Abstract:

Using employer-employee matched and firm production quantity and input data for Portuguese firms, we study the endogenous response of productivity to firm reorganizations as measured by changes in the number of management layers. 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 6%, while revenue-based productivity drops by around 3%. Such. © 2020 by The University of Chicago. All rights reserved.