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Within-Firm Productivity Dispersion: Estimates and Implications

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  • Scott Orr

Abstract

This paper develops a flexible recipe for identifying unobserved input allocations, as well as quantity- and revenue-based total factor productivity (TFP) across product lines, for multiproduct producers, using demand- and supply-side information. Applying variants of this recipe to a panel of plants manufacturing machinery in India from 2000–2007 yields sizable within-plant TFP differences. Removing an average plant’s lowest-performing product increases the unweighted average of plant-level revenue-based productivity by 10%–65%. A 1 standard deviation decline in product-level revenue-based TFP generates around a 6 percentage point increase in the probability of dropping that product.

Suggested Citation

  • Scott Orr, 2022. "Within-Firm Productivity Dispersion: Estimates and Implications," Journal of Political Economy, University of Chicago Press, vol. 130(11), pages 2771-2828.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/720465
    DOI: 10.1086/720465
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    Cited by:

    1. David Van Dijcke, 2022. "On the Non-Identification of Revenue Production Functions," Papers 2212.04620, arXiv.org, revised Oct 2023.
    2. Mauro Caselli & Arpita Chatterjee & Shengyu Li, 2023. "Productivity and Quality of Multi-product Firms," Discussion Papers 2023-10, School of Economics, The University of New South Wales.
    3. Jamil, Nida & Chaudhry, Theresa Thompson & Chaudhry, Azam, 2022. "Trading textiles along the new silk route: The impact on Pakistani firms of gaining market access to China," Journal of Development Economics, Elsevier, vol. 158(C).

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