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Within-Firm Productivity Dispersion: Estimates and Implications

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  • Scott Orr

Abstract

This paper develops a flexible recipe for identifying unobserved input allocations, as well as quantity- and revenue-based total factor productivity (TFP) across product lines, for multiproduct producers, using demand- and supply-side information. Applying variants of this recipe to a panel of plants manufacturing machinery in India from 2000–2007 yields sizable within-plant TFP differences. Removing an average plant’s lowest-performing product increases the unweighted average of plant-level revenue-based productivity by 10%–65%. A 1 standard deviation decline in product-level revenue-based TFP generates around a 6 percentage point increase in the probability of dropping that product.

Suggested Citation

  • Scott Orr, 2022. "Within-Firm Productivity Dispersion: Estimates and Implications," Journal of Political Economy, University of Chicago Press, vol. 130(11), pages 2771-2828.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/720465
    DOI: 10.1086/720465
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    Cited by:

    1. David Van Dijcke, 2022. "On the Non-Identification of Revenue Production Functions," Papers 2212.04620, arXiv.org, revised May 2024.
    2. Mauro Caselli & Arpita Chatterjee & Shengyu Li, 2023. "Productivity and Quality of Multi-product Firms," Discussion Papers 2023-10, School of Economics, The University of New South Wales.
    3. Jamil, Nida & Chaudhry, Theresa Thompson & Chaudhry, Azam, 2022. "Trading textiles along the new silk route: The impact on Pakistani firms of gaining market access to China," Journal of Development Economics, Elsevier, vol. 158(C).
    4. Germán Bet, 2024. "The Productivity Effects Of Corporate Diversification," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 685-728, June.
    5. Hong, Joonkyo & Luparello, Davide, 2024. "Robustness Report on "Within-Firm Productivity Dispersion: Estimates and Implications," by Scott Orr (2022)," I4R Discussion Paper Series 181, The Institute for Replication (I4R).

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