We present a heterogeneous-firm model in which management ability increases both pro- duction efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model's predictions. First, better...

Understanding the factors that may produce a sustained rate of innovation is important for promoting economic development and growth. In this paper, we examine the role of human capital in firms' innovation by using a large sample of manufacturing firms from China. We use two firm-level datasets...