Areas of Interest
Employee Mobility, Entrepreneurship, Personnel Economics, Labor Economics, Organizational Economics, Industrial Organization
Publications
Locked In? The Enforceability of Covenants Not to Compete and the Careers of High-Tech Workers (with Natarajan Balasubramanian, Mariko Sakakibara, Jagadeesh Sivadasan, Evan Starr)
Journal of Human Resources 57, no. S: S349-S396, 2022.
We study the relationship between the enforceability of covenants not to compete (CNCs) and employee mobility and wages. We exploit a 2015 CNC ban for technology workers in Hawaii and find that this ban increased mobility by 11% and new-hire wages by 4%. We supplement the Hawaii evaluation with a cross-state analysis using matched employer-employee data. We find that eight years after starting a job in an average-enforceability state, technology workers have about 8% fewer jobs and 4.6% lower cumulative earnings relative to equivalent workers starting in a non-enforcing state. These results are consistent with CNC enforceability increasing monopsony power.
Winner: Distinguished Paper Award in The Business Policy and Strategy Division, AOM Meeting 2016 (Anaheim California)
Academy of Management Best Paper Proceedings 2016
Analyst Optimism and Incentives under Market Uncertainty (with Hae Mi Choi)
The Financial Review, Vol. 52, Issue 3, pp. 307-345, 2017. (Lead Article)
We examine how analysts’ changing incentives driven by changes in market uncertainty affect their forecast optimism. Analysts issue more optimistically biased earnings forecasts and buy recommendations under high market uncertainty (VIX). The lower reputational costs and larger benefits of optimistic output explain the increased optimistic output: Analysts are less likely to be penalized for inaccuracy and can stimulate more trading activity from optimistically biased output when market uncertainty is high. We find that the likelihood of analysts’ turnover decreases, while the trading volume associated with optimistic output increases, with VIX. No evidence suggests that analysts’ self-selection affects our findings on optimism and market uncertainty.
Working Papers
I examine how the effect of worker quits on future establishment growth varies by the quitting worker’s productivity level. I argue that when there are labor market frictions related to search and training, the difficulty of replacing a worker with another of equivalent productivity increases with the productivity level of the quitting worker, and this in turn leads to greater detrimental effect of higher productivity worker quits. I provide novel empirical evidence that quits of high productivity workers lower future growth, whereas quits of low productivity workers do not. In particular, a one standard deviation increase in quit rate of high productivity workers is associated with a 1.2 percentage point decline in future establishment employment growth rate. The detrimental effect of high productivity worker quits is stronger for establishments with higher replacement costs: establishments that are more likely to have unfilled vacancies, that are more likely to cover the training costs of their employees, that have a more knowledge-intensive workforce, that have more complex operations, and that have worker representatives that participate in hiring decisions. I exploit the richness of the German employer-employee linked data to distinguish quitting workers from fired workers, and construct instrumental variables to alleviate potential endogeneity concerns. This study contributes to the literature by exploring the role of replacement-related labor market frictions in mediating the relation between worker quits and establishment performance.
Trying Out Different Workers: Worker Firing, Match Quality, and Growth of Small Firms in Germany
Winner: 2017 Kauffman Dissertation Fellowship
This paper examines how dismissing workers as a management practice can enhance worker-firm idiosyncratic match quality, and thereby foster growth of small firms. Match quality is assumed as a component of a worker’s productivity contribution to the firm, determined by the fit between the worker and the firm. Utilizing German employer-employee linked data, I propose a measure of match quality and examine how firing, match quality, and growth are related at the firm-level. I hypothesize that firms can enhance its match quality with its workforce by trying out different workers, and find that firing is positively associated with enhanced match quality and stronger future growth. This relation is stronger for firing workers with fewer past work experiences.