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Bartelsman, Eric,
John Haltiwanger, and
Stefano Scarpetta. 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection."
,
103(1): 305-34.
Show Article Details
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)
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Online Appendix
Authors:
Bartelsman, Eric (Free U Amsterdam and Tinbergen Institute)
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
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June 2013 AER
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