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American Economic Review: Vol. 103 No. 1 (February 2013)
AER Volume. 103, Issue 1 | 
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AER Forthcoming Articles
Cross-Country Differences in Productivity: The Role of Allocation and Selection
Article Citation
Bartelsman, Eric,
John Haltiwanger, and
Stefano Scarpetta. 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection."
American Economic Review,
103(1): 305-34.
DOI: 10.1257/aer.103.1.305
DOI: 10.1257/aer.103.1.305
Abstract
This paper investigates the effect of idiosyncratic (firm-level) policy
distortions on aggregate outcomes. Exploiting harmonized firm‑level
data for a number of countries, we show that there is substantial
and systematic cross‑country variation in the within-industry
covariance between size and productivity. We develop a model in
which heterogeneous firms face adjustment frictions (overhead labor
and quasi-fixed capital) and distortions. The model can be readily
calibrated so that variations in the distribution of distortions allow
matching the observed cross-country moments. We show that the
differences in the distortions that account for the size-productivity
covariance imply substantial differences in aggregate performance.
(JEL D24, L25, O47)
Article Full-Text Access
Full-text Article
Additional Materials
Download Data Set (212.67 KB) | Online Appendix (284.09 KB)
Authors
Bartelsman, Eric (Free U Amsterdam and Tinbergen Institute)
Haltiwanger, John (U MD and IZA, Bonn)
Scarpetta, Stefano (OECD and IZA, Bonn)
Haltiwanger, John (U MD and IZA, Bonn)
Scarpetta, Stefano (OECD and IZA, Bonn)
JEL Classifications
D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
L25: Firm Performance: Size, Diversification, and Scope
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
L25: Firm Performance: Size, Diversification, and Scope
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
