Are Executives in Short Supply? Evidence from Deaths' Events
53 Pages Posted: 26 Sep 2019 Last revised: 12 Feb 2021
Date Written: September 14, 2019
Using exhaustive administrative data on Italian social security records, we construct measures of local labor market tightness for executives that vary by industry and location. We then show that firm performance is negatively affected by executive death, but only in thin local labor markets. Death events are followed by an increase in the separation rate for the other executives, in particular for those with a college degree. Consistent with the hypothesis that the drop in performance is due to executive short supply, we find that after a death event executive wages in other firms increase, but only in thin markets.
Keywords: Executives supply, firm performance, local growth
JEL Classification: J24, M51, R11
Suggested Citation: Suggested Citation