Empirical Personnel (7 Lectures)

Fabian Lange

November/December 2016 Email: [email protected] www.fabianlange.ca EUI Office: Dependence Office #4

1 Overview

Personnel economics concerns itself with the implicit and explicit contractual relationships between employees and firms. The core problem in personnel relationships is that there is incomplete information that is often also asymmetrically distributed. Personnel economics asks how firm-workers acting in a overcome these information problems.

2 Assignments / Grading

I will assign two papers to write referee reports about. They are due on Dec. 22nd 2016 and will - together with class participation - form the basis of the grade for this class.

3 Lectures 1-3: Static Incentives

Lecture 1 The Basic Model of Incentives and

1. * H¨olmstrom,Bengt, “Moral hazard and observability”, The Bell Journal of Eco- nomics (1979), pp. 74–91.

2. Patrick Bolton and Mathias Dewatripont, Contract Theory (The MIT Press, 2004): Chapter 4

Lecture 2: The Empirical Literature on the Basic Model

1. Bandiera, Oriana and Barankay, Iwan and Rasul, Imran, “Social preferences and the response to incentives: Evidence from personnel data”, The Quarterly Journal of Economics (2005), pp. 917–962.

2. * Lazear, Edward P. “Performance Pay and ”, The American Economic Review 90, 5 (2000), pp. 1346-1361.

Lecture 3: Multitasking / Gaming the System

1. Baker, George P, “Incentive contracts and performance measurement”, Journal of Political (1992), pp. 598–614.

2. Oyer, Paul, “Fiscal year ends and nonlinear incentive contracts: The effect on business seasonality”, Quarterly Journal of Economics (1998), pp. 149–185. 4 Lecture 4-5: Perspectives on Careers and Promotions

Lecture 4: Job Hierachies: Tournamentsand Span of Control

1. * Lazear, Edward P and Rosen, Sherwin, “Rank-Order Tournaments as Optimum Labor Contracts”, The Journal of 89, 5 (1981), pp. 841–864.

2. Ehrenberg, Ronald G and Bognanno, Michael L, “Do Tournaments Have Incentive Effects?”, The Journal of Political Economy (1990), pp. 1307–1324.

3. Rosen, Sherwin, “Authority, control, and the distribution of earnings”, The Bell Jour- nal of Economics (1982), pp. 311–323.

5 Lecture 5-6 Information revelation over a Career

Lecture 5: Career Concerns and Assignment

1. * Gibbons, Robert and Waldman, Michael, “A theory of and promotion dynam- ics inside firms.”, Quarterly Journal of Economics (1999), pp. 1321-1358.

2. * Holmstr¨om,Bengt. “Managerial incentive problems: A dynamic perspective.“ The Review of Economic Studies 66, no. 1 (1999): 169-182.

3. Gibbons, Robert, and Kevin J. Murphy. Optimal incentive contracts in the presence of career concerns: Theory and evidence. No. w3792. National Bureau of Economic Research, 1992.

Lecture 6: Employer Learning

1. Altonji, Joseph G and Pierret, Charles R, “Employer Learning and Statistical Dis- crimination”, The Quarterly Journal of Economics 116, 1 (2001), pp. 313-350.

2. * Lange, Fabian, “The Speed of Employer Learning”, Journal of Labor Economics 25, 1 (2007), pp. 1–35.

3. Kahn, Lisa B and Lange, Fabian, “Employer learning, productivity, and the earnings distribution: Evidence from performance measures”, The Review of Economic Studies 81, 4 (2014), pp. 1575–1613.

6 Lecture 7 Supervisors

1. Lazear, Edward P., Kathryn L. Shaw, and Christopher Stanton. ”The of Bosses.” Journal of Labor Economics 33, no. 4 (October 2015): 823–861. 2. * Frederiksen, A, Kahn, Lisa B. and Fabian Lange “Supervisors and Performance Man- agement Systems”, manuscript available soon on my webpage (www.fabianlange.ca)