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Fane Naja Groes (Copenhagen Business School) “A Tale of Two C(…)s: Competence and Complementarity”

The next meeting of BeNA in Winter Semester 2015/16 is taking place on Wednesday, February 10, 6.15-7.45 pm at DIW Berlin, Room 2.026 (Schmoller).

We are glad to welcome Fane Naja Groes (Copenhagen Business School) who will present her paper “A Tale of Two C(…)s: Competence and Complementarity”. Please see the abstract below. After the meeting we are all going out for a dinner. Everyone is welcome to join.

We would also like to encourage you to talk with Fane about your research. In order to set up an appointment, please check in with The office hour will take place at Humboldt University, Room 117. For further information, please  contact Hanna Zwiener

For all upcoming talks in the winter semester have a look at the semester program.

Abstract “A Tale of Two C(…)s: Competence and Complementarity”

We build a tractable assignment model to characterize the matching and separation patterns of CEOs and their employers. Managers learn about their own type by observing a sequence of public signals. The sorting is ex ante perfect across managers of a given cohort whose most recent assignment is the same, but is not typically so ex post. Moreover, if matching is costless, perfect ex ante sorting occurs across managers of a given cohort regardless of their assignment history. We calibrate the model to match empirical targets from a large matched employer-employee dataset covering the Danish labor force between 2000 and 2009. We exploit the non-monotonicity of executive compensation in the employer type — the firm’s productivity, that is — to parameterize the model. We have a particular interest in the degree of complementarity between the characteristics of the manager and those of the firm in the production function and our results fill a gap in the literature on the aggregate effects of a particular form of misallocation, namely mismatch, which depend critically on this elasticity.