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Management Practices, Workforce Selection, and Productivity

Author

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  • Stefan Bender
  • Nicholas Bloom
  • David Card
  • John Van Reenen
  • Stefanie Wolter

Abstract

We study the relationship among productivity, management practices, and employee ability using German data combining management practices surveys with employees' longitudinal earnings records. Including human capital reduces the association between productivity and management practices by 30%-50%. Only a small fraction is accounted for by the higher human capital of the average employee at better-managed firms. A larger share is attributable to the human capital of the highest-paid workers, that is, the managers. A similar share is mediated through the pay premiums offered by better-managed firms. We find that better-managed firms recruit and retain workers with higher average human capital.

Suggested Citation

  • Stefan Bender & Nicholas Bloom & David Card & John Van Reenen & Stefanie Wolter, 2018. "Management Practices, Workforce Selection, and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 371-409.
  • Handle: RePEc:ucp:jlabec:doi:10.1086/694107
    DOI: 10.1086/694107
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    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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