Working Paper: CEPR ID: DP14334
Authors: Fabiano Schivardi; Julien Sauvagnat
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 Codes: J24; M51; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| executive death (D73) | firm performance (ROA) (L25) |
| executive death (D73) | executive separation rate (J63) |
| executive death (D73) | wages for executives in neighboring firms (M12) |
| local executive supply (M11) | firm performance (ROA) (L25) |