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Review of Economic Studies Vol. 87 No. 5 2020

Commitment in Organizations and the Competition for Talent

Thomas Cooley1; Ramon Marimon2; Vincenzo Quadrini3

1 Stern School of Business, New York University, and NBER · 2 European University Institute, UPF - BarcelonaGSE, CEPR and NBER · 3 University of Southern California and CEPR

Abstract

We show that a change in organizational structure from partnerships to public companies—which weakens contractual commitment—can lead to higher investment in high return-and-risk activities, higher productivity (value added per employee) and greater income dispersion (inequality). These predictions are consistent with the observed evolution of the financial sector where the switch from partnerships to public companies has been especially important in the decades that preceded the 21st Century financial crisis.

DOI
10.1093/restud/rdaa008
Volume
87
Issue
5
Pages
2165-2204
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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