Hierarchies allow individuals to leverage their knowledge through others' time. This mechanism increases productivity and amplifies the impact of skill heterogeneity on earnings inequality. To quantify this effect, we analyze the earnings and organization of U.S. lawyers and use the equilibrium...

Should a social program be run at a higher or lower level of government? We consider a government-run program supplying a private good to consumers. We focus on a tradeoff between the advantage of a high level of government in resource allocation and its disadvantage in consumer information. We...

The intensity of supervision, defined as the proportion of supervisors to bottom-rank productive workers, differs widely across organizations and nations. Analysing three monitoring systems that differ in their supervision intensity, I show that the possibility of collective shirking...

Recent years have witnessed an enormous amount of reorganization of the corporate sector in the US and in Europe. This paper examines the role of market competition for this trend in corporate reorganization. We find that at intermediate levels of competition the CEO of the corporation decides...

Social capital is often defined as consisting of trust and post materialist values on the one hand, and social networks on the other. From an institutionalist point of view this concept is not convincing. Norms (i.e. informal institutions) can combine with different governance modes, not only...