Documents University of Zurich 7 results

"We analyze the relationship between gender-specific social norms and firms' pay-setting behavior. We combine information about regional voting behavior relative to gender equality laws, as a measure for gender-specific social norms, with a large data set of multi-branch firms and workers. The results show that multi-branch firms pay more discriminatory wages in branches located in regions with a higher social acceptance of gender inequality than in branches located in regions with a lower acceptance. Voter approval rates account for about 50% of the entire variation of within-firm gender pay gaps across regions. By investigating a subsample of performance pay workers for whom we are able to observe their time-based and performance pay component separately, we show that unobserved productivity differences within firms across regions cannot explain the relationship between social norms and within-firm gender pay gaps. As performance pay is more closely related to workers' productivity than time-based pay, gender-specific productivity differences would manifest in the workers' performance pay component. However, as the relationship between social norms and within-firm gender pay gaps manifests only for the time-based pay component but not for the performance pay component of the same workers, unobserved gender-specific productivity differences cannot explain our findings. The results support a strong relationship between social norms and the discriminatory pay-setting behavior of firms."

"The most influential approach of corporate governance, the view of shareholders' supremacy does not take into consideration that the key task of modern corporations is to generate and transfer firm-specific knowledge. It proposes that, in order to overcome the widespread corporate scandals, the interests of top management and directors should be increasingly aligned to shareholders' interests by making the board more responsible to shareholders, and monitoring of top management by independent outside directors should be strengthened. Corporate governance reform needs to go in another direction altogether. Firm-specific knowledge investments are, like financial investments, not ex ante contractible, leaving investors open to exploitation by shareholders. Employees therefore refuse to make firmspecific investments. To gain a sustainable competitive advantage, there must be an incentive to undertake such firm-specific investments. Three proposals are advanced to deal with this dilemma: (1) The board should rely more on insiders. (2) The insiders should be elected by those employees of the firm who are making firm-specific knowledge investments. (3) The board should be chaired by a neutral person. These proposals have major advantages: they provide incentives for knowledge investors; they countervail the dominance of executives; they encourage intrinsic work motivation and loyalty to the firm by strengthening distributive and procedural justice, and they ensure diversity on the board while lowering transaction costs. These proposals for reforming the board may help to overcome the crisis corporate governance is in. At the same time, they provide a step in the direction of a more adequate theory of the firm as a basis for corporate governance. "

"How does automation a!ect the politics of the welfare state? People whose jobs are at risk of being automated may react by claiming social protection (passive social policy), upskilling/commodi"cation (active social policy) or both. In this brief contribution, we study this question relying on novel survey data on perceived automation risk and social policy preferences in 8 West European countries. We "rst estimate the size and pro"le of the group of voters concerned about their potential substitution by technology and examine how subjective perceptions of automation risk compare to widely used objective indicators of automation risk. In contrast to a somewhat alarmist public debate, we "nd that a surprisingly small share of voters feels imminently threatened by automation. We then turn to an assessment of the demand for di!erent kinds of social policy as a response to automation risk and "nd highly consistent preferences across countries. At-risk workers support and prioritize passive unemployment protection measures, while support for activation, education and labor market reintegration policies is very limited. In other words: progressive automation increases demand for passive, consumption-oriented welfare policies and thereby narrows the support base for an activation/human capital-oriented policy strategy, which technocrats and policy advisers tend to recommend in reaction to automation of production."