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Organizations, Trade, and Productivity

Paper Session

Sunday, Jan. 8, 2017 1:00 PM – 3:00 PM

Hyatt Regency Chicago, Grand Suite 3
Hosted By: American Economic Association
  • Chair: Lorenzo Caliendo, Yale University

Productivity and Organization in Portuguese Firms

Lorenzo Caliendo
,
Yale University
Giordano Mion
,
University of Sussex
Luca Opromolla
,
Bank of Portugal
Esteban Rossi-Hansberg
,
Princeton University

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 firm production quantity and input data for Portuguese firms, 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, quantity based productivity increases by about 4%, while revenue-based productivity drops by more than 4%. 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.

Product-Level Efficiency and Core Competence in Multi-Product Plants

Alvaro García-Marín
,
University of Chile
Nico Voigtländer
,
University of California-Los Angeles

Abstract

A growing literature examines trade-related dynamics at the product-level within firms or plants. Product-level efficiency is a key theoretical component, and so is the ranking of products by "core competence." However, data limitations make it difficult to construct product-level efficiency, and productivity patterns across products within plants are largely unexplored. We exploit a uniquely detailed Chilean dataset that allows us to compute several alternative efficiency measures (such as marginal costs, revenue productivity, physical efficiency, and marginal costs), for each product within plants. We present novel stylized facts in three areas. First, on product-level efficiency patterns, we show that productive plants tend to be relatively efficient across the board, not just for their core products. Second, we show that the typically used sales-based product ranks correctly reflect higher physical efficiency (TFPQ); however - seemingly contradictory - marginal costs are higher for top-ranked sales products. We show that this discrepancy is likely driven by product quality and present a stylized model that underlines the importance of the ranking variable. Finally, using the prominent metric of export skewness towards core products, we highlight the importance of using the appropriate ranking variable when testing predictions of flexible manufacturing models. Product ladders based on marginal costs or revenue productivity do not show export skewness, while TFPQ-based rankings do yield skewness towards the most efficient product and thus aggregate efficiency gains from trade.

Import Competition, Productivity, and Multi-Product Firms

Emmanuel Dhyne
,
University of Mons and National Bank of Belgium
Amil Petrin
,
University of Minnesota
Valerie Smeets
,
Aarhus University
Fredric Warzynski
,
Aarhus University

Abstract

Using detailed firm-product level quarterly data, we develop an estimation framework of a Multi-Product Production Function (MPPF) and analyse firm-product level TFP estimations at various levels (industries, products). After documenting our estimation results, we relate productivity estimates with import competition, using firm and product level measures of import competition. We find that if productivity at the firm level tends to positively react to increased import competition, the multi-product firms response varies according to the relative importance of the product that faces stronger import competition in the firm’s product portfolio. When import competition associated to the main product of a firm increases, the firm tend to increase its efficiency in producing that core product, in which it has a productivity advantage. However, when the degree of foreign competition increases for non core products of a firm, it tends to lower its efficiency in producing those goods.
Discussant(s)
Chad Syverson
,
University of Chicago
Ferdinando Monte
,
Georgetown University
Peter Schott
,
Yale University
JEL Classifications
  • D2 - Production and Organizations
  • F1 - Trade