This paper examines hierarchies’ role in the organization of human-capital-intensive productionWe develop an equilibrium model of hierarchical organization, then provide empirical evidenceusing confidential data on thousands of law offices from the 1992 Census of Services. We showhow the...

Garicano and Rossi-Hansberg (2003) show that knowledge-based hierarchies arecharacterized by positive sorting between workers and managers when knowledgeacquisition takes place before production. We extend the analysis and find thatcomplementarities between manager and worker skill are even...

A large theoretical literature focuses on the question: What determines firms’ boundaries?Recently, Garicano and Santos and Holmstrom and Milgrom have proposed theories in whichfirms’ boundaries reflect the division of labor across individuals. This paper discussesstrategies for generating...

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

Earnings inequality has increased substantially since the 1970s. Using evidence changes from con…dential Census data on U.S. law offices on lawyers'organization and earnings, we study the extent to which the mechanism suggested by Lucas (1978) and Rosen (1982), a scale of operations effect...

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...

What is the role of firms and markets in mediating the division of labor? This paper uses confidential microdata from the Census of Services to examine law firms' boundaries. We find that firms' field scope narrows as market size increases and individuals specialize, indicating that firms'...

What is the role of firms and markets in mediating the division of labor? This paper uses confidential microdata from the Census of Services to examine law firms' boundaries. We find that firms' field scope narrows as market size increases and individuals specialize, indicating that firms'...

Earnings inequality has increased substantially since the 1970s. Using evidence from confidential Census data on U.S. law offices on lawyers' organization and earnings, we study the extent to which the mechanism suggested by Lucas (1978) and Rosen (1982), a scale of operations effect linking...