Abstract

http://ssrn.com/abstract=533183
 
 

References (44)



 
 

Citations (3)



 


 



Hierarchies, Specialization, and the Utilization of Knowledge: Theory and Evidence from the Legal Services Industry


Luis Garicano


University of Chicago - Booth School of Business - Economics; Centre for Economic Policy Research (CEPR)

Thomas N. Hubbard


Northwestern University - Department of Management & Strategy; National Bureau of Economic Research (NBER)

March 2004

U Chicago Law & Economics, Olin Working Paper No. 214

Abstract:     
What role do hierarchies play with respect to the organization of production and what determines their structure? We develop an equilibrium model of hierarchical organization, then provide empirical evidence using confidential data on thousands of law offices from the 1992 Census of Services. The driving force in the model is increasing returns in the utilization of acquired knowledge. We show how the equilibrium assignment of individuals to hierarchical positions varies with the degree to which their human capital is field-specialized, then show how this equilibrium changes with the extent of the market. We find empirical evidence consistent with a central proposition of the model: the share of lawyers that work in hierarchies and the ratio of associates to partners increases as market size increases and lawyers field-specialize. Other results provide evidence against alternative interpretations that emphasize unobserved differences in the distribution of demand or firm size effects, and lend additional support to the view that a role hierarchies play in legal services is to help exploit increasing returns associated with the utilization of human capital.

Number of Pages in PDF File: 61

JEL Classification: D23, K40, L14, L22, L84

working papers series


Download This Paper

Date posted: April 20, 2004  

Suggested Citation

Garicano, Luis and Hubbard, Thomas N., Hierarchies, Specialization, and the Utilization of Knowledge: Theory and Evidence from the Legal Services Industry (March 2004). U Chicago Law & Economics, Olin Working Paper No. 214. Available at SSRN: http://ssrn.com/abstract=533183 or http://dx.doi.org/10.2139/ssrn.533183

Contact Information

Luis Garicano
University of Chicago - Booth School of Business - Economics ( email )
Graduate School of Business
1101 East 58th Street
Chicago, IL 60637
United States
773-834-2862 (Phone)
773-702-0458 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Thomas N. Hubbard (Contact Author)
Northwestern University - Department of Management & Strategy ( email )
Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,018
Downloads: 172
Download Rank: 88,620
References:  44
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.297 seconds