TY  - RPRT
        AU  - Gomes, Pedro Maia
AU  - Kuehn, Zoë
        TI  - Human Capital and the Size Distribution of Firms
        PY  - 2014/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 8268
        UR  - https://www.iza.org/publications/dp8268
        AB  - Countries that have relatively fewer workers with a secondary education have smaller firms. The shortage of skilled workers limits the growth of more productive firms. Two factors influence the availability of skilled workers: i) the education level of the workforce and ii) large public sectors that predominantly hire individuals with a better education. We set up a model economy with a government and private firm formation where production requires unskilled and skilled jobs. Workers with a secondary education are pivotal as they can perform both types of jobs. We find that level of education and public sector employment account for 40-45% of the differences between the United States and Mexico in terms of average firm size, GDP per capita, and GDP per hour worked. We also show that the impact of public employment on skill premiums and productivity measures depends on the skill bias in public hiring.

        KW  - firm size
KW  - educational attainment
KW  - skill complementarities
KW  - public employment
KW  - college premium
KW  - high school premium
        ER  -