The Law of One Price and a Theory of the Firm
Volume: Volume 29, No. 1
Issue: Spring 1998
Pages: pp. 137-156
Authors: Shailendra Raj Mehta
Title: The Law of One Price and a Theory of the Firm
Abstract: I use a hierarchical perspective to explain the pattern of interindustry wages and capital intensities. Industries that have more productive technologies pay more than less-productive ones, and are more capital intensive as well. Results on size of the hierarchy, effort levels, and span of control are presented as well. The key insight is that supervisors both monitor and coordinate their subordinates, and time spent on one of these activities reduces the time available for the other. Several stylized facts are explained thereby.
JEL Classification
Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. industry, schooling, experience, tenure, cohort, etc.
(J310)
Human Capital Formation in school, formal training programs, on the job; Occupational Choice; Labor Productivity
(J240)
Wage and Fringe Benefit Studies (8242)
Labor Economics: Theory and Empirical Studies Illustrating Theory
(8210)
Manpower Training and Development (8110)
Human Capital; Value of Human Life (8510)
Productivity Studies: Labor, Capital, and Total Factor (8250)
Occupation (8120)