John D. Leeth

Compensating wage differentials for fatal injury risk in Australia, Japan, and the United States

Our research infers the effects of institutionalized wage setting and lengthy worker-firm attachment by comparing estimated compensating wage differentials for fatal injury risk in Japanese, Australian, and U.S. manufacturing. Hedonic labor market equilibrium regressions for Japan reveal a statistically fragile compensating wage differential of 0% to 1.4% for exposure to the average fatality risk compared to employment in a perfectly safe workplace. Australian workers receive a statistically robust 2.5% estimated wage premium. Using new data on work-related fatalities, we find a 1% compensating wage differential in U.S. manufacturing that becomes more positive and statistically less significant as data are aggregated.

Are Female Executives Over-Represented in Precarious Leadership Positions?

We use a sample of CEO appointments at US corporations over the years 1992–2004 to test the ‘glass cliff’ hypothesis, which posits that females are appointed to leadership positions at firms that are in a precarious financial condition. Our analysis utilizes three measures of stock-price-based financial performance and two distinct control samples of appointments of males to the CEO position. We find that corporate performance preceding CEO appointments tends to favor females, implying that females (males) are appointed to the CEO position largely at times when the firm is in relatively better (worse) financial health. Disaggregating the data by appointments in up versus down markets, at high-risk versus low-risk firms, and by calendar time yield similar conclusions. There appears to be no glass cliff facing female CEOs at US firms. Our findings suggest a need for additional research to identify where and for what types of positions this phenomenon is prevalent.

Compensating Wage Differentials for Fatal and Nonfatal Injury Risk by Gender and Race

Our research examines risk compensation by gender and race using occupation, gender, and race specific fatal and nonfatal injury rates and a data set sufficiently large to produce accurate estimates across fairly narrow groups. The data provide strong evidence that men earn compensating differentials for both fatal and nonfatal injury risk and women earn compensating differentials for nonfatal injury risk. Female wage premiums for nonfatal injury risk exceed male wage premiums by a factor of more than three. Nonfatal injury risk compensation is widespread among the various demographic groups although largest for white women. Fatal injury risk compensation is more isolated with only white and Hispanic males earning significantly higher pay for greater amounts of fatal injury risk.

The Impact of Takeovers on Shareholder Wealth during the 1920s Merger Wave

We examine the impact of merger announcements on protfolios of acquiring firm and target firm common stock from 1919 to 1930. despite vast changes in the economic and regulatory environment, overall acquisition profitability has remained remarkably constant over the last 70 and 80 years. Target firm shareholders in the 1920s clearly gained from takeovers, averaging abnormal retruns in excess of 15%, while acquiring firm shareholders essentially broke even. synergistic or monopolistic gains from consolidation were minimal. Unlike the more recent experience, target firm and acquiring firm abnormal returns were largely unaffected by the mode of acquisition, the means of financing, or the degree of industrial relatedness.

Gender differences in CEO compensation: evidence from the USA

Purpose – To provide insights into the experience of women aspiring to the CEO position, particularly regarding qualifications and compensation expectations.Design/methodology/approach – The ExecuComp database of executives at 1,500 large US corporations from 1992 to 2004 was used to identify women CEOs and to examine gender differences in compensation of executives over that period. Additional information about the backgrounds of female CEOs was collected from company press releases and regulatory filings.Findings – Women are not as highly compensated as men before becoming CEO but the few who reach the CEO position receive similar compensation as men. While women CEOs are younger on average than men, they have impressive work experience and education.Research limitations/implications – The study covers relatively large US companies that are publicly traded; thus, smaller firms and privately‐held firms are not included.Practical implications – Impressive work experience, usually from within the company, ...

The success of mergers in the 1920s : A stock market appraisal of the second merger wave

Abstract This paper examines the impact on acquiring firm shareholder wealth of mergers during the oligopoly merger wave of the 1920s. These acquisitions were relatively unregulated; the Securities and Exchange Commission did not exist and antitrust laws were only loosely enforced. Although the lack of financial market controls and the possibility of monopoly gains should have permitted acquiring companies to capture large take-over profits, stock price data on 134 firms indicate only modest success. The average profitability of an acquisition in the 1920s does not differ from the profitability resulting from mergers in the 1960s and 1970s, despite vast differences in the economic environments.

The impact of mergers on acquiring firm shareholder wealth: The 1905–1930 experience

From the standpoint of investors successful acquisitions increase profitability and stock Contemporary studies find acquiring firm shareholders earning small gains before and large losses after consolidation. Using modern financial market procedures, we examine a portfolio of 191 acquiring firms from 1905 to 1930 to determine the impact on firm owners of early industrial acquisitions in the United States and the effect of institutional changes on takeover gains. Acquisitions from 1905 to 1930 raised shareholder wealth by more than 3 percent, an increase exceeding gains from more recent mergers. Stock price continued to rise after completion for acquisitions before World War I, but fell dramatically for acquisitions during the oligopoly merger wave of the late 1920s.

Simulating Hedonic Labor Market Models: Computational Issues and Policy Applications

This research demonstrates that much useful quantitative information concerning hedonic labor market equilibrium and the effects of disturbances to it can be obtained through the use of numerical simulation analysis. In particular, the authors (1) explore the general problems involved in numerically simulating hedonic labor market equilibrium; (2) determin e the sensitivity of wages to changes in the parameter values of the underlying structural equations; and (3) examine the labor market and economic welfare implications of some straightforward policy alternatives, including a tax on the firm based on its industrial injury experience. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Hedonic Wage Equilibrium: Theory, Evidence and Policy

We examine theoretically and empirically the properties of the equilibrium wage function and its implications for policy. Our emphasis is on how the researcher approaches economic and policy questions when there is labor market heterogeneity leading to a set of wages. We focus on the application where hedonic models have been most successful at clarifying policy relevant outcomes and policy effects, that of the wage premia for fatal injury risk. Estimates of the overall hedonic locus we discuss imply the so-called value of a statistical life (VSL) that is useful as the benefit value in a cost-effectiveness calculation of government programs to enhance personal safety. Additional econometric results described are the multiple dimensions of heterogeneity in VSL, including by age and consumption plans, the latent trait that affects wages and job safety setting choice, and family income. Simulations of hedonic market outcomes are also valuable research tools. To demonstrate the additional usefulness of giving detail to the underlying structure we not only develop the issue of welfare comparisons theoretically but also illustrate how numerical simulations of the underlying structure can also be informative. Using a reasonable set of primitives we see that job safety regulations are much more limited in their potential for improving workplace safety efficiently compared to mandatory injury insurance with experience rated premiums. The simulations reveal how regulations incent some workers to take more dangerous jobs, while workers’ compensation insurance does not (or less so).

Value of a Statistical Life

Although several approaches exist to determine life-saving benefits, economists most often rely on estimates of how much workers or consumers implicitly pay to avoid exposure to some hazard that may result in death. Because the approach relies on risk reduction and not certain death, economists refer to the resulting estimates as the value of a statistical life (VSL). VSLs provide policymakers a method to value the benefits of policies that reduce risk by small amounts. The entry not only explains the economic theory underlying the concept of VSL but also how a researcher goes about estimating VSL empirically. The entry concludes with a discussion of how government agencies use the recent average estimate for VSL of