Firm Size and Human Capital as Determinants of Productivity and Earnings

Mans M. Soderbom () and Francis John Teal

Working Papers Series from Centre for the Study of African Economies, University of Oxford

Abstract: The evidence that earnings rise with firm size and that human capital affects earnings based on labour market data are two of the most robust empirical findings in economics. In contrast the evidence for scale economies in firm data is very weak. The limited direct evidence of human capital on firm productivity suggests that human capital is indeed productive and that the magnitudes are consistent with the findings based on individual data. The common objection to accepting the role of size and human capital as determinants of either earnings or productivity has been the role of unobserved factors. In this paper we investigate the roles of size and human capital in determining both earnings and productivity using a panel data set of matched labour firm data which allows us to control for such factors.

Keywords: PRODUCTIVITY; WAGES; HUMAN RESOURCES; MANUFACTURING INDUSTRIES (search for similar items in EconPapers)
JEL-codes: O12 C33 J41 O55 (search for similar items in EconPapers)
Date: 2001
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