Labor Markets

Fraud occurs when there is an incentive and the opportunity to commit fraud and the fraudster can rationalize his behavior. Academic literature in financial economics has investigated incentives and opportunities to commit fraud but has largely ignored the fraudsters' ability to rationalize fraud. We address this gap by positing that economic actors, whose earnings are restricted by regulations, cheat more and rationalize such behavior as an effort to get "out of the hole" that regulations have forced them into.

Using personnel data from nine large firms in three industries (call centers, trucking, and high-tech), we empirically assess the benefit to firms of hiring through employee referrals. Compared to nonreferred applicants, referred applicants are more likely to be hired and more likely to accept offers, even though referrals and nonreferrals have similar skill characteristics. Referred workers tend to have similar productivity compared to nonreferred workers on most measures, but referred workers have lower accident rates in trucking and produce more patents in high-tech.

We combine unique administrative and survey data to study the match between firms and managers. The data include manager characteristics, firm characteristics, detailed measures of managerial practices, and outcomes for the firm and the manager. A parsimonious model of matching and incentives generates implications that we test with our data. We use the model to illustrate how risk aversion and talent determine how firms select and motivate managers.

We investigate the consequences of the "revolving door" for trial lawyers at the SEC's enforcement division. If future job opportunities motivate SEC lawyers to develop and/or showcase their enforcement expertise, then the revolving door phenomenon will promote more aggressive regulatory activity (the "human capital" hypothesis). In contrast, SEC lawyers can relax enforcement efforts in order to develop networking skills and/or curry favor with prospective employers at private law firms (the "rent seeking" hypothesis).

Selecting more effective teachers among job applicants during the hiring process could be a highly cost-effective means of improving educational quality, but there is little research that links information gathered during the hiring process to subsequent teacher performance. We study the relationship among applicant characteristics, hiring outcomes, and teacher performance in the Washington DC Public Schools (DCPS).

In a recent statement, the American Statistical Association (ASA) discusses the use of value-added measurement to evaluate teacher quality. We present our views on the issues raised by the ASA, in light of research we and others have done on this subject. We highlight areas of agreement with the ASA statement, clarify which issues raised by the ASA have been largely resolved, and point to those issues which should be a priority for future research.

Chetty, Friedman, and Rockoff (2014)[CFR] evaluate the degree of bias in teacher value-added (VA) estimates using a “teacher switching” research design, regressing changes in mean test scores across cohorts on changes in mean teacher VA. Recent studies (Kane, Staiger, and Bacher-Hicks 2014, Rothstein 2014) have found that regressing changes in mean scores in the prior grade on changes in mean VA also yields a positive coefficient, a result we confirm in our data.

We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an "all or nothing" decision. Very few respondents choose declining real payout streams over flat or increasing real payout streams of equivalent expected present value. Highlighting the effects of inflation increases demand for cost of living adjustments. Frames that highlight flexibility, control, and investment significantly reduce annuitization.

This paper investigates the impact of individuals' social ties at organizational entry on the formation of intraorganizational networks. When individuals enter organizations with one or more preentry relationships in place, I argue they form more extensive networks post entry than their untied counterparts. However, it is also suggested that under some conditions—i.e., when quality is more certain—the relationship between pre- and postentry social structure is contingent on individuals' quality attributes.