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Productivity and Organization in Portuguese Firms

Author

Listed:
  • Lorenzo Caliendo

    (Yale University)

  • Esteban Rossi-Hansberg

    (Princeton University)

  • Giordano Mion

    (University of Sussex)

  • Luca David Opromolla

    (Banco de Portugal)

Abstract

The productivity of firms is, at least partly, determined by a firm's actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and Örm production quantity and input data for Portuguese Örms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantitybased productivity increases by about 8%, while revenue-based productivity drops by around 7%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity.

Suggested Citation

  • Lorenzo Caliendo & Esteban Rossi-Hansberg & Giordano Mion & Luca David Opromolla, 2019. "Productivity and Organization in Portuguese Firms," 2019 Meeting Papers 1574, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:1574
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • 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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