Understanding Productivity Dispersion

This project aims to collect new data from Uganda, in the hope of helping to provide an answer to the question of why some firms produce so much more output per worker than others, in developing countries.

Differences in total factor productivity across countries - an important explanatory factor of differences in income per capita- are difficult to address, since they could be ascribed to different institutions or rule of law. However, productivity dispersion is significant even within developing countries due to the majority of firms being small and unproductive, with some notable exceptions. This within-country dispersion could be attributed to factors that may be better studied and addressed by external interventions, but at at the present time suitable data to provide an answer to these questions is lacking.

This project aims to fill this gap by designing and implementing a representative survey of small, medium, and large firms and their employees, in urban and semi-urban Uganda. The survey focuses on manufacturing firms, where productivity is easier to measure, and includes sectors where - at least in principle - firms of different productivity can co-exist. Moreover, sectors with a sufficient number of large firms are targeted. These criteria lead to a concentration on three sectors: manufacturing of metal products, of furniture and of grain mill products. In terms of coverage, the researchers expect to be able to survey around 1000 firms, of which around 40% should be large firms. Both owners/managers and employees will be interviewed. The collected data will be then analysed through summary statistics and counterfactual exercises.

This project has already received substantial backing from important policymakers in Uganda: indeed, the Ministry of Trade has expressed strong interest, and formed a partnership with the researchers. Since the Ministry is currently designing a new industrial training model, the evidence from this survey will inform its key features. Moreover, this will be a stepping stone towards a fruitful and lengthy collaboration, with the researchers aiming to build a large-scale randomized control trial around the roll-out of such training program.