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Hierarchical sorting and learning costs

Garicano, Luis and Hubbard, Thomas N. (2005) Hierarchical sorting and learning costs. Journal of Economic Behavior & Organization, 58 (2). pp. 349-369. ISSN 0167-2681

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Identification Number: 10.1016/j.jebo.2004.03.021


Garicano and Rossi-Hansberg [Garicano, L., Rossi-Hansberg, E., 2005. Organization and Inequality in a Knowledge Economy. NBER Working Paper 11458] show that knowledge-based hierarchies are characterized by positive sorting between workers and managers when knowledge acquisition takes place before production. We extend the analysis and find that complementarities between manager and worker skill are even stronger when knowledge is acquired on the job. We then examine empirically the existence of sorting in law firms along the dimensions of cognitive ability and experience. We find strong evidence of positive sorting by cognitive ability, as proxied by the quality of the law school attended, but little evidence of sorting by experience, suggesting little substitutability between cognitive ability and experience.

Item Type: Article
Official URL:
Additional Information: © 2009 Elsevier
Divisions: Management
Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
Date Deposited: 27 Oct 2009 16:52
Last Modified: 11 Apr 2024 19:00

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