Distortions, endogenous managerial skills and productivity differences

Dhritiman Bhattacharya, Nezih Guner, Gustavo Ventura

Research output: Contribution to journalArticle

20 Citations (Scopus)

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 2013

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Productivity
Managerial skills
Managers
Benchmark
Life cycle
Tax rate
Span of control
Plant size

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 journalArticle

Bhattacharya, Dhritiman ; Guner, Nezih ; Ventura, Gustavo. / Distortions, endogenous managerial skills and productivity differences. In: Review of Economic Dynamics. 2013 ; Vol. 16, No. 1. pp. 11-25.
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