The optimal use of management

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2021
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Wiley
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We analyze the management input from the perspective of shadow cost minimization. Using Bloom and Van Reenen's management measure, we estimate management's shadow price, dual Morishima elasticities of substitution, and relative price efficiencies. We find that the shadow price of management is about 1.3 million US dollars. Management is a weak dual complement for labor but a strong dual complement for capital. Increases in management reduce the relative income share of labor but not capital. Most firms use too little management, but relative use of management improves over time, with the combination of ownership and control, and competition.

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Sickles, Robin C., Sun, Kai and Triebs, Thomas P.. "The optimal use of management." Economic Inquiry, 59, no. 3 (2021) Wiley: 1346-1363. https://doi.org/10.1111/ecin.12979.

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This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.
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