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 language | English (US) |
|---|---|
| Pages (from-to) | 11-25 |
| Number of pages | 15 |
| Journal | Review of Economic Dynamics |
| Volume | 16 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 2013 |
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Keywords
- Distortions
- Productivity differences
- Size
- Skill investments
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Distortions, endogenous managerial skills and productivity differences. / Bhattacharya, Dhritiman; Guner, Nezih; Ventura, Gustavo.
In: Review of Economic Dynamics, Vol. 16, No. 1, 01.2013, p. 11-25.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Distortions, endogenous managerial skills and productivity differences
AU - Bhattacharya, Dhritiman
AU - Guner, Nezih
AU - Ventura, Gustavo
PY - 2013/1
Y1 - 2013/1
N2 - 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%.
AB - 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%.
KW - Distortions
KW - Productivity differences
KW - Size
KW - Skill investments
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U2 - 10.1016/j.red.2012.10.001
DO - 10.1016/j.red.2012.10.001
M3 - Article
AN - SCOPUS:84871919454
VL - 16
SP - 11
EP - 25
JO - Review of Economic Dynamics
JF - Review of Economic Dynamics
SN - 1094-2025
IS - 1
ER -