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The Persistence of Differences in Productivity, Wages, Skill Mixes and Profits Between Firms in a Rapidly Changing Environment

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  • Katsuya Takii

    (Osaka School of International Public Policy (OSIPP))

Abstract

In this paper, we construct a dynamic assignment model that can provide a unified explanation of persistent differences in productivity, wages, skill mixes and profits between firms in a changing and uncertain environment. Large expected organization capital (firm-specific knowledge) attracts skilled workers, who help to accumulate organization capital. Accumulated large organization capital, in turn, confirms high expectations. This positive feedback brings about persistent differences in these variables in an uncertain environment. We estimate parameters and simulate the model. Our results show that a positive assignment mechanism accounts for a large part of the observed persistence; the difficulty of estimating organization capital plays only an auxiliary role.

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Bibliographic Info

Paper provided by Osaka School of International Public Policy, Osaka University in its series OSIPP Discussion Paper with number 08E003.

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Length: 50 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:osp:wpaper:08e003

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Keywords: Organization Capital; Assignment; Persistence;

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References

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  23. Katsuya Takii, 2007. "The Persistence of Differences in Productivity, Wages, Skill Mixes and Profits Between Firms," Discussion Papers in Economics and Business 07-10, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
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Cited by:
  1. Katsuya Takii & Ryuichi Tanaka, 2013. "On the role of job assignment in a comparison of education systems," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 180-207, February.
  2. TAKII Katsuya, 2011. "Persistent Productivity Differences Between Firms," Discussion papers 11048, Research Institute of Economy, Trade and Industry (RIETI).

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