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02 Apr 2019Working Paper Summaries

Managerial Quality and Productivity Dynamics

by Achyuta Adhvaryu, Anant Nyshadham, and Jorge Tamayo

Which managerial skills, traits, and practices matter most for productivity? This study of a large garment firm in India analyzes the integration of features of managerial quality into a production process characterized by learning by doing.

Author Abstract

Which managerial skills, traits, and practices matter most for productivity? How does the observability of these features affect how appropriately they are priced into wages? Combining two years of daily, line-level production data from a large Indian garment firm with rich survey data on line managers, we find that several key dimensions of managerial quality, like attention, autonomy, and control, are important for learning-by-doing as well as for overall productivity but are not commensurately rewarded in pay. Counterfactual simulations of our structural model show large gains from screening potential hires via psychometric measurement and training to improve managerial practices.