Working Paper: NBER ID: w31740
Authors: Vittorio Bassi; Jung Hyuk Lee; Alessandra Peter; Tommaso Porzio; Ritwika Sen; Esau Tugume
Abstract: We collect time-use data for entrepreneurs and employees in a sample of 1,000 manufacturing firms in Uganda, representative of both small and large production units. We find that even the largest firms in this setting more closely resemble a collection of self-employed individuals sharing a production space than a modern firm in which labor is specialized. We interpret the evidence through an equilibrium model of occupational choice and task assignment within the firm. The estimated model shows that there are only small productivity gains from having talented entrepreneurs run large firms. As a result, given the currently used production technology, classic development interventions such as wage subsidies or capital grants would have muted effects on firm size and aggregate productivity.
Keywords: Labor Specialization; Firm Size; Customization; Uganda
JEL Codes: L23; L25; O11; O14; O17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Barriers to labor specialization (J29) | Firm size (L25) |
| Demand for customized goods (L67) | Barriers to labor specialization (J29) |
| Barriers to labor specialization (J29) | Productivity (O49) |
| Internal organization of firms (L22) | Returns to scale (D24) |
| Returns from supply-side interventions (J24) | Internal organization of firms (L22) |
| Unbundling costs associated with labor specialization (J39) | Benefits of interventions (O22) |