Distortions, endogenous managerial skills and productivity differences

Dhritiman Bhattacharya, Nezih Guner, Gustavo Ventura

Research output: Contribution to journalArticle

23 Scopus citations

Abstract

We develop a span-of-control model where managerial skills are endogenous and the outcome of investments over the life cycle of managers. We calibrate this model to U.S. plant-size data to quantify the effects of distortions that are correlated with the size of production units, and how these effects are amplified by managerial investments. We find a quantitatively important role for managerial investments. Distortions that consist of a tax rate of 20% on the top 50% managers reduce steady-state output by about 14.6% in our benchmark model. When skills are exogenous the reduction is about 9.2%.

Original languageEnglish (US)
Pages (from-to)11-25
Number of pages15
JournalReview of Economic Dynamics
Volume16
Issue number1
DOIs
StatePublished - Jan 1 2013

Keywords

  • Distortions
  • Productivity differences
  • Size
  • Skill investments

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Distortions, endogenous managerial skills and productivity differences'. Together they form a unique fingerprint.

  • Cite this