previously CESifo working paper, winner of the 50th EFA best doctoral tutorial award

This paper investigates whether and how company boards affect firm performance. I study a regulation in France that exogenously changed boards by mandating a minimum representation of each gender for firms above a certain size threshold. I show that the new boards increase various measures of profitability by 4 to 9%. The rise in profits occurs mainly through cuts in the SG&A revenue cost share and more specifically changes in the composition of outsourced workers. On the output side, I find that firms expand their market share and their product variety as well as increase plant-level specialization. I use a random effects approach jointly estimating board output and formation to infer member quality. I decompose profit variance and tie back the substantial gains from the regulation to individual traits being complementary inputs in the board on top of individual ability and sorting.

Are economically diverse cities more resilient? Building on the insights of a simple model of labor flows, we document using French data on worker moves that more diverse cities–occupationally or industrially–experience shallower decreases in gross outflows and smaller declines in employment following negative labor demand shocks. We then show that such data also allows us to measure the implied insurance value of a city using a sufficient-statistics approach in a canonical random utility dynamic discrete choice model across sectors, occupations, and cities. The diversity of outside options impact a worker’s welfare. We find that there is a correlation between a city’s economic diversity and its insurance value against labor demand shocks.