DYNAMICS OF PRODUCTIVITY AND COST OF LABOUR IN ITALIAN MANUFACTURING FIRMS
We thank Giovanni Dosi, Angelo Secchi, and Federico Tamagni for many useful discussions and comments at various stages of this work. We also thank Lawrence Kahn for useful suggestions. The statistical exercises which follow would not have been possible without the valuable help of the Italian Statistical Office (ISTAT) and in particular of Roberto Monducci and Andrea Mancini. G.B. acknowledges the support of the Italian Ministry of University and Research, grant PRIN 2009 “The growth of firms and countries: distributional properties and economic determinants”, prot. 2009H8WPX5. The usual disclaimer applies.
This paper studies the impact of size on labour cost and productivity for Italian manufacturing firms. The distributions of both labour cost and productivity display a wide support, even when disaggregated by sector of industrial activity. Further, both labour cost and productivity, when considered alone, are growing with the size of the firm. We investigate this relationship on a new set of data and we are able to show that once productivity differences among firms have been accounted for, size still retains a positive effect on cost of labour in most of the sectors considered.