Stanley Baiman, Barry L. Lewis, An Experiment Testing the Behavioral Equivalence of Strategically Equivalent Employment Contracts, Journal of Accounting Research, Vol. 27, No. 1 (Spring, 1989), pp. 1-20

Post-Earnings-Announcement drift, Risk premium, Delayed market reaction, Incomplete risk adjustment

Job market segmentation refers to the idea that there tends to be a correlation among high wages, high productivity, high capital intensity, high value added, few quits relative to layoffs, and low labor turnover. This paper develops a model of wage dispersion and job market segmentation based on the very sparse assumption that the only departure from a strictly orthodox neoclassical world consists of wages being sticky in the short run. Implications of the model are explored and discussed.

Abstract. The purpose of this paper is to describe certain aspects of specialized knowledge communication in auditing. The paper discusses the possible organizational responses an audit firm could make when competitive markets require efficient knowledge sharing among auditors and when economies of scale opportunities through division of responsibilities exist. Experienced auditors were surveyed about their consultation with others in their firms for specific types of clients and for different phases of audit engagements. In general, the results suggest limits to expertise‐related economies of scale in the audit setting studied. The required specialized knowledge seems to be close at hand and accessible in most engagements with little need to consult with nonlocal specialists. When consulted, however, the nonlocal specialists are believed to convey important information. Résumé. Les auteurs ont pour but de décrire certains aspects de la communication de connaissances spécialisées en vérification. Ils traitent des différentes réponses organisation‐nelles que peut donner un cabinet de vérification aux exigences des marchés concurrentiels relatives au partage efficient des connaissances chez les vérificateurs et à la possibilité de réaliser des économies d'échelle grâce au partage des responsabilités. Les auteurs ont interrogé des vérificateurs expérimentés dans le but de déterminer s'ils consultaient d'autres vérificateurs de leur cabinet au sujet de certains types précis de clients et pour différentes phases des missions de vérification. De façon générale, les résultats obtenus donnent à penser que les économies d'échelle reliées à l'expertise dans les contextes de vérification étudiés sont limitées. Dans la plupart des missions, il semble que les connaissances spécialisées requises soient à portée de la main et facilement accessibles, sans qu'il soit nécessaire de consulter des spécialistes de l'extérieur. On croit cependant que les spécialistes de l'extérieur livrent de l'information importante lorsqu'ils sont consultés.

The earnings of married women have a more equalizing effect on the distribution of lifetime family earnings (or the expected present value of earnings) than on the distribution of annual family earnings, using Panel Study of Income Dynamics longitudinal data. The intertemporal variability of wives' labor supply causes the correlation between the lifetime earnings of husbands and wives to weaken relative to the correlation between their annual incomes, resulting in lower lifetime inequality. The inequality of potential income (full employment earnings) is found to be much greater for lifetime earnings than average annual earnings, based on alternative endogenous wage-hours models. Copyright 1989 by MIT Press.

The recent debate questioning whether unemployment in the 1970s represents sectoral adjustment or cyclical variation is expanded to examine comparable causes of real wage variability. Using Panel Study of Income Dynamics panel data, real wages respond more to persistent sectoral shocks than cyclical shocks in the 1970s, making recent estimates of procyclical wage variability appear weak in perspective. Employing a model of endogenous sector-specific individual skills, older workers earning economic rents are shown to have the greatest wage response to sectoral shocks. These results are consistent with the hypothesis that short run cyclical shocks may be met with hours adjustment, as specified in implicit or explicit contracts, but that persistent shocks require wage adjustment. Copyright 1989 by MIT Press.