Economic Adjustment during the Great Recession: The Role of Managerial Quality

20 Pages Posted: 1 Dec 2020

See all articles by Gilbert Cette

Gilbert Cette

Banque de France

Jimmy Lopez

LEDi; Microeconomic and Structural Analysis Directorate

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT); National Bureau of Economic Research (NBER)

Giuseppe Nicoletti

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

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Date Written: October 1, 2020

Abstract

This study investigates empirically how managerial practices have affected macroeconomic adjustment during the Great Recession after the 2008 economic crisis. We start by constructing a country*industry balanced panel data over the 2007-2015 period for eighteen industries in ten OECD countries, and complementing it by two indicators: an indicator of management quality at the country level based on the managerial practices categorical scores at firm level from Bloom et al. (2012); and an indicator at the industry level for the shocks stemming from the 2008 economic crisis. We then rely on the local projection method pioneered by Jordà (2005) to estimate the direct impacts of country management quality indicators and industry economic shocks as well as their joint impacts, on five variables of interest: value-added, employment, labor productivity, wage per employee and labor share during the Great Recession. We find that, in countries where management quality is higher, production and employment are more resilient during the Great Recession, with less production losses and employment damages, no effects on productivity, wage moderation and a slight increase in the labor shares. It appears, moreover, that this resilience is increasing with the size of industry shocks

Keywords: Economic adjustment, Employment, Wage, Management quality, Great Recession, Local projection cross-country analysis, Dynamic modelling

JEL Classification: E24, M11, M54

Suggested Citation

Cette, Gilbert and Lopez, Jimmy and Mairesse, Jacques and Nicoletti, Giuseppe, Economic Adjustment during the Great Recession: The Role of Managerial Quality (October 1, 2020). Banque de France Working Paper No. 784, Available at SSRN: https://ssrn.com/abstract=3738232 or http://dx.doi.org/10.2139/ssrn.3738232

Gilbert Cette (Contact Author)

Banque de France ( email )

Paris
France

Jimmy Lopez

LEDi ( email )

Boulevard Gabriel
Dijon, Bougogne 21000
France

Microeconomic and Structural Analysis Directorate ( email )

Paris
France

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT)

Keizer Karelplein 19
6211 TC Maastricht
Netherlands

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Giuseppe Nicoletti

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33 1 4524 8730 (Phone)
+33 1 4524 1347 (Fax)

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