Brendan O'Flaherty

Up-or-Out Rules in the Market for Lawyers

We examine how up-or-out rules operate as a screening device in the market for lawyers. Using data on large New York law firms, we show that firm growth is a slow and uncertain process because performance as an associate is not an especially informative signal about whether a lawyer will make a good partner and because the costs of mistaken promotion are relatively high. A newly hired associate is unlikely to be a suitable partner and the screening process is relatively imprecise. Firm growth therefore contributes between 5%-7% of the present value of profits of a law firm.

On the Job Screening, up or out Rules, and Firm Growth

This paper uses on-the-job screening to derive a stochastic and dynamic model of hiring, promotion, and dismissal policies, and their impact on total firm employment and output. The model provides an explanation of the up-or-out rule observed in many organizations. It also provides an explanation for a cost-of-adjustment mechanism for the stock of human capital in a firm.(This abstract was borrowed from another version of this item.)

Land assembly and urban renewal

Abstract When a developer who wants to assemble several parcels of land to undertake a project with positive externalities cannot make a credible all-or-nothing offer, the optimal acquisition is unlikely to take place. Urban renewal is the traditional way to deal with this inefficiency. Urban renewal tries to correct a real problem, but it does not do so perfectly, or possibly even very well.

Globalization and the Rate of Technological Progress: What Track and Field Records Show

The past century and a quarter has seen frequent improvements in track and field records. We attempt to estimate what proportion of the speed of record breaking is due to globalization (competitors from more countries) and what proportion is due to technological progress (better equipment and training techniques). It appears that technological change is the chief driving force but that technological progress is improving the performance of seasoned elite athletes faster than it is improving the performance of adolescents. Both our results and our methods may have wider application.

Will Free Trade with Political Science Put Normative Economists out of Work

Telling governments what to do is an ancient and important tradition in economics. Predicting what governments will do, i.e., endogenizing policy, is a newer activity, but one of growing prominence. The two activities appear incompatible: if what governments do is the result somehow of equilibrium behavior of self-interested actors, then advising governments is as senseless an activity as advising monopolists to lower prices or advising the San Andreas fault to be quiet. We show why and how advising can sometimes be a sensible activity, even when we hold sophisticated views about how governments operate. Copyright 1997 Blackwell Publishers Ltd..

What Shocks Precipitate Homelessness

Income shocks appear to be the main shocks that precipitate homelessness. Rent shocks are less important. I am grateful to Lance Freeman, Sewin Chan, Jay Bainbridge and participants at the ColumbiaNYU conference on How to House the Homeless for helpful comments; to Adonis Antoniades for excellent research assistance; and the Russell Sage Foundation for financial support. Support from the Columbia Center on Homelessness Prevention Studies is gratefully acknowledged.

The option value of tax delinquency: Theory

Abstract How taxes are enforced matters. Current enforcement of real property taxes does not consider the option value of delinquency: the ultimate penalty is confiscation of property sometime in the future, but the value of the property to be confiscated is not known with certainty. If redemption fees are sufficiently small, it can be optimal to wait and see what the size of the penalty will be before paying taxes. We show how this can lead to excessive abandonment, and examine proposals for reform.

Need and generosity: how markets for free goods equilibrate

Abstract When more people use emergency food pantries or homeless shelters, how can an observer tell whether the change is being driven by greater need among users or greater generosity among donors? Why are serious and long-standing gluts and shortages relatively rare in both the emergency food system and the emergency shelter system? I answer both questions together by developing a model of the supply and demand for nonpriced goods. Quality plays the role in this model that price plays in standard model. Quality adjusts to “clear the market,” and observers can tell whether need or generosity is responsible for changes in quantity by looking at the accompanying changes in quality.

Do housing and social policies make households too small? Evidence from New York

How many adults should live in a house? How do people actually divide themselves up among households? Average household sizes vary substantially, both over time and in the cross-section. In New York City, we find that housing and income maintenance policies exert powerful influences on household size and composition -more powerful than race, culture, or ethnicity. These policies make households smaller (measured by number of adults). We review arguments why governments might want to influence household sizes, and discern no reason for trying to make households smaller than they would be in the absence of these housing and income maintenance policies. Small average household size can be extremely expensive in terms of physical and environmental resources, higher rents, and possibly homelessness. Our results indicate that New York City may well have too much of it.

Assessment and Prediction in Homelessness Services and Elsewhere

This article cautions against the naive use of predictive techniques by homelessness service providers. Prediction is hard and may be impossible. Prediction does not automatically lead to socially optimal assignments. On the other hand, mechanism design, which does not rely on top‐down predictions, can be used to good effect. Moreover, fairness counts as well as optimality—and may be easier to achieve. I use examples from fire service, central banking, police patrol, tax auditing, art, finance, soup kitchens and cadaveric organ allocation.