Sustained rents in imperfect labor markets : essays on recruitment, training, and incentives

Abstract

This thesis is composed of three papers, each relating to labor market imperfections and their implications for firms' staffing practices. In the first paper, I examine why hospitals provide direct financial support to nursing schools and faculty. This support is striking because nursing education is clearly general, clearly paid by the firm, and information asymmetries appear minimal. Using AHA and survey data, I find hospitals employing a greater share of their MSA's registered nurses are more likely to provide such support, net of size and other institutional controls. I interpret this result as evidence that technologically-general skills training may be made defacto-specific by mobility frictions. In the second paper, I present a theory of couples' job search whereby women sort into lowerpaying geographically-dispersed occupations due to expectations of future spouses' geographically-clustered occupations and (thereby) inability to relocate for work. Results confirm men segregate into geographically-clustered occupations, and that these occupations involve more-frequent early career relocations for both sexes. I also find that the minority of the men and women who depart from this equilibrium experience delayed marriage, higher divorce, and lower earnings. Results are consistent with the theory's implication that marriage and mobility expectations foment a self-fulfilling pattern of occupational segregation, with individual departures deterred by earnings and marriage penalties. In the third paper, I examine the use and misuse of authority and incentives in organizational hierarchies. Through a principal-supervisor-agent model inspired by sales settings, I propose organizations delegate authority over salespeople to front-line sales mangers because they can decompose performance measures into ability and luck. The model yields the result that managers on the cusp of a quota have a unique personal incentive to retain and adjust quotas for poor performing subordinates, permitting me to distinguish managers' interests from those of the firm. I parametrically estimate the model using detailed person-transaction-level microdata from 244 firms that subscribe to a "cloud"-based service for automating transaction processing and compensation. I estimate 13-15% of quota adjustments and retentions among poor performers are explained by the managers' unique personal interest in meeting a quota. I use agency theory to evaluate firms' mitigation practices.