NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Marina Mendes Tavares

International Monetary Fund
720 19th Street, NW
Washington, DC

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Institutional Affiliation: ITAM

NBER Working Papers and Publications

April 2017Policy Distortions and Aggregate Productivity with Endogenous Establishment-Level Productivity
with José-María Da-Rocha, Diego Restuccia: w23339
What accounts for differences in output per capita and total factor productivity (TFP) across countries? Empirical evidence points to resource misallocation across heterogeneous production units as an important factor. We study misallocation in a general equilibrium model of establishment productivity where the distribution of productivity is characterized in closed form and responds to the same policy distortions that create misallocation. In this framework, policy distortions not only misallocate resources across a given set of productive units (static effect), but also create disincentives for productivity improvement thereby altering the productivity distribution and equilibrium prices (dynamic effect), further lowering aggregate output and TFP. The dynamic effect is substantial contri...
December 2016Firing Costs, Misallocation, and Aggregate Productivity
with José-María Da-Rocha, Diego Restuccia: w23008
We assess the quantitative impact of firing costs on aggregate total factor productivity (TFP) in a dynamic general-equilibrium framework where the distribution of establishment-level productivity is not invariant to the policy. Firing costs not only generate static factor misallocation, but also a worsening of the productivity distribution contributing to large aggregate TFP losses. Firing costs equivalent to 5 year's wages imply a drop in TFP of more than 20 percent. Factor misallocation accounts for 20 percent of the productivity loss, a relatively small drop in TFP, whereas the remaining 80 percent arises from the endogenous change in the productivity distribution.

Published: José-María Da-Rocha & Marina Mendes Tavares & Diego Restuccia, 2018. "Firing Costs, Misallocation, and Aggregate Productivity," Journal of Economic Dynamics and Control, . citation courtesy of

 
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