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Using data obtained from human resources consulting firms, we
document the cost to large firms of hiring managers and business
professionals in 146 countries worldwide. The average pay in the
poorest decile of countries is $18,000 per year, which is 9.7 times
GDP per worker. In contrast, in the richest decile of countries,
large firms pay managers and business professionals only 0.8 times
GDP per worker. We use an appropriate technology model to show
that the cost of management could be an important deterrent to the
expansion of the modern sector in developing countries.
