Alan Benson

Firm-Sponsored General Education and Mobility Frictions: Evidence from Hospital Sponsorship of Nursing Schools and Faculty

This study asks why hospitals provide direct financial support to nursing schools and faculty. This support is striking because nursing education is clearly general, clearly paid by the firm, and information asymmetries appear minimal. Using AHA and survey data, I find hospitals employing a greater share of their MSAs registered nurses are more likely to provide direct financial support to nursing schools and faculty, net of size and other institutional controls. Given the institutional context, I interpret this result as unusually specific evidence that technologically general skill training may be made de facto-specific by imperfect and costly mobility.

Rethinking the Two-Body Problem: The Segregation of Women Into Geographically Dispersed Occupations

Empirical research on the family cites the tendency for couples to relocate for husbands’ careers as evidence against the gender neutrality of household economic decisions. For these studies, occupational segregation is a concern because occupations are not random by sex and mobility is not random by occupation. I find that the tendency for households to relocate for husbands’ careers is better explained by the segregation of women into geographically dispersed occupations rather than by the direct prioritization of men’s careers. Among never-married workers, women relocate for work less often than men, and the gender effect disappears after occupational segregation is accounted for. Although most two-earner families feature husbands in geographically clustered jobs involving frequent relocation for work, families are no less likely to relocate for work when it belongs to the wife. I conclude that future research in household mobility should treat occupational segregation occurring prior to marriage rather than gender bias within married couples as the primary explanation for the prioritization of husbands’ careers in household mobility decisions.

Labor Market Trends Among Registered Nurses: 2008-2011

This study uses recent data from the Bureau of Labor Statistics (BLS) and Registered Nurses (RNs) licensing exam to examine the recession’s effect on the RN labor market. It then reports results of a survey of 518 hospital nursing officers conducted in 2008 and 2010 matched with institutional data from the American Hospital Association (AHA). These unique data show how the recession led hospitals to slow hiring despite accelerating attrition of retirement-age nurses; shift away from H1-B, agency, and, overtime work; and reduce training, and other benefits for new hires. More broadly, results show how nurse-staffing practices adapt to market conditions. Results also suggest reduced hospital support for nursing education may strain the supply of managerial and specialty nurses as baby-boom nurses retire.

The Value of Employer Reputation in the Absence of Contract Enforcement: A Randomized Experiment

In two experiments, we examine the effects of employer reputation in an online labor market in which employers may decline to pay workers while keeping the work product. In the first experiment, a blinded worker performs tasks posted by employers with good, bad, or no online reputations. Results confirm that reputation provides information on task completion time and nonpayment, and thereby effective wage rates. In the second experiment, we create multiple employer identities endowed with different exogenously introduced reputations. We find that employers with good reputations attract workers at nearly twice the rate as those with bad reputations with no discernible difference in quality. We interpret these results through the lens of an equilibrium search model in which the threat of a bad reputation deters employers from the abuse of authority even in the absence of contractual protections of workers.

The Long Haul Effects of Interest Arbitration: The Case of New York State's Taylor Law

The authors examine debates about the effects of mandatory interest arbitration on police and firefighters in New York State under the Taylor Law from 1974 to 2007. Comparing experience with interest arbitration in the first three years after the law was adopted with experiences from 1995 to 2007, the authors find that no strikes occurred under arbitration and that rates of dependence on arbitration declined considerably. Moreover, the effectiveness of mediation prior to and during arbitration remained high, the tripartite arbitration structure continued to foster discussion of options for resolution among arbitration panel members, and wage increases awarded under arbitration matched those negotiated voluntarily by the parties. Econometric estimates of the effects of interest arbitration on wage changes in a national sample suggest wage increases differed little in states with arbitration from those without it. The authors therefore propose a role for interest arbitration in national labor policy.

Dropouts, Taxes and Risk: The Economic Return to College under Realistic Assumptions

Most published estimates of the economic return to college rest on a series of best-case assumptions that often overstate returns and, most importantly, obscure differences in return across different institutions. We simulate the economic return to college under more realistic assumptions using U.S. Census data combined with administrative data from the more selective University of California system and the less selective California State University system. Specifically, we adjust for delayed graduations, the probability of dropping out, progressive taxes on earned income, and risk aversion. We perform a bounding exercise for ability bias. These each reduce expected returns to a Bachelor’s degree. Contrary to prior “best case” estimates, and under reasonable bounds for the ability bias, we find that the return to a college degree in 2010 could be less than the interest on unsubsidized Stafford loans. Returns are particularly modest for young men at the less-selective CSU system, largely due to high dropout rates, delayed graduation, and a lower effect on labor force participation compared to women. Our analysis begins to bridge the gap between standard estimates of the economic return to college and the institutional performance metrics reported in the Obama Administration’s College Scorecard.

Do Agents Game Their Agents' Behavior? Evidence from Sales Managers

This paper examines how sales managers, acting as agents of the firm, game the staffing and incentives of their subordinates. Sales managers on a quota’s cusp have a unique personal incentive to retain and lower quotas for poor-performing subordinates, allowing one to isolate a manager’s interest from the firm’s. Using microdata from 244 firms that subscribe to a cloud-based service for processing sales compensation, I estimate that 13%–15% of both quota adjustments and retentions among poor performers are explained by managers’ incentives around quotas. Although a minority of poor performers are subsequently terminated or transferred, most are retained indefinitely.

Promotions and the Peter Principle

The best worker is not always the best candidate for manager. In these cases, do firms promote the best potential manager or the best worker in her current job? Using microdata on the performance of sales workers at 214 firms, we find evidence consistent with the “Peter Principle,” which predicts that firms prioritize current job performance in promotion decisions at the expense of other observable characteristics that better predict managerial performance. We estimate that the costs of promoting workers with lower managerial potential are high, suggesting either that firms are making inefficient promotion decisions or that the benefits of promotion-based incentives are great enough to justify the costs of managerial mismatch.

Are Bonus Pools Driven by their Incentive Effects? Evidence from Fluctuations in Gainsharing Incentives

Bonus pools, in which a worker’s realized bonus depends both on a worker’s share of the pool (which serves as the incentive) and on the size of the pool (which is largely outside of the worker’s control), are a common method for distributing incentive pay. Using data on the variation in the size of the bonus pool generated by a US manufacturing plant’s gainsharing plan, which varies incentives for quality and worker engagement, the authors evaluate the conditions under which such bonuses have incentive effects. Overall, results are cautionary: The evidence suggests gainsharing’s benefits operate outside of the incentive channel, and incentives may backfire if they are too small or too diluted by group performance metrics. The authors illustrate how random variation in the size of bonus pools offers researchers a powerful, readily available, and underused tool for studying how workers respond to the availability and strength of incentives.

Plantwide Incentives for Plantwide Quality: Do They Work?

This paper examines whether plantwide incentives for quality actually have incentive effects, a puzzle because high level incentives are common but potentially vulnerable to freeriding and other obstacles. We exploit a natural experiment embedded in a common but economically peculiar feature of self-funded incentives distributed under a gainsharing plan: the plants variable costs create exogenous variation in the eligibility and magnitude of incentives. Although incentives are salient and potentially large, and despite sufficient statistical power to detect differences quality-related item returns within 1% (on an 8.5% overall rate), we find evidence that item returns stays the same in weeks there is an incentive for quality, and may actually rise when incentives are small. We interpret this as evidence that the strict incentive effects of such plantwide programs are ineffective or possibly counterproductive, at least by their intended mechanism. Rather, the effectiveness of gainsharing plans may rest on programs typically adopted simultaneously or through a sense of shared ownership that is imparted regardless of whether employees are eligible for incentives.