This is a thread to share papers that pop up in the mainstream media. if nothing newsworthy happens, I guess we could also post 90s-mall-goth memes.
“Eclipse of Rent-Sharing: The Effects of Managers’ Business Education on Wages and Labor Share in the US and Denmark”
Pluralistic: 06 Jun 2022 – Pluralistic: Daily links from Cory Doctorow - Cory Doctorow’s take:
The paper makes a somewhat nuanced and technically complex argument, but let me paraphrase its conclusion: Going to business-school makes you the kind of person who cuts wages in bad times and refuses to increase wages in good times. When companies are run by MBAs, their workers’ wages decline.
I used to teach intro to stats for MBA students, so on the one hand, I’d like to believe this isn’t true, but on the other hand, thinking about some of the students, totally plausible.
From the paper, the model is
which they describe as
where Bit is an indicator variable for whether the manager at firm i in year t has a business degree.
In addition, Xit denotes a vector of covariates, λi summarizes the firm fixed effects, δt corresponds to time effects, and εit is an error term. The coefficient of interest is γ, which is the effect of business managers on firm and worker outcomes. In our event studies, we allow the effects to vary by event time, and in some of the specifications we allow these effects to vary by worker skill or wage percentile.
We use a number of different strategies to estimate equation (1). Our first and most central strategy is a series of event studies, focusing on firms that transition from being run by non-business managers to being run by business managers. These event studies enable us to confirm that firms switching to business managers are not on differential trends before the events and provide a transparent way of estimating and displaying our results.
So they have a panel data set, firm by year, and “management has an mba” is the effect of interest.
Throughout, we follow Borusyak et al. (2021) and use an “imputation” estimator to compute the
event-study estimates. This estimator ensures consistency in the presence of two-way fixed effects and avoids issues of spurious identification and negative weights on some observations (de Chaisemartin and D’Haultfœuille, 2020). In practice, this estimator is constructed in three steps. First, the unit fixed effects, time fixed effects, and the coefficients of other control variables are estimated from regressions using untreated observations only.
Second, the treatment effect for each treated observation is computed from the first-step regression as the difference between the actual outcome and the potential untreated outcome. Finally, using the second-step estimated effects, we compute the average treatment effect on the treated.
and
In the US worker-level regressions, because the total number of workers is very large (over 100
million), we adopt a matching procedure for implementing worker-level regressions
Anyways I’m going to spend a little more time with this study. I haven’t found the section that clearly defines the outcome Y yet.
BTW @RavinKumar can you add the MathJax plugin? Discourse Math - plugin - Discourse Meta