Econometrica: May 2022, Volume 90, Issue 3

Managers and Productivity in the Public Sector

https://doi.org/10.3982/ECTA19244
p. 1063-1084

Alessandra Fenizia

This paper studies the impacts of managers in the administrative public sector using novel Italian administrative data containing an output‐based measure of productivity. Exploiting the rotation of managers across sites, I find that a one standard deviation increase in managerial talent raises office productivity by 10%. These gains are driven primarily by the exit of older workers who retire when more productive managers take over. I use these estimates to evaluate the optimal allocation of managers to offices. I find that assigning better managers to the largest and most productive offices would increase output by at least 6.9%.

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