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Are Executives in Short Supply? Evidence from Death Events

10 March 2021
2:00 pm

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 executive death, but only in thin local labor markets. Death events are followed by an increase in the separation rate for the other executives, in particular for those with a college degree. Consistent with the hypothesis that the drop in performance is due to executive short supply, we find that after a death event executive wages in other firms increase, but only in thin markets.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 executive death, but only in thin local labor markets. Death events are followed by an increase in the separation rate for the other executives, in particular for those with a college degree. Consistent with the hypothesis that the drop in performance is due to executive short supply, we find that after a death event executive wages in other firms increase, but only in thin markets.

 

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relatore: 
Fabiano Schivardi, LUISS Guido Carli Roma
Units: 
AXES