Working Paper: CEPR ID: DP18487
Authors: Vittorio Bassi; Jay Lee; Alessandra Peter; Tommaso Porzio; Ritwika Sen; Esau Tugume
Abstract: We collect time-use data for entrepreneurs and their workers in over 1,000 manufacturing firms in urban Uganda. We document limited labor specialization within the firm for establishments of all sizes and argue that this is likely due to the prevalence of product customization. We then develop a general equilibrium model of task assignment within the firm, estimate it with our data, and find large barriers to labor specialization. This setting is close, in terms of aggregate productivity and firm scale, to an extreme benchmark in which each firm is just a collection of self-employed individuals sharing a production space. Given how firms are organized internally, the benefits from alleviating other frictions that constrain firm growth are muted: most African firms resemble artisanal workshops whose business model is not easily scalable.
Keywords: self-employment; economic development; macroeconomics; firm organization
JEL Codes: O11; O17; L23; L25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| limited labor specialization within firms (L23) | growth (O40) |
| customized product demand (L15) | limited labor specialization within firms (L23) |
| internal organization (L22) | returns to supply-side interventions (E65) |
| reducing barriers to labor specialization (J59) | productivity (O49) |
| reducing barriers to labor specialization (J59) | firm size (L25) |
| firm productivity (D22) | entrepreneur's ability (M13) |