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We model a principal-firm offering training to its agent-worker under two alternative organizational structures: integration, where the principal retains authority to overrule the investment project recommended by the worker; and delegation, where the principal cannot overrule the worker's preferred investment project. We assume that training reduces the worker's effort cost of assembling information about alternative projects' payoffs and identify the conditions under which delegation increases the profit-maximizing intensity of training. Empirical estimates from matched employer-employee data show that workplaces delegating authority do provide more worker training. This result persists in two cross sections, in panel fixed-effect estimates and, critically, in an instrumental variable exercise that also controls for establishment fixed effects. (JEL D21.D22, D23, M53, M54), I. INTRODUCTION Delegation of decision-making allows employers to capture the superior knowledge and information of workers. The objective functions of workers, however, may differ sharply from those of their employers. [...]

Theory suggests that when workers choose between permanent and flexible contracts, their utility should tend to equalize across contract types. New estimates of job satisfaction show the critical role played by unmeasured worker heterogeneity. They reveal that flexible contracts are a strong negative determinant of satisfaction with job security but are often a positive determinant of other dimensions of job satisfaction. As a consequence, flexible contracts have either a weak negative influence or no influence on overall job satisfaction. Moreover, flexible contracts generally have no impact on overall life satisfaction of the employed. These results appear broadly consistent with the presence of equalizing differences. (JEL J28, J41), I. INTRODUCTION This article estimates the influence of flexible--more contingent--employment contracts on job satisfaction and life satisfaction. Hedonic labor market theory suggests that workers sort across contract types maximizing their [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.regsciurbeco.2009.03.004 Byline: John S. Heywood (a), Guangliang Ye (b) Keywords: Mixed oligopoly; Public enterprise; Spatial price discrimination Abstract: This paper is the first to examine the welfare consequences of foreign competition in a mixed oligopoly set in a linear model of spatial price discrimination. It demonstrates that the entry of a foreign firm often lowers domestic welfare. This results because the public firm locates largely independently of the presence of the foreign firm and because the profit earned by the foreign firm reduces domestic welfare. Privatization of the public firm typically lowers domestic welfare but can increase global welfare. Thus, domestic governments are unlikely to allow foreign entry and when they do, they are unlikely to privatize the public firm despite the potential rise in global welfare. Author Affiliation: (a) Department of Economics, University of Wisconsin-Milwaukee, P.O. Box 413, Milwaukee, WI 53201, USA (b) Lingnan (University) College, Sun Yat-Sen University, Guangzhou, 510275, China Article History: Received 30 June 2008; Revised 30 March 2009; Accepted 30 March 2009 Article Note: (footnote) [star] The authors thank two reviewers for helpful comments that improved the paper.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jebo.2009.04.011 Byline: John S. Heywood (a)(b), Uwe Jirjahn (c) Keywords: Profit sharing; 1/N problem; Team production Abstract: This paper presents a model showing that profit sharing is subject to the 1/N problem in the case of independent worker productivity but not in the case of interdependent worker productivity. This implies the role of firm size on the likelihood of profit sharing will differ by the nature of the underlying technology. We test this implication using German establishment data and using a proxy for interdependent worker productivity. The results conform to the theory showing that firm size is associated with reduced profit sharing use when technology is independent but not when technology is interdependent. Author Affiliation: (a) Department of Economics, University of Wisconsin-Milwaukee, Milwaukee, WI 53201, USA (b) Labor and Industrial Economics Group, Birmingham Business School, University of Birmingham, UK (c) Department of Economics, Institute for Labor Economics, University of Hanover, Germany Article History: Received 20 March 2008; Revised 20 April 2009; Accepted 22 April 2009

This paper is the first to examine the welfare consequences of a public firm in a traditional model of spatial price discrimination. It demonstrates that when a private firm acts as a Stackelberg location leader, the presence of a public firm always improves welfare. Moreover, when three firms locate sequentially, the presence of a public firm improves social welfare unless it locates last. Thus, despite examining a variety of location timings, including simultaneous location, privatization never improves welfare and usually harms welfare. This conclusion differs from several currently in the literature in which privatization often improves welfare. (JEL L13, L32, L33, L52), I. INTRODUCTION The idea that a public firm can regulate oligopolistic behavior dates at least to Merrill and Schneider (1966), and researchers since then have spent considerable effort isolating whether [...]

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-8586.2008.00301.x Byline: John S. Heywood (*), Guangliang Ye ([dagger]) Keywords: mixed duopoly; public enterprise; research and development and partial privatization Abstract: ABSTRACT This paper is the first to examine the incentive for partial privatization in a mixed duopoly with R&D rivalry. We show that because mixed duopolies engage in more R&D, the optimal extent of privatization is unambiguously reduced. Yet, this reduction is often very modest. Adopting the extent of privatization that would be optimal if one ignored the R&D rivalry routinely results in greater welfare than retaining a fully public firm and ignoring partial privatization. Only when R&D has an extremely low cost would it be preferable to ignore partial privatization. Author Affiliation: (*)Department of Economics, University of Wisconsin-Milwaukee, Milwaukee, Wisconsin, USA ([dagger])Research Institute of Economics and Management, Southwestern University of Economics and Finance, Chengdu, China Article note: Correspondence: J.S. Heywood, Department of Economics, University of Wisconsin-Milwaukee, P.O. Box 413, Milwaukee, WI 53201, USA. Email: heywood@uwm.edu. The authors thank the Scientific Research Foundation for Returned Overseas Chinese Scholars for Support.

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1468-0335.2007.00649.x Byline: COLIN GREEN ([dagger]), JOHN S. HEYWOOD ([double dagger]) Abstract: This paper investigates the influence of performance-related pay on several dimensions of job satisfaction. In cross-sectional estimates performance-related pay is associated with increased overall satisfaction, satisfaction with pay, satisfaction with job security and satisfaction with hours. It appears to be negatively associated with satisfaction with the work itself; yet, after accounting for worker fixed effects the positive associations remain and the negative association vanishes. These results appear robust to a variety of alternative specifications and support the notion that performance-related pay allows increased opportunities for worker optimization and does not generally demotivate workers or crowd out intrinsic motivation. Author Affiliation: ([dagger])Lancaster University ([double dagger])University of Wisconsin - Milwaukee and University of Birmingham Article History: Final version received 29 March 2007.

This paper examines the consequences of a Stackelberg leader merging with followers when costs are convex. Such mergers are always profitable for the participants, and the followers often do better merging than remaining excluded rivals. This resolution of the merger paradox cannot be generated either by Stackelberg leadership without convex costs or by convex costs without leadership. In addition, with convex costs, a merger with the leader can actually harm excluded rivals (suggesting why they might object to the merger) and increase social welfare. JEL Classification: L12, L13, 1. Introduction In the canonical model of the merger paradox, two firms with linear costs never have an incentive to merge as long as there remains even a single rival [...]

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1475-4932.2007.00392.x Byline: SCOTT J. ADAMS (1), JOHN S. HEYWOOD (1) Keywords: J13; J33 Abstract: The factors affecting age of hiring are estimated using Australian establishment data. Lower ages of new hires are associated with training and with workplaces using steeper tenure-wage profiles. Lower ages of hires are associated with steeper profiles throughout the age of hire distribution, whereas lower ages of hires are associated with the provision of training only among younger hires. Moreover, the evidence confirms that larger employers are more likely to hire younger workers but that lower ages of hire continue to be associated with steeper tenure-wage profiles even among larger employers. The robust role of the tenure-wage profile suggests that it is too early to conclude, as some have, that specific training is the paramount reason for the reduced hiring prospects of the old. Author Affiliation: (1)Department of Economics and Graduate Program in Human Resources and Labor Relations, University of Wisconsin-Milwaukee, Milwaukee, Wisconsin, USA Article note: Correspondence: John S. Heywood, Department of Economics, University of Wisconsin-Milwaukee, PO Box 413, Milwaukee, WI 53201, USA. Email: heywood@uwm.edu

Returning to the contention that convex costs provide a resolution to the merger paradox, we show that for reasonable degrees of convexity, the minimum market share needed for merger to be profitable remains close to that associated with linear costs. Moreover, convex costs do not eliminate the free rider problem identified as part of the merger paradox. Finally, we retain convex costs while modeling a firm-by-firm sequential merger process, showing that the paradox constrains a larger share of potential mergers. These findings help reduce the relevance of convex costs as a resolution to the merger paradox. (JEL L12, L13), I. INTRODUCTION A simple canonical model published in the early 1980s suggests that mergers are rarely profitable for potential participants. Salant, Switzer, and Reynolds (1983) examined a model of n-identical [...]

This paper examines for the first time the role of unionization as a determinant of plant closings in Canada. Using the 1999 to 2001 Canadian Workplace and Employee Survey, the paper contributes to the North American evidence by showing that the share of a plant's workers covered by collective bargaining has a robust positive partial correlation with the probability of larger plants closing. For smaller plants, the extent of unionization tends to be much lower and its variation plays no role in plant closure. The study highlights the theoretical and statistical importance of examining closure separately for large and small plants

A comparative analysis between output-based payment and time rates payment is presented. It is observed that racial or gender earnings discrimination is more likely in time rates payment and supervisory evaluations.

We investigate the desire of nonunion workers in Great Britain to become represented by unions. Comparing our results to those from the United States, we find that workers in Great Britain are less likely to desire unionization and express lower dissatisfaction with their influence at work. The determinants of the desire for unionization are estimated controlling for a wide variety of individual and workplace variables. The roles of human resource management and employee involvement are isolated. We identify direct workplace and worker-level effects of these practices in reducing the desire for unionization and an indirect effect operating through the influence of employee relations, a major determinant of the desire for unionization. Also, we identify characteristics of co-workers that are associated with desire for unionization and examine the role information revelation may play in managerial strategies to forestall unions., I. Introduction Using the extensive data of the United States Workplace Representation and Participation Survey, Freeman and Rogers (1999) provide an answer to the provocative question 'what do workers want?' [...]

The consequences of a demand constraint (low willingness to pay) are examined in a model of merger by spatial price discriminators. The imposition of a demand constraint reduces the extent of inefficiency associated with merger and also eliminates the resolution of the merger paradox obtained in the earlier, unconstrained case. Moreover, with the introduction of a demand constraint, a tax on transport cost can actually improve efficiency, which is never the case in the absence of the demand constraint. Indeed, the optimal tax often eliminates all spatial price competition by creating local monopolies. (JEL D43, L41), I. INTRODUCTION Studies of merger activity in models of spatial price discrimination conventionally assume that pricing by firms is not constrained by demand. Instead, the only constraints on the discriminatory [...]

In this paper, we exploit the longitudinal element of the 1990 and 1998 Workplace Employee Relations Surveys for Britain to investigate the effect of unionism on establishment closings. Contrary to both recent U.S. research and long-standing British work, we find a strong positive association between two measures of unionism--union recognition for collective bargaining purposes and union coverage--and plant closings. This association is robust to the inclusion of highly detailed industry controls but is driven by plants that are parts of multiestablishment entities. No such relationship obtains in the case of single-plant enterprises. In explaining our findings, we address their consistency with the widely perceived reduction in the 'disadvantages of (British) unionism' in recent years., 1. Introduction The effect of unions on establishment closings is an important but poorly developed theme in empirical labor economics. This is unfortunate because the association may assist our understanding [...]

This papers compares U.S. findings on the influence of management giving higher supplements to nonunion members when there is a threat of unionization with analysis in the UK labour market.

Alternative theories such as the discrimination in the workplace can help explain the relationship between women's employment and piece rates. Gender segregation could explain part of the relationship. This theory claims that women who worked at jobs related to their tasks at home could be paid through piece rates. Discrimination in the workplace offers another explanation in that women are paid by piece rates due to shorter employment.

In the presence of job matching, the returns to education signals are shown to decline in value as additional work experience allows more direct observation of productivity. This is tested [...]

I. Introduction Federal merger guidelines recognize that when sellers are spatially dispersed, the 'closeness' of competitors can be crucial in evaluating the welfare consequences of a merger.(1) This recognition makes [...]

A model reflects the activity between a government that maximizes tax revenue and a spatial monopolist that maximizes profit. The model assumes the government utilizes a per-unit output tax and a transport tax, while the monopolist is able to strategically change its location and mode of transport. The model demonstrates that if the government is only allowed to use one tax instrument, it would use a per-unit output tax as this forces the monopolist to use inefficient strategic choices in order to avoid profit losses.

Downstream companies can use a convex cost function to force upstream firms to lower input prices. This can be attributed to the downstream firm's capability in using wasteful technology to maximize earnings from infra-marginal units. However, the firm must face inelastic demand and must have a fixed proportion technology. The incentive for vertical control will continue if downstream marginal costs increase.

Past research on the federal sector job queue fails to incorporate the important role of unionization. We estimate a two-stage bivariate probit in which the willingness of a worker to queue for a union job enters the estimation of the federal queue. We demonstrate that the failure to implement our approach may lead to the inappropriate conclusion that there does not exist a federal queue in the US labour market. We identify the characteristics that lead workers to seek employment in the federal sector and, as a byproduct, also provide independent confirmation of the presence of a queue for union jobs.

The racial component of unemployed workers waiting for an opening in a unionized firm is analyzed. It is shown that racial minorities, notably blacks, compose a big portion of applicants in the unionized sector. Reasons for this include the relatively higher wages for minorities in firms with labor unions and the greater abundance of jobs for such minorities in firms which do not discriminate against colored workers.

Previous estimates of state and local government wage differentials have been typically based on data aggregated across all states, and such aggregation may produce misleading differential estimates. We estimate intrastate earnings differentials for the state and local sectors in Wisconsin, four other midwestern states, and two states outside the midwest. There is substantial variation in the differentials: aggregated differentials can be misleading. Our work also confirms that state and local government labor markets have reduced earnings dispersion and investigates the possibility that higher public sector earnings may attract an 'over-qualified' work force. (Reprinted by permission of the publisher.)

Analysis of a series of aggregates across corresponding occupations in Wisconsin provides proof of premiums available to state and local government workers when compared to workers in the private sector. This premium is not due to the agglomeration of government workers in high-wage urban areas. Despite several shortcomings in this methodology, the feasibility of the projects that can be completed using wage survey information is confirmed.

Federal employment determination is analyzed via the use of bivariate probit with partial observability models. The model that includes size variables in both the decision to search for federal employment and the decision to be selected from the queue does not indicate the existence of a queue for US federal jobs. The reverse is true for the model that ignores size variables.

I. Introduction Negotiated standard wage policies reduce dispersion in the log earnings of union members when compared to those of otherwise equal nonunion members |5; 6~. As large as these [...]

The relationship between reservation wages of union jobs and the workers' decision to queue for a union sector job is analyzed using data relating to a set of unemployed, semi-skilled workers. Queueing decisions are found to result in a reservation wage formation process distinct from that of workers' not queueing for a union job. Furthermore, workers with the highest estimated reservation wage differences are more likely to queue. For that matter, women and minorities are also found to be more likely to queue for union jobs than others.

Bivariate probit estimates with partial observability identify the factors influencing the worker's decision to seek a state or local government job and the factors influencing the government's decision to hire particular workers. The estimates routinely confirm the presence of a local job queue but confirm the presence of a state job queue only when the role of unionization is explicitly recognized. Our results suggest that the net benefits from local and state government employment are greater than those from private sector employment. The estimates also indicate that local governments disproportionately hire racial miinorities relative to the local governments' pool of applicants but indicate no such relationship for state governments. (Reprinted by permission of the publisher.)

This volume collects the proceedings of a 1989 conference held at the Federal Reserve Bank of Cleveland. The volume editors present an empirical puzzle which they hope the collected papers [...]

I. Introduction Academic work suggests that incentive schemes, such as piece-rates, economize on the monitoring of shirking while still eliciting additional effort. This additional effort is expected to result in [...]

By David Fairris. London: Routledge, 1997. 234 pp. $65. The fight by unions for better wages and benefits has been repackaged so often that even the wine skins are old. [...]

The analysis of data from the Workplace Employment Relations Survey of 1998, to model the work-life balance achieved as a result of the implementation of family friendly work practices by British firms, is presented.

The US data demonstrates that men and women value job flexibility differently and that once differences in the extent of job flexibility are accounted for, the gender composition of the workplace plays no role in determining the job satisfaction of women. Results revealed that women in female dominated workplaces might report higher job satisfaction because they value job flexibility and so choose to dominate the workplaces that provide job flexibility.

The paper presents a spatial model in which a foreign firm and local government behave strategically in setting a local equity requirement (LER). Contrary to simple intuition, larger equity requirements may increase economic efficiency, but this conclusion is highly sensitive to the vertical structure of the foreign firm. When the foreign firm has monopoly power in both foreign (upstream) and domestic (downstream) markets, the optimal equity requirement is zero. Surprisingly, the introduction of domestic competition upstream causes the government to adopt a LER which lowers economic efficiency.

A government authority regulates an upstream monopolist only if there is a sufficient welfare increase to justify doing so. A downstream firm strategically increases costs in order to force regulation upstream. The decision to regulate increases profit downstream, reduces profit upstream and reduces welfare relative to a model with no possibility for welfare-enhancing regulation.

John S. Heywood [*] Kristen Monaco [+] R. Rothschild [++] The consequences of merger are analyzed in an N-firm model of spatial price discrimination. The merger occurs with known probability [...]

A model of threat-induced nonunion wage supplements is developed in which worker support of unionization depends on both the relative wage between sectors and the likelihood of retaining employment after [...]

We show that West German workers with an internal locus of control sort into jobs with performance appraisals. Appraisals provide workers who believe they control their environment a tool to demonstrate their value and achieve their goals. We confirm that workers who are risk tolerant also sort into jobs with performance appraisals but explain why the influence of the locus of control and risk tolerance should not be additive. We demonstrate this by estimating a routinely large and significantly negative interaction in our sorting equations. We also show that important patterns of sorting are revealed only when taking into account the interaction of locus of control and risk tolerance. [ABSTRACT FROM AUTHOR]

A canonical Cournot competition model shows that the profitability of training can increase as the number of competitors decreases. British establishment evidence from 1998, 2004, and 2011 confirms that firms in less competitive markets provide more formal training. This persists within three separate cross-sections and in two separate panel estimates. It persists with alternative measures of training, with alternative measures of market competition and in estimates designed to account for endogeneity. These results suggest that a dominant product market position, indeed, increases the incentives to invest in training. [ABSTRACT FROM AUTHOR]