The Evolution of Managerial Expertise: How Corporate Culture Can Run Amok

Dan Bernhardt (), Eric Hughson and Edward Kutsoati ()

American Economic Review, 2006, vol. 96, issue 1, pages 195-221

Abstract: This paper investigates how noisy evaluation of worker skills affects human capital investments and hiring. Individuals distort investments toward skills that most managers can evaluate. Dynamically, when workers become managers, managerial expertise can become increasingly skewed over time, raising investment distortions and reducing output. If firms select managerial expertise strategically, efficient investments can be retrieved when (a) identifying whether workers' skills matter more than distinguishing among skilled workers, and (b) initial investment distortions are small. Otherwise, such strategic design worsens long-run outcomes. Finally, we determine when short-run affirmative action policies are effective.

Date: 2006
View citations in EconPapers

Downloads: (external link)
http://hdl.handle.net/10.1257/000282806776157669 (text/html)
http://www.aeaweb.org/articles/article_detail.php? ... issue_date=March2006 (application/pdf)
Access to full text is restricted to AEA members.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:aea:aecrev:v:96:y:2006:i:1:p:195-221

Ordering information: This journal article can be ordered from
http://www.aeaweb.org/subscribe.html

Access Statistics for this article

American Economic Review is edited by Robert Moffitt

More articles in American Economic Review from American Economic Association
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().