No Line Left Behind: Assortative Matching Inside the Firm
69 Pages Posted: 22 Oct 2019 Last revised: 16 Sep 2021
Date Written: September 23, 2019
We leverage the high degree of worker mobility across production lines in a large Indian manufacturer to estimate the sorting of workers to managers, using data on daily worker productivity. We find negative assortative matching (NAM) – i.e., better workers tend to match with worse managers. Estimates of the production technology, however, reveal that productivity would increase by up to 4% under positive sorting. Coupling these findings with a survey of managers and data on orders from multinational brands, we document that NAM arises partly because maintaining valuable relationships with buyers provides strong incentives to avoid delays on any given production line.
Keywords: Assortative Matching, Management, Productivity, Global Buyers, Readymade Garments, India
JEL Classification: J24, L14, L23, M5
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