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DOES INPUT QUALITY DRIVE MEASURED DIFFERENCES IN FIRM PRODUCTIVITY?

Jeremy T. Fox and Valérie Smeets
International Economic Review
Vol. 52, No. 4 (November 2011), pp. 961-989
Stable URL: http://www.jstor.org/stable/41349184
Page Count: 29
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
DOES INPUT QUALITY DRIVE MEASURED DIFFERENCES IN FIRM PRODUCTIVITY?
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Abstract

One explanation for productivity dispersion is that the quality of inputs differs across firms. We add labor market history variables such as experience and firm and industry tenure, as well as general human capital measures such as schooling and sex. Adding these variables decreases the ratio of the 90th to 10th productivity quantiles from 3.27 to 2.68 across eight Danish manufacturing and service industries. We also use the wage bill and worker fixed effects. We find that the wage bill explains as much dispersion as human capital measures.

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