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NBER Working Papers and Publications
|January 2018||Misallocation Measures: The Distortion That Ate the Residual|
with John Haltiwanger, Chad Syverson: w24199
A large literature on misallocation and productivity has arisen in recent years, with Hsieh and Klenow (2009; hereafter HK) as its standard empirical framework. The framework’s usefulness and theoretical founding make it a valuable starting point for analyzing misallocations. However, we show that the empirical lynchpin of this approach can be very sensitive to model misspecification. The condition in the HK model that maps from observed production behaviors to the misallocative wedges/distortions holds in a single theoretical case, with strict assumptions required on both the demand and supply sides. We demonstrate that applying the HK methodology when there is any deviation from these assumptions will mean that the “distortions” recovered from the data may not be signs of inefficiency. R...
|September 2016||High Growth Young Firms: Contribution to Job, Output, and Productivity Growth|
with John Haltiwanger, Ron S. Jarmin, Javier Miranda
in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, John Haltiwanger, Erik Hurst, Javier Miranda, and Antoinette Schoar, editors
Recent research shows that the job creating prowess of small firms in the U.S. is better attributed to startups and young firms that are small. But most startups and young firms either fail or don’t create jobs. A small proportion of young firms grow rapidly and they account for the long lasting contribution of startups to job growth. High growth firms are not well understood in terms of either theory or evidence. Although the evidence of their role in job creation is mounting, little is known about their life cycle dynamics, or their contribution to other key outcomes such as real output growth and productivity. In this paper, we enhance the Longitudinal Business Database with gross output (real revenue) measures. We find that the patterns for high output growth firms largely mim...