms as the control group. To reinforce my finding that the disclosure increase is prompted by reduced investor processing costs, I examine cross-sectional settings where investor processing costs are likely to vary, showing that the disclosure increase is greater for firms where detailed information is more pertinent than summary measures (those with operations in multiple industries, more volatile earnings, and more disperse analyst forecasts), and smaller for firms with sophisticated investors. These findings suggest that investor processing costs can be significant enough to impact firms’ disclosure decisions.
TL;DR: In this paper, the authors examined the relationship between the quantity and quality of sustainability disclosure and earnings quality in the context of corporate ethical value and culture, and found that sustainability disclosure quantity is positively associated with innate earnings quality and negatively correlated with discretionary earnings quality.
Abstract: Voluntary disclosures of sustainability information have recently received considerable attention by investors, regulators, and public companies in improving reliability and integrity of corporate reporting. We examine the association between the quantity and quality of sustainability disclosures and earnings quality in the context of corporate ethical value and culture. We posit that sustainability disclosures of environmental, social, and governance (ESG) performance reports are linked to earnings quality, because of the importance of both earnings quality and ESG sustainability disclosures to investors and trustworthiness of corporate reporting. We collect our sample of 35,110 firm-year observations between 1999 and 2015. Using both difference-in-difference tests and OLS regression, we find that sustainability disclosure quantity is positively associated with innate earnings quality and negatively correlated with discretionary earnings quality in mitigating managerial earnings manipulation and unethical opportunistic reporting behavior. Further tests illustrate that sustainability disclosure quality can strengthen the positive relation between innate earnings quality and sustainability disclosure quantity and mitigate the negative relation between discretionary earnings quality and sustainability disclosure quantity. Finally, additional tests suggest that the relation between earnings quality and sustainability disclosure quantity is moderated by corporate structure and prior-year sustainability performance. Our results provide policy, practical, and research implications as ESG sustainability reporting is being integrated into corporate culture and business models.
TL;DR: Wang et al. as mentioned in this paper explored and compared the extent of intellectual capital (IC) and its four components in high-tech and non-high-tech small and medium-sized enterprises (SMEs) operating in China's manufacturing sector, and examined the relationship between IC and the performance.
Abstract: The purpose of this paper is to explore and compare the extent of intellectual capital (IC) and its four components in high-tech and non-high-tech small and medium-sized enterprises (SMEs) operating in China’s manufacturing sector, and to examine the relationship between IC and the performance of high-tech and non-high-tech SMEs.,The study uses the data of 116 high-tech SMEs and 380 non-high-tech SMEs listed on the Shenzhen stock exchanges during 2012–2016. The modified value added intellectual coefficient (MVAIC) model is used incorporating four components, namely, capital employed, human capital, structural capital and relational capital. Finally, multiple regression analysis is utilized to test the proposed research hypotheses.,The findings of this paper reveal that there is significant difference in MVAIC between high-tech and non-high-tech SMEs. The results further indicate a positive relationship between IC and financial performance of high-tech and non-high-tech SMEs. Specifically, IC is positively associated with firms’ earnings, profitability and operating efficiency. Additionally, capital employed efficiency, human capital efficiency and structural capital efficiency are found to be the most influential value drivers for the performance of two types of SMEs while relational capital efficiency possesses less importance.,This paper will provide a valuable framework for executives, managers and policy makers in managing IC within the Chinese context.,To the best knowledge of the authors, this is the first empirical study that has been conducted on high-tech and non-high-tech SMEs in the manufacturing sector in China.
TL;DR: The authors examined the consequences of nonresponse on earnings gaps and found that nonresponse biases earnings measures, and showed that earnings nonresponse in household surveys is widespread, yet there is limited knowledge of how nonresponse bias earnings measures.
Abstract: Earnings nonresponse in household surveys is widespread, yet there is limited knowledge of how nonresponse biases earnings measures. We examine the consequences of nonresponse on earnings gaps and ...
TL;DR: This paper examined how managers' ethnic cultural background affects their communication with investors using earnings conference calls with executives from 42 countries and found that managers with ethnic cultural backgrounds were more likely to use ethnic stereotypes in their communications with investors.
Abstract: We examine how managers' ethnic cultural background affects their communication with investors. Using earnings conference calls with executives from 42 countries, we find that managers fro...
TL;DR: In this paper, the authors examine how women on boards influence bank earnings management and find an inverted U-shaped relation between women on the boards and bank earnings, which is strengthened if women sit on audit or nomination committees, moderated if women directors have higher education levels and more board experience, and unchanged during the 2007-2009 financial crisis.
Abstract: We examine how women on boards influence bank earnings management. Using the likelihood of a board appointing women directors based on a Blau index of gender diversity in each director's total employment connections outside our sample banks for identification, we find an inverted U-shaped relation between women on boards and bank earnings management. Specifically, when there exists only a marginal number of women directors, banks are more likely to manipulate earnings. But, when the number of women directors reaches three or more, bank earnings management declines. This inverted U-shaped impact is intensified if women sit on audit or nomination committees, is moderated if women directors have higher education levels and more board experience, and is unchanged during the 2007–2009 financial crisis. Our results hold when we use alternative measures of bank earnings management, employ GMM estimations and test for alternative hypotheses for the inverted U-shaped relation.
TL;DR: Cohen et al. as discussed by the authors found that an analyst makes more accurate, frequent, and informative earnings forecasts and recommendations for firms ranked higher within her portfolio based on proxies for importance to institutions.
Abstract: Analysts strategically allocate more effort to portfolio firms that are relatively more important to their careers. Thus, the other firms the analysts cover indirectly affect a firm’s information environment. Controlling for analyst and firm characteristics, we find that an analyst makes more accurate, frequent, and informative earnings forecasts and recommendations for firms ranked higher within her portfolio based on proxies for importance to institutions. A firm’s relative rank widely varies across analysts, but its information environment improves when a larger proportion of analysts consider it to be relatively important. Analysts experience more favorable career outcomes when strategically allocating their efforts. Received August 23, 2017; editorial decision June 27, 2018 by Editor Lauren Cohen. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
TL;DR: The authors used both longitudinal administrative data and cross-sectional household survey data to study the margins of labor market adjustment following Brazil's early 1990s trade liberalization, examining various adjustment margins, including earnings and wage changes; interregional migration; shifts between tradable and nontradable employment; and shifts between formal employment, informal employment, and non-employment.
TL;DR: This paper provided the first estimate of the impacts of automation on individual workers by combining Dutch micro-data with a direct measure of automation expenditures covering firms in all private non-financial industries over 2000-2016.
Abstract: We provide the first estimate of the impacts of automation on individual workers by combining Dutch micro-data with a direct measure of automation expenditures covering firms in all private non-financial industries over 2000-2016. Using an event study differences-indifferences design, we find that automation at the firm increases the probability of workers separating from their employers and decreases days worked, leading to a 5-year cumulative wage income loss of about 8% of one year’s earnings for incumbent workers. We find little change in wage rates. Further, lost wage earnings are only partially offset by various benefits systems and are disproportionately borne by older workers and workers with longer firm tenure. Compared to findings from a literature on mass layoffs, the effects of automation are more gradual and automation displaces far fewer workers, both at the individual firms and in the workforce overall.
TL;DR: In this article, the authors assess the causal effects of disability insurance (DI) allowance on individuals at the margin of program entry in the context of Norway's DI system, drawing on two strengths of the Norwegian environment: the Norwegian register data and the random assignment of applicants to Norwegian judges who differ systematically in their leniency.
Abstract: While a mature literature finds that Disability Insurance (DI) receipt discourages work, the welfare implications of these findings depend on two rarely studied economic quantities: the full cost of DI allowances to taxpayers, summing over DI transfer payments, benefit substitution to or from other transfer programs, and induced changes in tax receipts; and the value that individuals and families place on receiving benefits in the event of disability. We comprehensively assess these missing margins in the context of Norway's DI system, drawing on two strengths of the Norwegian environment. First, Norwegian register data allow us to characterize the household impacts and fiscal costs of disability receipt by linking employment, taxation, benefits receipt, and assets at the person and household level. Second, random assignment of DI applicants to Norwegian judges who differ systematically in their leniency allows us to recover the causal effects of DI allowance on individuals at the margin of program entry. Accounting for the total effect of DI allowances on both household labor supply and net payments across all public transfer programs substantially alters our picture of the consumption benefits and fiscal costs of disability receipt. While DI allowance causes a significant increase in household income and consumption on average, it has little impact on income or consumption of married applicants because spousal earnings responses (via the added worker effect) and benefit substitution entirely offset DI benefit payments among those who are allowed relative to those who are denied. To develop the welfare implications of these findings, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. We find that household valuation of receipt of DI benefits is considerably greater for single and unmarried individuals than for married couples because spousal labor supply substantially buffers household income and consumption in the event of DI denial.
TL;DR: In this paper, the authors estimate returns to career technical education (CTE) programs using administrative data from the California Community College system linked to earnings records, and find average returns to CTE certificate and degrees that range from 14 to 45 percent.
Abstract: Career technical education (CTE) programs at community colleges are increasingly seen as an attractive alternative to four-year colleges, yet little systematic evidence exists on the returns to specific certificates and degrees. We estimate returns to CTE programs using administrative data from the California Community College system linked to earnings records. We employ estimation approaches, including individual fixed effects and individual-specific trends, and find average returns to CTE certificate and degrees that range from 14 to 45 percent. The largest returns are for programs in the healthcare sector; estimated returns in non-health related programs range from 15 to 23 percent. [End Page 986] [ABSTRACT FROM AUTHOR]
TL;DR: In a series of laboratory experiments that control for other aspects of volunteering, such as its signaling value, subjects demonstrate behavior consistent with the theoretical assumption that gifts of time produce greater utility than the same transfers in the form of money.
Abstract: Why do individuals volunteer their time even when recipients receive far less value than the donor’s opportunity cost? Previous models of altruism that focus on the overall impact of a gift cannot rationalize this behavior, despite its prevalence We develop a model that allows for differential warm glow depending on the form of the donation In a series of laboratory experiments that control for other aspects of volunteering, such as its signaling value, subjects demonstrate behavior consistent with the theoretical assumption that gifts of time produce greater utility than the same transfers in the form of money Subjects perform an effort task, accruing earnings at potentially different wage rates for themselves or a charity of their choice, with the ability to transfer any of their personal earnings to charity at the end of the experiment Subjects exhibit strong preferences for donating time even when differential wage rates make it costly to do so The results provide new insights on the nature of vo
TL;DR: This paper found that financial statement comparability enhances the ability of current period returns to reflect future earnings, as measured by the future earnings response coefficient (FERC), and that comparability improves the informativeness of stock prices and allows investors to better anticipate future firm performance.
Abstract: We find that financial statement comparability enhances the ability of current period returns to reflect future earnings, as measured by the future earnings response coefficient (FERC). This suggests that comparability improves the informativeness of stock prices and allows investors to better anticipate future firm performance. In addition, using both the FERC and stock price synchronicity tests, we find that comparability increases the amount of firm‐specific information (rather than market/industry‐level information) reflected in stock prices. Analysts play an important role in improving stock price informativeness by producing more firm‐specific information when comparability is high. These findings suggest that comparability lowers the costs of gathering and processing firm‐specific information. This article is protected by copyright. All rights reserved.
TL;DR: Even within a fee-for-service system, male and female surgeons do not have equal earnings for equal hours spent working, suggesting that the opportunity to perform the most lucrative surgical procedures is greater for men than women.
Abstract: Importance Sex-based income disparities are well documented in medicine and most pronounced in surgery. These disparities are commonly attributed to differences in hours worked. One proposed solution to close the earnings gap is a fee-for-service payment system, which is theoretically free of bias. However, it is unclear whether a sex-based earnings gap persists in a fee-for-service system when earnings are measured on the basis of hours worked. Objective To determine whether male and female surgeons have similar earnings for each hour spent operating in a fee-for-service system. Design, Setting, and Participants This cross-sectional, population-based study used administrative databases from a fee-for-service, single-payer health system in Ontario, Canada. Surgeons who submitted claims for surgical procedures performed between January 1, 2014, and December 31, 2016, were included. Data analysis took place from February 2018 to December 2018. Exposures Surgeon sex. Main Outcomes and Measures This study compared earnings per hour spent operating between male and female surgeons and earnings stratified by surgical specialty in a matched analysis. We explored factors potentially associated with earnings disparities, including differences in procedure duration and type between male and female surgeons and hourly earnings for procedures performed primarily on male vs female patients. Results We identified 1 508 471 surgical procedures claimed by 3275 surgeons. Female surgeons had practiced fewer years than male surgeons (median [interquartile range], 8.4 [2.9-16.6] vs 14.7 [5.9-25.7] years;P Conclusions and Relevance Even within a fee-for-service system, male and female surgeons do not have equal earnings for equal hours spent working, suggesting that the opportunity to perform the most lucrative surgical procedures is greater for men than women. These findings call for a comprehensive analysis of drivers of sex-based earning disparities, including referral patterns, and highlight the need for systems-level solutions.
TL;DR: In this article, the authors used longitudinal data for the period 1968-2005 for a sample of male household heads to determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes, including earnings, income, and consumption.
TL;DR: This paper examined the earnings management behavior of female chief executive officers (CEOs) conditional on their equity incentives and found that female CEOs do not necessarily reduce earnings management, while male CEOs manipulate earnings to a lesser degree than their male counterparts.
TL;DR: In this paper, the authors examined the associations between an onset of serious mental disorders before the age of 25 with subsequent employment, income and education outcomes, finding that serious mental disorder is associated with low employment rates and poor educational outcomes, leading to a substantial loss of total earnings over the life course.
Abstract: Objective To examine the associations between an onset of serious mental disorders before the age of 25 with subsequent employment, income and education outcomes. Methods Nationwide cohort study including individuals (n = 2 055 720) living in Finland between 1988-2015, who were alive at the end of the year they turned 25. Mental disorder diagnosis between ages 15 and 25 was used as the exposure. The level of education, employment status, annual wage or self-employment earnings, and annual total income between ages 25 and 52 (measurement years 1988-2015) were used as the outcomes. Results All serious mental disorders were associated with increased risk of not being employed and not having any secondary or higher education between ages 25 and 52. The earnings for individuals with serious mental disorders were considerably low, and the annual median total income remained rather stable between ages 25 and 52 for most of the mental disorder groups. Conclusions Serious mental disorders are associated with low employment rates and poor educational outcomes, leading to a substantial loss of total earnings over the life course.
TL;DR: In this paper, the authors used data on hourly earnings and driving performance of Uber drivers to find the optimal work arrangement for each driver, based on the data collected by the company.
Abstract: Technology has facilitated new, nontraditional work arrangements, including the ride-sharing company Uber. Uber drivers provide rides anytime they choose. Using data on hourly earnings and driving,...
TL;DR: The role of IROs in corporate disclosure events was surveyed by as discussed by the authors, who found that the value, nature, and timing of private communication between IRO, analysts, and investors, and significant influence IRO have on corporate disclosures; and the degree of the actor involved in public earnings conference calls, even the Q&A portion.