PUBLICATIONS:
Organization & Density-Related Differences in Firm-Level Wage Disparities?, Regional Science and Urban Economics 95, July 2022. (Working Paper version: paper.pdf)
Abstract: This paper examines differences in within-firm wage disparities across French employment areas. Using administrative data, my analysis first documents that wage disparities are larger within firms operating in denser employment areas: a 100% increase in the employment density of an area is associated with a 0.015 log point increase in the 95/5 hourly wage ratio within firms. My analysis also examines the extent to which differences in the internal organization of labor into layers of hierarchy account for these disparities. I find that firms in denser employment areas organize into a greater number of layers, and that wage disparities are larger in firms with more layers. Finally, I conclude that firm organization is important: local differences in firm organization account for 31.3% to 50.0% of the cross-sectional relationship between the employment density of areas and the log of the 95/5 hourly wage ratio within firms, and 12.2% of the same relationship estimated within firms. A separate analysis conducted with the standard deviation of log hourly wages leads to similar conclusions.
Firm Organization and Productivity across Locations, Journal of Urban Economics, 112, July 2019: 152-168. (Working Paper version: paper.pdf)
Note: previously circulated as The Impact of Market Size on Firm Organization and Productivity.
Abstract: This paper provides a new mechanism to explain variation in firm productivity across locations: variation in the internal organization of labor into hierarchical layers, which are associated with different responsibilities within the firm. To guide my analysis, I develop a theoretical model that yields two implications. First, firms in larger markets organize into a greater number of layers. Second, because they have more layers, firms in larger markets are more productive. I then use administrative data to examine the model's implications across French employment areas and non-tradeable service industries that satisfy the model's assumptions: Clothing and Shoe Retail, Traditional Restaurants, and Hair and Beauty Salons. The findings are consistent with the model. I also observe that 8.8% to 22.4% of the log productivity gains from denser areas arise from differences in the organization of firms. A separate analysis shows that results are similar across firms operating in the manufacturing sector.
Organization and Export Performance, Economic Letters, 146, September 2016: 130-134.
Abstract: This paper presents new facts on firms' internal organization and their export performance. I find an ordering of the distribution of organizations and, both across and within firms, firms' number of layers is positively correlated with their export performance.
WORKING PAPERS:
Near and Far: R&D Strategies of Business Groups, with Nilanjana Dutt and Luisa Gagliardi (paper.pdf)
Abstract: Understanding how business groups organize their global research and development (R&D) networks has implications for their innovation performance. Among various drivers of innovation, geographic distance plays a key role in determining the benefits and costs of conducting R&D activities in different locations. Prior research has suggested firms typically invest in geographically proximate subsidiaries that are easy to monitor and benefit from knowledge spillovers. Yet, there is also evidence of highly distant subsidiaries providing access to specialized knowledge. Using data from a globally comprehensive sample of business groups complemented by several additional data sources, we show that subsidiaries both proximate and highly distant from the headquarters are equally likely to be active in R&D. Moreover, business groups use different strategies based on the monitoring-autonomy tradeoff to benefit from each of these different subsidiaries. Our findings suggest that business groups that invest in highly distant R&D-active subsidiaries tend to have higher patenting activity and productivity. These results yield concrete recommendations for business groups on how to balance the tension between the costs and benefits of geographic distance for R&D strategies and how to manage their R&D networks successfully.
Sorting Within and Across French Production Hierarchies (paper.pdf)
Abstract: The objective of this paper is to examine the assignment of workers to layers and firms. In particular, I use an administrative dataset of French workers to study the organization of firms. To do this, I first classify employees as residing in different organizational layers such as production and administrative workers, supervisors, senior managers, and owners and CEOs, using occupational codes. From a panel wage regression I then obtain estimates of workers' ability. I emphasize three results. First, higher ability workers are employed in the higher layers of firms. Second, I find evidence of positive assortative matching between workers in the different layers of firms. Third, I find weak evidence that higher ability workers allow their managers to increase their span of control and employ larger teams.
Organization and Differences in Pay Across Firms (paper.pdf)
Abstract: This paper examines differences in pay across French manufacturing firms. I find that average wages are greater in firms with more layers and that organization accounts for a meaningful share of the differences in pay associated with the density of areas, and the size, the productivity and the export status of firms.
The Geography of Business Groups, with Luisa Gagliardi, Jeremy Luccheti and Frederic Robert-Nicoud
Abstract: We investigate how geographic distance affects the internal organization of business groups. To do this, we build parent-subsidiary model that features knowledge creation, monitoring, and opportunistic behavior. In equilibrium, we show that the parent firm chooses a level of monitoring that decreases with the geographic distance from the subsidiary, implying that the parent firm grants greater autonomy to distant subsidiaries. We also find that this effect increases with parent firm's knowledge. Using business group data, we find empirical support for the theoretical predictions of the model.
Product Differentiation, Firm Organization and Productivity, with Tanguy van Ypersele
Abstract: This paper provides a new mechanism to explain the productivity of firms across sectors. Namely, firms in homogeneous good sectors are more productive because they organize with a greater number of layers. Using administrative French data, I first groups sectors by their degree of product differentiation. I emphasize three results. First, firms producing homogeneous goods operate with a greater number of layers. Second, an additional layer in a firm is associated with an increase in productivity. And third, I find that organization plays a role in explaining the productivity of firms across sectors.
Teams, Trade and Comparative Advantage
Abstract: This paper investigates the relationship between income inequality and international trade. To understand this relationship I extend Garicano and Rossi-Hansberg (2004) to two goods and two countries. Production can occur in teams, composed of one manager and many production workers. A competitive equilibrium exists in both the closed and open economy. In such an equilibrium there is positive sorting, the earnings function are convex, and the sets of managers and workers are connected. This model yields the result that in an open economy, identical workers located in different countries do not earn the same income. This paper demonstrates that from trade liberalization, in a given sector, the returns to managers and production workers change in the same direction. Finally, this paper concludes that whether international trade increases or decreases income inequality depends on the cost of communication between managers and workers.
SELECTED WORKS IN PROGRESS:
Re-Examining Minimum Wages Through the Lens of Organization, with Claire Lelarge and Nicholas Lawson