Distortions, Endogenous Managerial Skills and Productivity Differences

Dhritiman Bhattacharya
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Dhritiman Bhattacharya: EQUIFAX

No 570, 2011 Meeting Papers from Society for Economic Dynamics

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 in order to quantify the effects of distortions that are plant specific and correlated with the size of production units (size-dependent policies). Our preliminary results indicate that these distortions can lead to large effects on plant productivity, as well as sharp reductions in the fraction of employment in large plants. Distortions also affect age-income profiles of managers as they reduce incentives to accumulate skills.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:570

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