Predation, Protection, and Productivity: A Firm-Level Perspective
- (pp. 184-221)
(Complimentary)
Abstract
This paper studies the consequences of predation when firms deploy guard labor as a means of protecting themselves. We build a simple model and combine it with data for 144 countries from the World Bank enterprise surveys, which ask about firm-level experiences with predation and spending on protection. We use the model to estimate the output loss caused by the misallocation of labor across firms and from production to protection. The loss due to protection effort is substantial and patterns of state protection at the micro level can have a profound impact on aggregate output losses. Various extensions are discussed.Citation
Besley, Timothy, and Hannes Mueller. 2018. "Predation, Protection, and Productivity: A Firm-Level Perspective." American Economic Journal: Macroeconomics, 10 (2): 184-221. DOI: 10.1257/mac.20160120Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- K40 Legal Procedure, the Legal System, and Illegal Behavior: General
- L84 Personal, Professional, and Business Services
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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