Workers & Bosses should be matched according to performance. The effect of good bosses on high quality workers is greater than the effect of good bosses on lower quality workers, but the effect of sorting is not large.

A. Human capital & Effort : An individual worker’s output at time ‘t’ depends on human capital, hich reflects both innate ability & previously learned skills & on effort.

A worker’s stock of human capital at time’t’ depends on experiences with current & previous bosses .

Past bosses can affect the worker’s output at time ‘t’ because some of the knowledge & work habits acquired from those bosses may be retained.

Bosses, in the context in which we study are most important in their ability to teach & motivate workers . For the most part, they do not engage in task assignment , hiring or other aspects of the supervisor job, although they may play some role in firing & in promotion.

Should good bosses be matched with good workers or with bad workers?

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