Richard Thakor won the 2016 MIT Sloan thesis prize for demonstrating that limiting financial constraints on a business can reduce the misallocation of assets and trigger economic growth.
The paper, “Financial Constraints and Asset Reallocation: Evidence from Farming and Fracking [PDF],” examined how Oklahoma’s exponential growth in oil fracking wells has impacted the finances as well as the productivity of the state’s farmers. Thakor found that farmers who leased a portion of their land to oil companies for fracking used the money—typically $10,000 per acre per year—to buy off debt or purchase additional acreage.These farmers increased wheat yields on their new land by 12 percent and profits by 15 percent, which Thakor said is consistent with the increased efficiency effect. The findings also suggest that small business owners, as well as larger firms operating in markets where skills are fixed, might be able to reap the financial benefits of the asset reallocation effect, he added.
Santiago Campero earned second place for his paper, “Does Firm Status Confer a Recruiting Advantage? Evidence from High Tech Entrepreneurial Firms.” Campero evaluated nearly 1,000 job listings for software engineers and developers posted from 2007 to 2011 and found that high-status firms—whether by their own reputation or, in the case of startups, their founders’ pedigree—hired a greater share of high-status workers than firms perceived to have a lower status.
The implication, he said, is hiring trends embodied by the “old hierarchy,” in industries such as academia, banking, and law, appear to have been replicated in the new economy.
Thakor received $3,000 for first place. Campero received $2,000 for second place. The pair, along with seven other MIT Sloan PhD candidates, presented their work March 18 on campus to a panel of three judges: Josh Anderson, PhD ’15; Nathan Fong, PhD ’11; and Lourdes Sosa, PhD ’06.
“I feel invigorated and motivated by what our students are doing,” said Ezra Zuckerman, deputy dean at MIT Sloan. “They’re on the cutting edge of answering important and challenging questions about our world.”
Other PhD candidates presenting research at the event were:
Asaf Bernstein: “Household Debt Overhang and Labor Supply”
Julia DiBenigno: “Managing Conflict in Organizations: The Case of U.S. Army Mental Healthcare Delivery”
Winston Dou: “Embrace or Fear Uncertainty: Growth Options, Limited Risk Sharing, and Asset Prices”
James Duan: “Would You Like In-App Purchases with that Mobile App?”
Jae Ha: “When Mom-And-Pops Differ From Chains: How Perceptions of Moral Standing Can Be A Competitive Advantage”
Abhishek Nagaraj: “The Private Impact of Public Maps—Landsat Satellite Imagery and Gold Exploration”
Yiftach Nagar: “Accelerating the Review of Ideas in Open Innovation Challenges”