TY  - RPRT
        AU  - Gottlieb, Charles
AU  - Poschke, Markus
AU  - Tueting, Michael
        TI  - Skill Supply, Firm Size, and Economic Development
        PY  - 2026/Oct/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 19052
        UR  - https://www.iza.org/publications/dp19052
        AB  - Large firms are more productive than small firms, yet in low-income countries they employ only a small share of workers. Using newly harmonized microdata that link workers’ education and wages to the size of their employer for 57 countries, we document four facts: Countries with lower skill  endowments have 1) less employment in large firms and 2) a greater skill premium, and 3) large firms are more skill-intensive than small firms across countries, 4) with a gap that is larger in low-income countries. A model in which heterogeneous firms choose between a skill-intensive modern technology and a traditional one matches these patterns. In a quantitative analysis of the model, skill endowments account for 88% of the cross-country variation in large-firm employment, and technology choice adds a third to a country’s output gain from a larger skill endowment. Small firms in low-income countries are thus largely an efficient response to skill scarcity, and adjustments in the size structure of firms are an important vector of output gains from skill increasing skill supply.
        KW  - firm size
KW  - skills
KW  - technology choice
KW  - skill premium
KW  - economic development
        ER  -