Why is Productivity so Dispersed?

Posted: 29 Feb 2008

See all articles by Rachel Griffith

Rachel Griffith

Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)

Jonathan Haskel

Imperial College Business School; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Andy Neely

University of Cambridge; London Business School

Multiple version iconThere are 2 versions of this paper

Date Written: 2006

Abstract

Many papers have documented wide variations in productivity even in narrowly defined industries. Some have argued that this primarily reflects measurement problems due, for example, to comparing across different products. Others argue that this reflects persistent differences in performance due, for example, to management. This paper looks at productivity differences not within an industry but within a firm. We use data on productivity of different branches within lines of business of a major UK-based wholesaler. Using these productivity data for comparisons is, we argue, more likely to compare like with like than comparing between firms. We document sustained differences in productivity even between branches within the same line of business. We also discuss the extent to which they are correlated with differences in management and find that such differences 'account' for around 40 per cent of the difference in productivity.

Suggested Citation

Griffith, Rachel and Haskel, Jonathan and Neely, Andy D., Why is Productivity so Dispersed? ( 2006). Oxford Review of Economic Policy, Vol. 22, Issue 4, pp. 513-525, 2006. Available at SSRN: https://ssrn.com/abstract=1096846 or http://dx.doi.org/10.1093/oxrep/grj030

Rachel Griffith (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

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Centre for Economic Policy Research (CEPR)

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Jonathan Haskel

Imperial College Business School ( email )

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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Andy D. Neely

University of Cambridge ( email )

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HOME PAGE: http://www.ifm.eng.cam.ac.uk/people/adn1000/

London Business School ( email )

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