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The Anatomy of French Production Hierarchies

Author

Listed:
  • Lorenzo Caliendo
  • Ferdinando Monte
  • Esteban Rossi-Hansberg

Abstract

We study the internal organization of French manufacturing firms. We divide the employees of each firm into "layers" using occupational categories. Layers are hierarchical in that the typical worker in a higher layer earns more, and the typical firm occupies less of them. The probability of adding/dropping a layer is positively/negatively correlated with value added. Reorganization, through changes in layers, is essential to understanding how firms grow. Firms that expand substantially add layers and pay lower average wages in all preexisting layers. In contrast, firms that expand little and do not reorganize pay higher average wages in all preexisting layers.

Suggested Citation

  • Lorenzo Caliendo & Ferdinando Monte & Esteban Rossi-Hansberg, 2015. "The Anatomy of French Production Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 809-852.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/681641
    DOI: 10.1086/681641
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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