Manager Allocation and Firm Dynamics
Coming Soon!, 2024
Abstract This paper studies how the allocation of managerial talent both between and within firms affects firm composition, dynamics, and the broader distribution of productivity across the economy. I build a firm dynamics model with frictional between-firm allocation and costly within-firm promotion of managers and derive the equilibrium implications of these forces to firm composition and aggregate productivity distribution. Using granular German employer-employee data, I analyze and quantify the impact of these channels on managerial position flows. Theoretical insights are confronted with empirical evidence to assess their implications for firm dynamics and overall productivity.