Are Executives in Short Supply? Evidence from Deaths' Events

49 Pages Posted: 29 Jan 2020

See all articles by Julien Sauvagnat

Julien Sauvagnat

Bocconi University; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Fabiano Schivardi

Luiss Guido Carli - Department of Economics and Finance; Einaudi Institute for Economics and Finance (EIEF); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2020

Abstract

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 executives death, but only in thin local labor markets. Death events are followed by an increase in the separation rate for the other executives of the firm, in particular for those with a college degree. Consistent with the hypothesis that the drop in performance is due to the fact that executives are in short supply, we find that after a death event executives wages in other firms increase, but only in thin markets. This indicates that local policies aiming at boosting the supply of managerial skills might be effective at increasing firm performance.

Keywords: Executives supply, firm performance, local growth

JEL Classification: J24, M51, R11

Suggested Citation

Sauvagnat, Julien and Schivardi, Fabiano, Are Executives in Short Supply? Evidence from Deaths' Events (January 2020). CEPR Discussion Paper No. DP14334, Available at SSRN: https://ssrn.com/abstract=3526060

Julien Sauvagnat (Contact Author)

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Fabiano Schivardi

Luiss Guido Carli - Department of Economics and Finance ( email )

Viale Romania 32
Rome, Rome 00187
Italy

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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