Does Transparency Lead to Pay Compression?

From Alex Mas:

This paper asks whether disclosing wages to the public changes wage setting at the top of the public sector income distribution. I evaluate a 2010 California mandate that required cities to submit municipal salaries to the State, to be posted on a public website. City managers—typically the highest paid employees—in cities that had not previously disclosed salaries experienced average compensation declines of approximately 8 percent relative to cities where at the time of the mandate manager wages were already in the public domain. This decline was largely accomplished through nominal pay cuts. The wage cuts were not the result of relatively greater financial stress, as the overall wage bill did not diverge between these sets of cities. Wages were cut irrespective of whether or not they were out of line with (measured) fundamentals. Consequently, the residual variance of manager wages did not decline. Following new disclosure the city manager quit rate increased by 75 percent, suggesting that transparency pressured cities to lower the wages that were already close to reservation levels. The evidence is more consistent with a “populist” response to perceptions of excessive salaries than with the effects of increased accountability.

Posted in Uncategorized | Tagged , , | Leave a comment

Go West Young Man: Population Share Growth in the US 1980-2010

Growth in Population Share, 1980-2010

Image | Posted on by | Tagged , | 2 Comments

A College Major Matters Even More in a Recession – NYTimes.com

A College Major Matters Even More in a Recession – NYTimes.com.

Posted in Uncategorized | Leave a comment

Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection

From Will Dobbie and Jae Song:

Consumer bankruptcy is one of the largest social insurance programs in the United States, but little is known about its impact on debtors. We use 500,000 bankruptcy filings matched to administrative tax and foreclosure data to estimate the impact of Chapter 13 bankruptcy protection on subsequent outcomes. Exploiting the random assignment of bankruptcy filings to judges, we find that Chapter 13 protection increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points. These results come primarily from the deterioration of outcomes among dismissed filers, not gains by granted filers.

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Jason Furman on Business Tax Reform

See here for new slides on business tax reform from Jason Furman. The text of his speech is here.

Posted in Uncategorized | Tagged , , , | 1 Comment

Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry

From Serguey Braguinsky, Atsushi Ohyama, Tetsuji Okazaki, Chad Syverson:

We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward “higher productivity buys lower productivity” story commonly appealed to in the literature. Acquired firms’ production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less profitable, however, due to consistently higher inventory levels and lower capacity utilization—differences that reflected problems in managing the uncertainties of demand. When purchased by more profitable firms, these less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital.

Posted in Uncategorized | Tagged , , , , | Leave a comment

It’s Where You Work: Increases in Earnings Dispersion across Establishments and Individuals in the U.S.

From Erling Barth, Alex Bryson, James C. Davis, Richard Freeman:

This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. It also shows that the divergence of establishment earnings occurred within and across industries and was associated with increased variance of revenues per worker. Our results direct attention to the fundamental role of establishment-level pay setting and economic adjustments in earnings inequality.

Posted in Uncategorized | Tagged , , , , , , | Leave a comment