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DP10993 Productivity and Organization in Portuguese Firms

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posted on 2023-06-08, 23:52 authored by Lorenzo Caliendo, Giordano Mion, Luca David Opromolla, Esteban Rossi-Hansberg
The productivity of firms is, at least partly, determined by a firm’s actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and firm production quantity and input data for Portuguese firms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantity-based productivity increases by about 4%, while revenue-based productivity drops by more than 4%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity.

History

Publication status

  • Published

Publisher

Centre for Economic Policy Research

Pages

58.0

Place of publication

London

Department affiliated with

  • Economics Publications

Institution

Centre for Economic Policy Research

Full text available

  • No

Legacy Posted Date

2016-01-07

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