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Productivity and Organization in Portuguese Firms

Author

Listed:
  • Mion, Giordano
  • Rossi-Hansberg, Esteban
  • Opromolla, Luca David
  • Caliendo, Lorenzo
Abstract
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 8%, while revenue-based productivity drops by around 7%. 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.

Suggested Citation

  • Mion, Giordano & Rossi-Hansberg, Esteban & Opromolla, Luca David & Caliendo, Lorenzo, 2015. "Productivity and Organization in Portuguese Firms," CEPR Discussion Papers 10993, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10993
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    More about this item

    Keywords

    Firm size; Layers; Managers; Organization; Productivity; TFP; Wages;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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