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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.

Suggested Citation

  • 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.
  • Handle: RePEc:osp:wpaper:08e003
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    References listed on IDEAS

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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. Katsuya Takii, 2011. "Persistent Productivity Differences Between Firms," OSIPP Discussion Paper 11E004, 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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