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Economic Adjustment during the Great Recession: The Role of Managerial Quality

Gilbert Cette (), Jimmy Lopez (), Jacques Mairesse () and Giuseppe Nicoletti ()
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Jimmy Lopez: LEDI, Université de Bourgogne-Franche-Comté (France) and Banque de France (France)
Jacques Mairesse: CREST ENSAE (France); UNU-MERIT, Maastricht University (Netherlands); EHESS (France); NBER (USA)
Giuseppe Nicoletti: Economics Department, OECD (France)

No 2020-26, Working Papers from Center for Research in Economics and Statistics

Abstract: This study investigates empirically how managerial practices have affected macroeconomic adjustment during the Great Recession after the 2008 economic crisis. We start by constructing a country*industry balanced panel data over the 2007-2015 period for eighteen industries in ten OECD countries, and complementing it by two indicators: an indicator of management quality at the country level based on the managerial practices categorical scores at firm level from Bloom et al. (2012); and an indicator at the industry level for the shocks stemming from the 2008 economic crisis. We then rely on the local projection method pioneered by Jordà (2005) to estimate the direct impacts of country management quality indicators and industry economic shocks as well as their joint impacts, on five variables of interest: value-added, employment, labor productivity, wage per employee and labor share during the Great Recession. We find that, in countries where management quality is higher, production and employment are more resilient during the Great Recession, with less production losses and employment damages, no effects on productivity, wage moderation and a slight increase in the labor shares. It appears, moreover, that this resilience is increasing with the size of industry shocks.

Keywords: Economic adjustment; Employment; Wage; Management quality; Great Recession; Local projection cross-country analysis; Dynamic modelling. (search for similar items in EconPapers)
JEL-codes: E24 M11 M54 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2020-11-03
New Economics Papers: this item is included in nep-lab and nep-mac
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