Some recent papers of interest

Persistent Social Networks: Civil War Veterans who Fought Together Co-Locate in Later Life

by Dora L. Costa, Matthew E. Kahn, Christopher Roudiez, Sven Wilson  –  #22397 (AG DAE HE)


At the end of the U.S Civil War, veterans had to choose whether to

return to their prewar communities or move to new areas.  The late

19th Century was a time of sharp urban growth as workers sought out

the economic opportunities offered by cities.  By estimating discrete

choice migration models, we quantify the tradeoffs that veterans

faced. Veterans were less likely to move far from their origin and

avoided urban immigrant areas and high mortality risk areas.  They

also avoided areas that opposed the Civil War. Veterans were more

likely to move to a neighborhood or a county where men from their

same war company lived.  This co-location evidence highlights the

existence of persistent social networks.  Such social networks had

long-term consequences:  veterans living close to war time friends

enjoyed a longer life.

CEO Pay and the rise of Relative Performance Contracts: A

Question of Governance?

by Brian Bell, John Van Reenen  –  #22407 (CF LS)


Would moving to relative performance contracts improve the alignment

between CEO pay and performance? To address this we exploit the large

rise in relative performance awards and the share of equity pay in

the UK over the last two decades.  Using new employer-employee

matched datasets we find that the CEO pay-performance relationship

remains asymmetric:  pay responds more to increases in shareholders’

return performance than to decreases.  Further, this asymmetry is

stronger when governance appears weak. Second, there is substantial

“pay-for-luck” as remuneration increases with random positive shocks,

even when the CEO has equity awards that explicitly condition on firm

performance relative to peer firms in the same sector. A reason why

relative performance pay fails to deal with pay for luck is that CEOs

who fail to meet the terms of their past performance awards are able

to obtain more generous new equity rewards in the future.  Moreover,

this “compensation effect” is stronger when the firm has weak

corporate governance.  These findings suggest that reforms to the

formal structure of CEO pay contracts are unlikely to align

incentives in the absence of strong shareholder governance.

Can Paying Firms Quicker Affect Aggregate Employment?

by Jean-Noel Barrot, Ramana Nanda  –  #22420 (CF LS PE PR)


In 2011, the federal government accelerated payments to their small

business contractors, spanning virtually every county and industry in

the US.  We study the impact of this reform on county-sector

employment growth over the subsequent three years.  Despite firms

being paid just 15 days sooner, we find payroll increased 10 cents

for each accelerated dollar, with two-thirds of the effect coming

from an increase in new hires and the balance from an increase in

earnings.  Importantly, however, we document substantial crowding out

of non-treated firms employment, particularly in counties with low

rates of unemployment. Our results highlight an important channel

through which financing constraints can be alleviated for small

firms, but also emphasize the general-equilibrium effects of

large-scale interventions, which can lead to a substantially lower

net impact on aggregate outcomes.

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paul frijters
paul frijters
5 years ago

People with friends live longer than people without friends; bosses help themselves to the wealth of their companies; and if the circumstances improve for a sub-set of firms, their competitors suffer.

Nichts neues im Westen! :-)

paul frijters
paul frijters
5 years ago

Hi Nick,

sure. “nichts neues im Westen” is a well-known German saying best translated as ‘All quiet on the Western front’, ie the notion that the war was in the East and that nothing much happened in the West.

I was hence (playfully, I hope) suggesting that these papers were not saying anything that we havent heard many many many times already from the nber and other economics outlets from West of Germany (the UK and the US).