The Matching Between Workers and Jobs Explains Productivity Differentials Across Firms

Recent research has highlighted the contribution that managerial decisions make to firms’ productivity. This column uses a novel measure of job-worker allocation quality to document how firms that match their employees to their most suitable jobs are more productive, and their ability to do so depends on the quality and experience of their management. The measure is helpful for uncovering a hitherto neglected dimension of managerial practices, and could be particularly valuable at times when the need to cope with technological innovation, pandemics, climate change, or wars requires widespread firm restructuring and workers’ reallocation.