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Decomposing differences in total factor productivity across firm size

By Laia Castany Teixidor, Enrique López-Bazo and Rosina Moreno Serrano

Abstract

This paper investigates the extent to which the gap in total factor productivity between small and large firms is due to differences in the endowment of factors determining productivity and to the returns associated with these factors. We place particular emphasis on the contribution of differences in the propensity to innovate and in the use of skilled labor across firms of different size. Empirical evidence from a representative sample of Spanish manufacturing firms corroborates that both differences in endowments and returns to innovation and skilled labor significantly contribute to the productivity gap between small and large firms. In addition, it is observed that the contribution of innovation to this gap is caused only by differences in quantity, while differences in returns have no effect; in the case of human capital, however, most of the effect can be attributed to increasing differences in returns between small and large firms

Topics: Formació del personal, Petita i mitjana empresa, Dimensió de les empreses, Employee training, Small business, Size of business enterprises
Publisher: Universitat de Barcelona. Institut de Recerca en Economia Aplicada Regional i Pública
Year: 2015
OAI identifier: oai:diposit.ub.edu:2445/63547
Journal:

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