@article{1ddac8edfdef44248733ad67e37e784b,
title = "Distortions, endogenous managerial skills and productivity differences",
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%.",
keywords = "Distortions, Productivity differences, Size, Skill investments",
author = "Dhritiman Bhattacharya and Nezih Guner and Gustavo Ventura",
note = "Funding Information: ✩ We thank the Associate Editor (Richard Rogerson), two anonymous referees and participants at the mini-conference “Misallocation and Productivity” at the SED meetings in Ghent. We also thank seminar participants at CREI-MOVE Workshop on Misallocation and TFP, Duke, Einaudi Institute for Economics and Finance, Federal Reserve Bank of Atlanta, VII REDg Workshop on Dynamic General Equilibrium Macroeconomics in Madrid, Tinbergen Institute, UC-San Diego and Yale for their comments. Rodica Calmuc and Ezgi Kaya provided excellent research assistance. Guner acknowledges financial support from Spanish Ministry of Economy and Competitiveness, Grant ECO2011-28822. All errors are ours. * Corresponding author. E-mail addresses: dbhattacharya@promontory.com (D. Bhattacharya), nezih.guner@movebarcelona.eu (N. Guner), Gustavo.Ventura@asu.edu (G. Ventura). 1 See Bartelsman et al. (forthcoming), Barseghyan and DiCecio (2011), Buera et al. (2011), Caselli and Gennaioli (2012), D{\textquoteright}Erasmo and Moscoso-Boedo (2012), Guner et al. (2008), Hsieh and Klenow (2009), Midrigan and Xu (2010), Restuccia and Rogerson (2008), among others.",
year = "2013",
month = jan,
doi = "10.1016/j.red.2012.10.001",
language = "English (US)",
volume = "16",
pages = "11--25",
journal = "Review of Economic Dynamics",
issn = "1094-2025",
publisher = "Academic Press Inc.",
number = "1",
}