Boosting Productivity Growth in Small Firms

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A large and growing fraction of workers receive wages that are insuficient to lift themselves and their families out of poverty. Such low wages are to a large extent related to the low productivity of the jobs performed by these workers, which in turn are related to the poor productivity of the firms in which these workers are employed. In fact, there is a large correlation between receiving a low wage and being employed in a small firm. This project seeks to understand the reasons behind the low productivity levels and growth of small firms in Latin America as a precondition to lift a large number of workers from poverty and improve the dismal productivity performance of many Latin American economies. A number of competing hypothesis would be examined, among them the following: (1) insufficient access to capital, (2) Unfair competition of large firms towards small firms driven by poor or inexisting defense of competition laws and institutions (3) Inequal access to information or inputs; (4) low human capital of workers and managers.