Abstract

http://ssrn.com/abstract=997389
 
 

References (32)



 
 

Citations (10)



 


 



The Return to Knowledge Hierarchies


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)

February 2007

CEPR Discussion Paper No. 6077

Abstract:     
Hierarchies allow individuals to leverage their knowledge through others' time. This mechanism increases productivity and amplifies the impact of skill heterogeneity on earnings inequality. To quantify this effect, we analyze the earnings and organization of U.S. lawyers and use the equilibrium model of knowledge hierarchies in Garicano and Rossi-Hansberg (2006) to assess how much lawyers' productivity and the distribution of earnings across lawyers reflects lawyers' ability to organize problem-solving hierarchically. We analyze earnings, organizational, and assignment patterns and show that they are generally consistent with the main predictions of the model. We then use these data to estimate the model. Our estimates imply that hierarchical production leads to at least a 30% increase in production in this industry, relative to a situation where lawyers within the same office do not.

Number of Pages in PDF File: 67

Keywords: Hedonics, hierarchy, matching, scale of operations effects, sorting, Structural Estimation

JEL Classification: D31, J31, J41, L22, L23, L84

working papers series





Date posted: June 29, 2007  

Suggested Citation

Garicano, Luis and Hubbard, Thomas N., The Return to Knowledge Hierarchies (February 2007). CEPR Discussion Paper No. 6077. Available at SSRN: http://ssrn.com/abstract=997389

Contact Information

Luis Garicano (Contact Author)
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
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
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References:  32
Citations:  10

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