Firm organization and productivity across locations

Grigorios Spanos
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Grigorios Spanos: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, SDS - Univ Geneva, Dept Hist Econ & Soc, Sch Social Sci

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Abstract: This paper provides a new mechanism to explain variation in firm productivity across locations: variation in the internal organization of labor into hierarchical layers, which are associated with different responsibilities within the firm. To guide my analysis, I develop a theoretical model that yields two implications. First, firms in larger markets organize into a greater number of layers. Second, because they have more layers, firms in larger markets are more productive. I then use administrative data to examine the model's implications across French employment areas and non-tradeable service industries that satisfy the model's assumptions: Clothing and Shoe Retail, Traditional Restaurants, and Hair and Beauty Salons. The findings are consistent with the model. I also observe that 8.8% to 22.4% of the log productivity gains from denser areas arise from differences in the organization of firms. A separate analysis shows that results are similar across firms operating in the manufacturing sector.

Keywords: Firm organization; Heterogeneous firms; Market size; Density; Regional disparities; Wages; Firm productivity (search for similar items in EconPapers)
Date: 2019-07
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-02271020
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Citations: View citations in EconPapers (5)

Published in Journal of Urban Economics, 2019, 112, pp.152-168. ⟨10.1016/j.jue.2019.05.006⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02271020

DOI: 10.1016/j.jue.2019.05.006

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