This paper tests two theories of corporate investment myopia which predict a distortion in investment policy with respect to the standard net present value rule. The theories are confronted with the empirical evidence, allowing the theories to compete to explain investment behavior. Research and development expense is used to proxy for long-term investment in a pooled, cross-sectional time-series regression. I find that research and development expense is decreasing in the age of the Chief Executive Officer. Results are consistent with the hypothesis that agency costs are lower when the firm invests myopically, rather than follow a standard net present value rule.

Utilizing a large sample of South Korean firms, this paper explores the impact of corporate governance in an emerging market country dominated by a few large business groups. Firms affiliated with the top five groups (chaebol) exhibit significantly lower performance and significantly higher sales growth relative to other firms. Furthermore, top executive turnover is unrelated to performance for top chaebol firms, indicating a breakdown of internal corporate governance for the largest business groups. Internal corporate governance appears much more effective for firms unrelated to the top chaebol as managers at poorly performing firms are significantly more likely to lose their job. These results imply that the lack of properly functioning internal corporate governance among the top chaebol, which dominate the Korean economy, may have increased the severity of the recent financial crisis.

This paper provides a quantitative theory for the recent rise in residual wage inequality consistent with the empirical observation that a sizable part of this increase has a transitory nature, a feature that eludes standard models based on ex ante heterogeneity in ability. An acceleration in the rate of quality improvement of equipment, like the one observed from the early 1970s, increases the productivity/quality differentials across machines (jobs). In a frictional labor market, this force translates into higher wage dispersion even among ex ante equal workers. With vintage-human capital, the acceleration reduces workers' capacity to transfer skills from old to new machines, generating a rise in the cross-sectional variance of skills, and therefore of wages. Through calibration, the paper shows that this mechanism can account for 30 percent of the surge in residual inequality in the U. S. economy (or for most of its transitory component). Two key implications of the theory—faster within-job wage growth and larger wage losses upon displacement—find empirical support in the data.

This study explores corporate responses to 1993 legislation that capped the corporate tax deductibility of top management compensation not qualified as “performance‐based.” Our analysis suggests that the cap may have created a focal point for salary compensation but had little effect on total compensation levels or growth rates at firms likely to be affected by the limit. There is little evidence that the policy significantly increased the performance sensitivity of chief executive officer (CEO) pay at affected firms. We conclude that corporate pay decisions have been relatively insulated from this policy intervention.

Studies attempting to link locational attributes and individual outcomes often focus on children or young adults, under the presumption that their location was exogenously determined by their parents. This strategy is more difficult to justify if parents migrate selectively and tend to transmit their own characteristics to their children. This paper uses Census microdata to document a strong link between selective migration in one generation and economic outcomes in the next. I show that selective migration is a possible explanation for a puzzle in the existing literature: the changing relationship between segregation levels and individual outcomes within the black population.