Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282129 
Year of Publication: 
2023
Series/Report no.: 
Discussion Paper No. 437
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
A growing empirical literature attributes much of the productivity advantages of large, "superstar" firms to their adoption of best practice management techniques that allow them to better identify and use talented workers. The reasons for the incomplete adoption of these "structured management practices" and their welfare implications are not well understood. This paper provides a positive and normative analysis of these issues in a theoretical framework in which structured management practices induce sorting of talent across firms. Incomplete adoption arises because worker talent is in limited supply. In equilibrium there is excessive adoption of structured management practices and too much sorting of talented workers into large firms. In this second-best environment, policy changes that favor large firms, such as trade liberalization, have the potential to lower welfare.
Subjects: 
labor market imperfection
misallocation
productivity
wage inequality
international trade
welfare
JEL: 
F12
F16
J31
J33
J42
M51
Document Type: 
Working Paper

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