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Essays on Incentives and Leadership
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2008 (English)Doctoral thesis, monograph (Other academic)
Abstract [en]

"Taxation, Career Concerns and CEO Pay". This paper proposes a simple dynamic model of equilibrium CEO compensation. Motivated by the strengthened career incentives stemming from the fall in the top income tax rates over the past decades, I study the implications of a model where the quality of talent identification depends on how hard individuals work in order to be among the winners in the contest for managerial positions. It is shown how the compensation of CEOs can be interpreted in this light, across time, across industries, and across countries, and I provide some evidence showing that the predictions of the model are in line with several empirical developments over the past decades.

"Incentives under Communism: The Value of Low-Quality Goods". In this paper, I study how efficiently centrally planned regimes can provide incentives across different stages of economic development. In particular, I study the attractiveness of an incentive system based on exclusive provision of high-quality goods to high-ranked members of society. At low levels of economic development, a self-interested regime can exploit such an incentive system to reduce the cost of providing incentives. However, such an incentive system generally loses its attractiveness as the economy grows. The economic performance of the centrally planned economies is then analyzed in light of this result.

"The Business of Troubled Autocrats". Many autocrats control resource rents. Typically, they rely on these rents in order to buy political support. In this paper, I study how such autocrats behave in product and capital markets, in particular at times of financial distress. The main questions are: How does the asset position of an autocrat affect his behavior as a producer in a market with rents? From whom does the autocrat obtain financing in order to get out of difficulties? I show that when the asset position of the autocrat drops below a certain threshold, output drops below the level of a standard monopolist. Further, the autocrat can obtain less expensive financing domestically by exploiting the presence of vested interests, implying that there is zero foreign debt in equilibrium.

Place, publisher, year, edition, pages
Institute for International Economic Studies , 2008. , 199 p.
Monograph series / Institute for International Economic Studies, University of Stockholm, ISSN 0346-6892 ; 63
Keyword [en]
Incentives, Managers, Taxation, Career Concerns, Autocrats, Communism, Soft Budget Constraints
National Category
Research subject
URN: urn:nbn:se:su:diva-7492ISBN: 978-91-7155-630-1OAI: diva2:198407
Public defence
2008-05-30, hörsal 5, hus B, Universitetsvägen 10, Stockholm, 10:00
Available from: 2008-05-08 Created: 2008-05-02Bibliographically approved

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