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The Anatomy of French Production Hierarchies

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  • Rossi-Hansberg, Esteban
  • Caliendo, Lorenzo
  • Monte, Ferdinando

Abstract

We use a comprehensive dataset of French manufacturing firms to study their internal organization. We first divide the employees of each firm into `layers' using occupational categories. Layers are hierarchical in that the typical worker in a higher layer earns more, and the typical firm occupies less of them. In addition, the probability of adding (dropping) a layer is very positively (negatively) correlated with value added. We then explore the changes in the wages and number of employees that accompany expansions in layers, output, or markets (by becoming exporters). The empirical results indicate that reorganization, through changes in layers, is key to understand how firms expand and contract. For example, we find that firms that expand substantially add layers and pay lower average wages in all pre-existing layers. In contrast, firms that expand little and do not reorganize pay higher average wages in all pre-existing layers.

Suggested Citation

  • Rossi-Hansberg, Esteban & Caliendo, Lorenzo & Monte, Ferdinando, 2012. "The Anatomy of French Production Hierarchies," CEPR Discussion Papers 9073, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9073
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    More about this item

    Keywords

    Firm dynamics; Firm growth; Organizational change; Organizations; Skills; Wages;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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

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