Mohammadali Feizpour; Mohammadreza Dehghanpour
Volume 11, Issue 41 , July 2011, , Pages 71-95
Abstract
The relationship between industrial structure and productivity, particularly when
the former influences the latter, is the traditional view that large firms in more
concentrated industries have the resources to make R&D investments, bring about
technical advances and ultimately raise industrial ...
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The relationship between industrial structure and productivity, particularly when
the former influences the latter, is the traditional view that large firms in more
concentrated industries have the resources to make R&D investments, bring about
technical advances and ultimately raise industrial productivity. On the other hand,
small firms in competitive industries may lack the resources to invest in innovation
and make productivity gains.
The purpose of this paper is to investigate the relationship between industrial
structure and labour productivity for manufacturing firms in Iran during the years of
the Second Development Plan. Concentration ratio, barriers to entry and minimum
efficient scale are considered as measures of industrial structure and labour
productivity wich is defined as the ratio of total output to total labour force. The data
for empirical analysis consist of 12000 manufacturing firms, aggregated at 23, 60
and 135 of 2, 3 and 4-digit industries respectively. The results suggest that industry
structure, measured by minimum efficient scale has a positive and significant effect
in the labour productivity. This finding suggests that Iranian manufacturing plants
are sub-optimal and it is possible to increase labour productivity by achieving
minimum efficient scale.
