Misallocation, Productivity and Development with Endogenous …
2024年3月1日 · In this paper, we propose a novel approach to studying the link between misallocation and productivity.
Three key questions arise: First, how important is misallocation as a source of aggregate productivity differences across countries? Second, what are the main causes of misallocation? Third, beyond the direct cost of lower contemporaneous output, are there additional costs associated with misallocation?
recently1 is that of establishment-level misallocation. Ac-cording to this hypothesis, poor countries are poor not only because individual establishments are less e cient, but also because factors of pro. rating misallocation and therefore aggregate TFP losses. Our …
There is growing interest in the view that underdevelopment may not just be a matter of lack of resources like capital, skilled labor, entrepreneurship or ideas but also a consequence of the misallocation or misuse of available resources.
ng firms in India, potentially reducing overall out-put. Hsieh and Klenow (2009) present empirical evidence that misallocation across plants within 4-digit industries may reduce TFP in manu.
Finance and Misallocation: Evidence from Plant-Level Data
We use producer-level data to evaluate the role of financial frictions in determining total factor productivity (TFP). We study a model of establishment dynamics in which financial frictions reduce TFP through two channels. First, finance frictions distort entry and technology adoption decisions.
Misallocation at the micro level typically reduces total factor productivity at the macro level.
the output of its direct and indirect customers; we call this the pure technology e ect. Second, the distribution of resources across producers shifts in response to the shock,
We show that in the presence of misallocation, it is our residual, rather than the traditional Solow residual, which correctly measures aggregate TFP growth. We then show that this new measure of aggregate TFP growth can be further decom-posed into changes in technical e ciency and changes in allocative e ciency.
We distinguish between misallocation on the intensive and the extensive margin, and show that the former should disappear asymptotically under general conditions, while the latter may persist. We conclude by discussing possible theories of persistent misallocation. (JEL …