Firm Heterogeneity, Worker Training and Labor Productivity: The Role of Endogenous Self-selection

Sun, Sizhong (2023) Firm Heterogeneity, Worker Training and Labor Productivity: The Role of Endogenous Self-selection. Journal of Productivity Analysis, 59. pp. 121-133.

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In productivity research with firm data, the existence of endogenous sample attrition is well known. In addition, endogenous sample selection may occur. In a simple model where heterogenous firms consider entry, exit, worker training and price setting in a monopolistically competitive market, I show that firm heterogeneity leads to self-selecting into the market, which in turn dampens the estimate of the marginal effect of worker training. To address the sample selection issue, I devise a generalized method of simulated moments estimator. Estimations with firm data from China’s shoe manufacturing industry show that an increase of one standard deviation of worker training expenditure intensity results in an around 5.6% decrease in a firm’s labor productivity, larger than the estimate without accounting for endogenous sample selection.

Item ID: 77031
Item Type: Article (Research - C1)
ISSN: 1573-0441
Copyright Information: Published Version: © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022. Accepted version may be made open access in an Institutional Repository after a 12 month embargo.
Date Deposited: 11 Dec 2022 23:28
FoR Codes: 38 ECONOMICS > 3801 Applied economics > 380109 Industry economics and industrial organisation @ 50%
38 ECONOMICS > 3802 Econometrics > 380201 Cross-sectional analysis @ 30%
38 ECONOMICS > 3801 Applied economics > 380111 Labour economics @ 20%
SEO Codes: 15 ECONOMIC FRAMEWORK > 1505 Microeconomics > 150510 Production @ 100%
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