Distortions, Endogenous Managerial Skills and Productivity Differences

Dhritiman Bhattacharya, Gustavo Ventura and Nezih Guner

No 673, Working Papers from Barcelona School of Economics

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; size; skill investments; productivity differences (search for similar items in EconPapers)
JEL-codes: E23 O40 (search for similar items in EconPapers)
Date: 2015-09
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Distortions, Endogenous Managerial Skills and Productivity Differences (2013)
Working Paper: Distortions, Endogenous Managerial Skills and Productivity Differences (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:673

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