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Title page 1

Contents 1

Abstract 3

1. Introduction 4

2. Context 9

2.1. Data 10

2.2. Promotions 11

2.3. Defining top managers 13

2.4. Matching between managers and workers 16

3. Theoretical Framework 17

3.1. Specification 18

4. Main Results 20

4.1. Parallel trends and dynamic effects 22

4.2. Manager, peer, or project effects? 24

4.3. Effects among early career workers 25

4.4. Instrumental variable approach 26

4.5. Employee perceptions of treatment effects 29

5. Transmission of Managerial Skills 29

5.1. Effects are concentrated in management track 30

5.2. Impacts on worker performance 32

5.3. Employee perceptions of mechanisms 34

5.4. Alternative mechanisms 35

6. Alternative Measures of Manager Quality 38

7. Conclusion 40

References 43

Appendix - For Online Publication 49

A. Descriptions of data 49

B. Extensions to main results 54

C. Restricted sample of early career workers 55

D. Deposit and bonus 58

E. Additional outcomes 61

F. Heterogeneous treatment effects 63

G. Robustness checks 68

H. Survey 73

Tables 10

Table 1. Summary for projects 10

Table 2. Promotion patterns 13

Table 3. Manager characteristics 15

Table 4. Workers characteristics 17

Table 5. The effects of top managers on workers' promotion 21

Table 6. Disentangle manager, peer, and project effects 24

Table 7. Instrumental variable regressions 28

Table 8. Effects by career track at first exposure 31

Table 9. The effect of top managers on workers' performance 33

Table 10. Differential drop out and bounding analysis 37

Figures 12

Figure 1. Project team structure 12

Figure 2. Manager value added 14

Figure 3. The dynamic effects of top manager exposure 23

Appendix Tables 50

Table A1. Data structure 50

Table B1. Multiple exposures 54

Table B2. Promotion to top positions 55

Table C1. Effects on a sub-sample of early career workers 56

Table C2. Event study 57

Table C3. Instrumental variable regressions on a sub-sample of early career workers 58

Table D1. Summary for deposit and bonus 58

Table D2. Main effects on a sub-sample with observed bonus data 59

Table D3. Heterogeneous effects on deposit and bonus 60

Table E1. The effects of top managers on project selection 61

Table E2. The effects of top managers on workers' demotion 62

Table E3. The effects of top managers on transition of track 62

Table F1. Heterogeneous effects by education level 63

Table F2. Heterogeneous effects by age at the beginning of the panel 64

Table F3. Heterogeneous effects by working experience at the beginning of the panel 65

Table F4. Heterogeneous effects by project order at first exposure 66

Table F5. Heterogeneous effects by hierarchy at first exposure 67

Table G1. Instrumental variable regressions: alternative thresholds 69

Table G2. Bounding analysis under alternative assumptions 69

Table G3. Robustness: continuous measure and alternative thresholds 70

Table G4. Robustness: dealing with missing manager value-added 71

Table G5. Robustness: alternative definitions of top managers 72

Table H1. Summary for survey respondents 73

Appendix Figures 49

Figure A1. Firm structure 49

Figure A2. Starting year of projects 50

Figure A3. Distribution of the number of projects each individual has 51

Figure A4. Project order and career progressions 52

Figure A5. Career progressions of individuals who start as a Foreman 53

Figure C1. Event plot using a restricted sample of early career workers 56

Figure D1. Distribution of relative performance 59

Figure G1. Nonlinear effects of managers' quality on subordinates 68

Figure H1. Difference in the estimated promotion probability 75

Figure H2. Difference in the estimated probability of promotion to project manager 75

Figure H3. Whether respondents perceive our main finding as plausible 77

Figure H4. The most important factor in explaining the observed treatment effect 78

Figure H5. Types of managerial skills that are transmitted 79