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Title: Essays on two-sector matching, status rewards and liability
Author: Gola, Paweł
ISNI:       0000 0004 6061 7651
Awarding Body: University of Oxford
Current Institution: University of Oxford
Date of Award: 2015
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This thesis consists of three self-contained chapters. Chapter 1 develops a two-sector, bivariate matching model, in which each sector uses a different dimension of skill in the production process. I show there exists a unique assignment of agents to sectors and derive comparative statics. The main result is that if jobs are scarce, both an increase in sector one skills' spread and a technological improvement increase the supply of talent in sector one, but decrease it in sector two. In sector two, this raises wages and wage inequality. In sector one, the effects are ambiguous in general, but wages increase for the most and decrease for the least talented agents. Chapter 2 studies the impact of social status on occupational sorting in a two-sector matching framework. Talent is two-dimensional and thus status is not a zero-sum game; it depends both on occupational prestige and within-sector rank (local status). I show that the weights with which these two components enter - the structure of status - crucially influence the way in which agents self-select into sectors and argue that it is likely that these weights differ across occupations. The more important are the individual components of status in a sector, or the less important the collective component, the better the agents who join that industry, which has important implications for total payoffs, wage levels and inequality, and profits. I also show that the stable assignment is typically inefficient, which is driven by the distortion of relative status rewards, not status concerns per se. Chapter 3 investigates whether directors of companies should have limited liability. I develop a three-player model in which: (a) debtholders and equityholders are defined by their control rights and (b) the project is run by the directors. The main result is that increased liability for directors forces them to internalise more of the downside risk of the project and hence reduces their risk-taking. This is optimal if over-investment was a problem initially. I show that the extent to which over-investment is a problem depends on how well debtholders are protected compared to equityholders. If debtholders are strong, increased liability can cause under-investment.
Supervisor: Jewitt, Ian Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Social status--Economic aspects ; Microeconomics ; Matching theory