Sharon M. Oster

Job Discrimination, Market Forces, and the Invisibility Hypothesis

The Invisibility Hypothesis holds that the job skills of disadvantaged workers are not easily discovered by potential new employers, but that promotion enhances visibility and alleviates this problem. Then, at a competitive labor market equilibrium, firms profit by hiding talented disadvantaged workers in low level jobs. Consequently, those workers are paid less on average and promoted less often than others with the same education and ability. As a result of the inefficient and discriminatory wage and promotion policies, disadvantaged workers experience lower returns to investments in human capital than other workers.

Intraindustry structure and the ease of strategic change

There has been considerable recent work in industrial organization emphasizing the importance of group stratification within industries. The thrust of this literature is that in empirical work, and in particular in investigating public policy problems, differences across firms within an industry may be crucial. This paper is intended as a contribution to the empirical literature of group structures. In this paper, I examine patterns of strategic group membership in a number of industries, and analyze changes in the strategies used by firms. In particular, I provide a series of rather simple exploratory tests of the importance of intraindustry strategic differences in a number of industries.

The diffusion of innovation among steel firms: the basic oxygen furnace

The major innovation in the steel industry in the post-World War II period has been the replacement of the open hearth furnace by the basic oxygen furnace. This article examines the diffusion of this important innovation at a more micro level than previous studies by focusing on plant behavior. Wide differences in the characteristics of the plants owned by a particular firm make this focus more appropriate. Using data from several large firms in the industry, estimates are first provided of the productivity of the basic oxygen furnace. Then, differences among plants and firms in the rate of adoption of the basic oxygen furnace are given and the causes of these differences are explored. The major finding of this article is that differences among firms in the rate of adoption of the basic oxygen furnaces are attributable both to the characteristics of the adopting plants that determine the profitability of this innovation and to the size of the firm.

Behavioral Biases Meet the Market: The Case of Magazine Subscription Prices

Abstract Using data from American magazines, we explore the relationship between newsstand and subscription prices and magazine characteristics. In particular, we distinguish between magazines that provide benefits in the future (investment magazines) versus those that are simply fun to read now (leisure magazines). A consumer with a present bias at the newsstand discounts the future payoff of the investment good but fully values the leisure good. This difference does not exist for subscriptions. Thus, the ratio of the subscription to newsstand willingness to pay for a magazine should differ between investment and leisure goods. We find that for magazines whose payoff is in the future, subscriptions are relatively more costly, ceteris paribus. This finding suggests that publishers reflect the present bias preferences of consumers in their price setting behavior.

Nonprofit organizations and their local affiliates: A study in organizational forms

Abstract Growth in the nonprofit sector typically occurs through a system of franchises. This paper explores the factors which encourage franchising in the sector. Data are analyzed from a survey by the author which suggest that the choice by nonprofits of the franchise versus branch office form is consistent with the predictions made by agency theory. Mechanisms used by nonprofit franchises to enhance intra-organizational coordination are also explored.

Industry Differences in the Level of Discrimination Against Women

I. Employer-generated discrimination, 216. — II. Discrimination as a functional element in the hierarchical work system, 220. — III. Conclusion, 228.

The Determinants of Consumer Complaints

While the rationale for conventional rate-of-return regulation has recently come into question, regulation designed to protect consumers by altering product quality has blossomed. In 1973, for example, eighteen major consumer bills were considered by Congress, among them requirements covering questions of product labelling, unit pricing, and truth in advertising. Currently there are 26 consumer offices scattered throughout the federal government, and over 200 city and state offices. In this paper, I try to explain variance in consumer complaints across different types of products. The tendency of consumers to complain about some products and not others is assumed to depend on some characteristics of both the industry producing that product and the people consuming it. The hypotheses generated are tested using data from the New Haven area. This paper is a first, exploratory study into the economic determinants of consumer complaints.

Exclusive Licensing in a Sequence of Innovations

In this paper, I examine the issues involved with sequential licensing of innovations. In particular, a model is developed in which the granting of an exclusive license has the potential to distort future industrial structure. Subsequent licensing negotiations are then affected by the initial exclusivity, giving the initial licensee more leverage in bidding. This dynamic effect gives firms strategic incentives to take exclusive licenses, even when, in a one-shot market, such licenses would not be optimal. Appropriate antitrust rules in the context of sequential innovations are then discussed.

A Note on the Determinants of Alimony.

Legal perceptions of the appropriate role of alimony are rapidly changing as the economic opportunities available to women are opening up. This article reviews work on human capital that has been done in economics and considers its implications for the role of alimony. The theme is that the human capital model of family interaction considerably broadens the role that alimony can and should play. Issues of relative contribution to the marriage, fault, and desire to end the marriage may all have a legitimate function in determining the size of alimony awards. Data on the size of alimony awards in Connecticut were examined to discover the underlying determinants of those awards.