Distribution of Ability and Earnings in a Hierarchical Job Assignment Model

Costrell, Robert M.; Loury, Glenn C.

doi:10.1086/424741

Cited by 44 publications

(59 citation statements)

References 14 publications

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“…8 We make the following assumptions about the production function. First, to generate production in a unit, both managerial and non-managerial tasks must be performed, q(E, 0) = q(0, M) = 0.…”

Section: The Modelmentioning

confidence: 99%

“…Assumption (2) assures that q(E, M) is not too concave, so that more able managers find it worthwhile to put in more managerial effort m s i,m than less able managers, see Proposition 1. 10 Lastly, we 8 Here, we use the result, derived in Section 4.1, that in equilibrium all workers in sector s exert the same level of effort. This allows us to write the total amount of effort exerted by workers in the unit as n s i e s w .…”

Section: The Modelmentioning

confidence: 99%

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Managerial talent, motivation, and self-selection into public management

Delfgaauw

Dur

2010

Journal of Public Economics

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The quality of public management is a recurrent concern in many countries. Calls to attract the economy's best and brightest managers to the public sector abound. This paper studies self-selection into managerial and non-managerial positions in the public and private sector, using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation. We find that, if demand for public sector output is not too high, the equilibrium return to managerial ability is always highest in the private sector. As a result, relatively many of the more able managers self-select into the private sector. Since this outcome is efficient, our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private-sector levels is not cost-efficient.

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Section: The Modelmentioning

confidence: 99%

Section: The Modelmentioning

confidence: 99%

Managerial talent, motivation, and self-selection into public management

Delfgaauw

Dur

2010

Journal of Public Economics

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“…In labour economics, it has long been recognised that the assignment of workers to tasks affects wages (see the survey by Sattinger, 1993). For example, Teulings (1995) and Costrell and Loury (2004) provide general equilibrium models where, similar to the approach used here, high-ability workers have a comparative advantage in performing demanding jobs. As a main feature of assignment models, which the present paper shares, these contributions show that the wage differential obtained by high-ability workers does not only reflect productivity differences on any given job but depends on the matching between workers and tasks.…”

Section: Introductionmentioning

confidence: 99%

Grade Inflation, Social Background, and Labour Market Matching

Schwager

2008

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08070.pdf Non-Technical SummaryThe results a student obtains in examinations at the end of school to a large extent determine her future labour market or academic career. Because of this importance, and since students from disadvantaged ethnical or social backgrounds typically fare worse in formal tests of academic achievement, some observers argue against tough testing and grading policies so as not to expose the disadvantage of such students to employers and/or further education institutions.Addressing this debate, the present paper examines the relationship between grades, social origin, and the labour market. It provides a game theoretic model describing the matching of workers of different abilities to different jobs. The role of grades in this context is to inform employers about the ability of workers. The paper shows that, if grades honestly reveal abilities, in equilibrium the most able workers are matched to the most demanding jobs. Moreover, compared to applicants with a mediocre grade, applicants with a good grade obtain a wage premium which reflects the productivity differential and the relative scarcity of workers with differering abilities. If, however, the school inflates grades by awarding good grades to some low ability students, then the matching of jobs and workers is not only determined by ability but also by social background: The best jobs are then reserved to highly graded students originating from the upper social classes. In addition, these students are paid an additional wage premium which students from lower social classes with a good grade do not obtain. These results arise from the fact that grade inflation reduces the informational content of grades, thereby inducing employers to use an unfavourable background as an additional signal for low ability.In further results, it is examined how this effect determines the preferences for grading policies in the student population. It is shown that the aggregate wage sum received by workers from the disadvantaged social class strictly decreases if grades are inflated. Moreover, high ability students from the favoured social origin, whom one might call the "elite", may indeed prefer grade inflation to honest grading. This may be worthwhile since with inflated grades, able students from disadvantaged backgrounds cannot signal their ability anymore, and so can compete less successfully for the most attract...

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“…Given Equation (1), 1 Setting ln A = , a constant, we differentiate Equation (4) by WOM as α follows: the definition of WOM elasticity ( WOM ) is Equation (2), where ΔQ is the change in the amount of sales, ΔC is the change in the consumption, and ΔWOM is the change in WOM. E Finally, as in Equation (3), a basic function type is set as a Cobb-Douglas functional form, which is very easy to manipulate and has been widely used in prior studies in various fields (e.g., Costrell & Loury, 2004;Wirjanto, 2004); In Equation (3), where e is an exponential, A and β are constants, and ε is a random variable. We then take the natural logarithm (ln) to plus on both sides of Equation (3) to obtain a simple linear regression equation as Equation (4).…”

Section: Mathematical Notationsmentioning

confidence: 99%

Development of Word-of-Mouth Elasticity Measures for Tourism Product Categories

Chen¹,

Liu²,

Ho³

et al. 2012

PSYCH

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This study examines the influence of word of mouth (WOM) on eight tourism products by applying economic elasticity theory to understand the relationship between behavioral outcomes and target elements to these behavioral outcomes (customer consumption). The elasticity model of economics was developed to conceptualize WOM elasticity ( ) and measure WOM effects on various products. The results ofWOM elasticity values show a significant difference between physical and service product categories. In addition, all effective respondents in this research are highly sensitive to WOM relating to specific products. This shows that WOM is not only a key variable of tourism products but also validates that WOM communications are meaningful for tourism customers. The authors contributes to tourism service and WOM marketing effects compared by validating empirical research in eight different product categories and providing empirical support with prior services marketing literature. Theoretical and practical implications and future research issues are discussed.x WOM E

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Distribution of Ability and Earnings in a Hierarchical Job Assignment Model

Cited by 44 publications

References 14 publications

Managerial talent, motivation, and self-selection into public management

Managerial talent, motivation, and self-selection into public management

Grade Inflation, Social Background, and Labour Market Matching

Development of Word-of-Mouth Elasticity Measures for Tourism Product Categories

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