This study confirmed the effect of managerial ability on labor productivity by using firm-year panel data for domestic listed firms from 2002 to 2019. Managerial ability is analyzed with measurement method by Demerjian et al. (2012), and labor productivity is analyzed by the production capacity per employee based on value added and sales. Panel regression analysis is performed using a Pooled OLS model and a Fixed effect model as analysis methods. In addition, dynamic panel analysis using difference GMM and system GMM is conducted, which is differentiated from previous studies. As a result of the study, managerial ability has a positive (+) effect on labor productivity. In other words, the productivity of employee is improved as a manager with high ability is appointed. The contribution of this study is significant by analyzing the relationship between managerial ability and production capacity per employee. In particular, the influence on labor productivity is additionally controlled and various measurement results are presented to calculate more precisely. This can help firms in making corporate decisions to consider managerial ability for effective labor productivity improvement of domestic firms.

Keywords: Managerial Ability, Labor Productivity, DEA, Dynamic Panel Model