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The Persistence of Differences in Productivity, Wages, Skill Mixes and Profits Between Firms

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  • Katsuya Takii

    (Osaka School of International Public Policy, Osaka University)

Abstract

In this paper, we construct a dynamic assignment model that can provide a unified explanation of several observed features of persistent differences in productivity, wages, skill mixes and profits between firms. Large organization capital (high firm-specific knowledge) attracts skilled workers, who can create further organization capital in the future. This positive feedback brings about persistent differences in these variables. We also analyze how the real and perceived values of a firm's organization capital interactively influence persistence. We estimate parameters and simulate the model. Our results show that a positive assignment mechanism accounts for a large part of the observed persistence.

Suggested Citation

  • Katsuya Takii, 2007. "The Persistence of Differences in Productivity, Wages, Skill Mixes and Profits Between Firms," OSIPP Discussion Paper 07E002, Osaka School of International Public Policy, Osaka University.
  • Handle: RePEc:osp:wpaper:07e002
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    References listed on IDEAS

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    Cited by:

    1. Katsuya Takii, 2008. "The Persistence of Differences in Productivity, Wages, Skill Mixes and Profits Between Firms in a Rapidly Changing Environment," OSIPP Discussion Paper 08E003, Osaka School of International Public Policy, Osaka University.

    More about this item

    Keywords

    Organization Capital; Assignment; Persistence;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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