Hierarchies: Organizing the division of labor by Aloysius Siow

Join us for the latest Applied Economics Research Seminar Series event, Summer Term 2026.

Aloysius Siow, from the University of Toronto, will present this week's seminar on Hierarchies: Organizing the division of labor.

Abstract

As social organizations, hierarchies are ubiquitous. We proposed that hierarchies are used to coordinate and supervise the division of labor within organizations. Chandler observed that only employees at the bottom level of the hierarchy produce different task outputs which are combined into final outputs to be sold. Employees in higher levels of the hierarchies are managers who coordinate and supervise lower level managers, who in turn coordinate and supervise workers. We develop an analytic Chandler model. Implications include employee earnings rising with the level of the hierarchy. There is positive assortative matching by employees' skills across firms. There are firm and occupational fixed effects in labor earnings (AKM). Transfer pricing are be used to incentivize managers to hire and supervise their subordinates optimally. The framework proposes a role for horizontal communication skills (respect) where managers have to coordinate with other managers who do not share the same occupational knowledge. There is hierarchical comparative advantage where different skills are valued differently in different levels of the hierarchy.

The seminar will begin with a presentation and will end with a Q and A session.

It will be held in the Economics Common Room at 2pm on Monday, 22 June 2026. This event is open to all levels of study and is also open to the public. To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Applied Economics Research Seminar Series.