The evidence that earnings rise with firm size and that human capital affects earnings based on labour market data are two of the most robust empirical findings in economics. In contrast the evidence for scale economies in firm data is very weak. The limited direct evidence of human capital on firm productivity suggests that human capital is indeed productive and that the magnitudes are consistent with the findings based on individual data. The common objection to accepting the role of size and human capital as determinants of either earnings or productivity has been the role of unobserved factors. In this paper we investigate the roles of size and human capital in determining both earnings and productivity using a panel data set of matched labour firm data which allows us to control for such factors.
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Paper provided by Centre for the Study of African Economies, University of Oxford in its series Working Papers Series with number
2001-9.
Length: 29 pages Date of creation: 2001 Date of revision: Handle: RePEc:fth:oxesaf:2001-9
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Find related papers by JEL classification: O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
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