American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
The Missing Middle Managers: Labor Costs, Firm Structure, and Development
American Economic Review: Insights
(pp. 341–53)
Abstract
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.Citation
Hjort, Jonas, Hannes Malmberg, and Todd Schoellman. 2026. "The Missing Middle Managers: Labor Costs, Firm Structure, and Development." American Economic Review: Insights 8 (3): 341–53. DOI: 10.1257/aeri.20250149Additional Materials
JEL Classification
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- L84 Personal, Professional, and Business Services
- M10 Business Administration: General
- M51 Personnel Economics: Firm Employment Decisions; Promotions
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration