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Production Hierarchies in Sweden

I study the internal organization of firms using occupation data on workers in Swedish manufacturing firms. Firms with more layers are larger in size, in value added, and they pay higher wages. Firms are hierarchal in that lower layers have more workers and lower mean wage than higher layers. Adding layers is associated with increases in mean firm size/value added and decreases in mean firm wages (at pre-existing layers). The reverse holds for removing layers. This result also holds for layer by layer mean size and wages for a majority of pre-existing layers.