MACROMGR | The Macroeconomics of Managers

Summary
There are enormous differences in productivity both across countries and across firms within the same country. Not only is the average firm less productive in poor countries, the allocation of resources across firms is also less efficient. Good management is understood as one of the key determinants of firm performance. Why don't management best practices spread from good firms to bad ones and from rich countries to poor ones? In order to explain management practices and productivity at the macroeconomic level, we need to understand where good managers come from and how they are allocated across firms. I propose a new research agenda of the macroeconomics of managers. I will build three quantifiable theories to describe the market for manager skills and estimate them in new longitudinal data on the universe of firms and top managers in Germany (1991-2021) and Hungary (1980-2021). I will study the increased demand for manager skills after economic liberalization of the 1990s, the geographic and other frictions stopping managers from reaching their full potential at their ideal firm, and the spread of trading practices between firms as managers move. My research will show how the misallocation of manager skills across firms, space, and time can contribute to lower aggregate productivity.
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More information & hyperlinks
Web resources: https://cordis.europa.eu/project/id/101097789
Start date: 01-11-2023
End date: 31-10-2028
Total budget - Public funding: 1 782 794,00 Euro - 1 782 794,00 Euro
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Original description

There are enormous differences in productivity both across countries and across firms within the same country. Not only is the average firm less productive in poor countries, the allocation of resources across firms is also less efficient. Good management is understood as one of the key determinants of firm performance. Why don't management best practices spread from good firms to bad ones and from rich countries to poor ones? In order to explain management practices and productivity at the macroeconomic level, we need to understand where good managers come from and how they are allocated across firms. I propose a new research agenda of the macroeconomics of managers. I will build three quantifiable theories to describe the market for manager skills and estimate them in new longitudinal data on the universe of firms and top managers in Germany (1991-2021) and Hungary (1980-2021). I will study the increased demand for manager skills after economic liberalization of the 1990s, the geographic and other frictions stopping managers from reaching their full potential at their ideal firm, and the spread of trading practices between firms as managers move. My research will show how the misallocation of manager skills across firms, space, and time can contribute to lower aggregate productivity.

Status

SIGNED

Call topic

ERC-2022-ADG

Update Date

12-03-2024
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Horizon Europe
HORIZON.1 Excellent Science
HORIZON.1.1 European Research Council (ERC)
HORIZON.1.1.0 Cross-cutting call topics
ERC-2022-ADG
HORIZON.1.1.1 Frontier science
ERC-2022-ADG