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  • 2022
  • Working Paper
  • HBS Working Paper Series

Human Capital and the Managerial Revolution in the United States

By: Tom Nicholas
  • Format:Print
  • | Language:English
  • | Pages:57
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Abstract

This paper estimates the returns to human capital accumulation during the first era of megafirms in the United States by linking employees at General Electric—a canonical enterprise associated with the “visible hand” of managerial hierarchies—to data from the 1940 federal census. Across the hierarchy, 62 percent of employees had four or more years of a college education, a higher rate than for the country’s engineers (57 percent). I find large returns to higher education through seniority in the hierarchy linked to span of control, through earnings, and through selection into management training. For identification, I instrument for years of education and college attendance using the number of land-grant colleges and historical universities proximate to an individual’s birth state. The findings provide causal evidence on the human capital determinants of the managerial revolution, driven by earlier public investments supporting the expansion of the US higher education system.

Keywords

Returns To Education; Management Practices; Hierarchies; Human Capital; Management; Training; Higher Education; Government and Politics; United States

Citation

Nicholas, Tom. "Human Capital and the Managerial Revolution in the United States." Harvard Business School Working Paper, No. 23-015, September 2022.
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About The Author

Tom Nicholas

Entrepreneurial Management
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  • Air Wars: Deregulating the U.S. Airline Industry By: Tom Nicholas and James Weber
  • A Soul and a Service: North Carolina Mutual Life Insurance By: Tom Nicholas and John Masko
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