Between 1960 and 1990 Japanese labor productivity rose from 27 percent of the U.S. to 87 percent. These productivity gains are associated with large variations in Japanese TFP. We find that movements in Japanese TFP are associated with prior movements in U.S. R&D expenditures. Model simulations...

We attempt to formulate and explain two types of self-fulfilling prophecy, called the Pygmalion effect (if a supervisor thinks her subordinates will succeed, they are more likely to succeed) and the Galatea effect (if a person thinks he will succeed, he is more likely to succeed). To this...

We consider a model with two countries in which each government redistributes income between two types of individuals (the rich and the poor). This model shows that an increase in the mobility of individuals induces intensive tax competition across countries and lowers the level of...

Abstract This paper studies the optimal organizational form and the optimal type of manager by considering the nonmaterial (psychological) payoff as well as the standard material payoff for agents. I compare two organizational forms: T-form, where all agents have the same job title so that they...

We build a general equilibrium model of monopolistic competition with moral hazard contracting to examine the interactions among skill-biased technological change (SBTC), organizational changes, and skill premium and within-group wage inequality. While the existing literature finds that the...

This paper develops a simple growth model with moral hazard contracting to examine the interactions between the organizational mode of firms and economic productivity growth. The organizational mode of firms differs in terms of the degree to which decisions of R&D investment are delegated to a...