In this research.
If CEO pay is informative, then the salary of a manager will reveal the increment of value he provides. Using the quantization noise metaphor we can claify this. If an incremental piece of value is computed with a linear combination of firm wages, then a top heavy management team will dominate the calculation with large quants. The firm cannot be precise (in the general case).
The author states his technique is most valuable for small firms, which would be correct. Larger firms can use variance approximations.
Interest in better measures of employment dispersion is important in deciding the issue of structural vs cyclical employment, an issue for Recalculationists.
The upshot of this study is that CEOs are paid about 150 times more than they need.
Here is 2006 research that uses entropy to determine lot size and transaction rates in the firm! I though I was original! This research is valuable in that is looks at the learning process (Ramsey Search) in determining lot sizes for a firm.
This research computes the entropy measures of regional skill level in Europe, and show positive correlation with maximum entropy and growth.
I will be wading into this morass using the entropy model. Note the main issue here: Does government stimulus efforts increase or decrease entropy in the work force?
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