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Essays on factor misallocation Pulido Pescador, José
Abstract
This thesis studies different implications of micro-level factor misallocation across heterogeneous agents. It consists of three chapters. The first chapter examines the impact of firm-level factor misallocation on an open economy’s comparative advantage. After providing empirical evidence on how Colombian metrics of firm-level misallocation are related to measures of its revealed comparative advantage, I explore the general equilibrium effects of such misallocation and its impact on industries' export capabilities. I compute a counterfactual equilibrium in which the misallocation is removed in Colombia. The reallocation of factors leads to an important change in the country's industrial structure and a rise in the exports-to-GDP ratio of 18 p.p. This industrial composition effect is absent in the workhorse models of firm-level factor misallocation under closed economies. Based on a co-authored paper with Tomasz Święcki, the second chapter studies the origin of the income gaps between agricultural and non-agricultural workers in developing countries. We use Indonesian data to document a robust premium for workers who move out of agriculture and a loss for those who move into agriculture, even if they do not migrate. We argue that to generate simultaneously these within-worker premia and the main moments of the joint sector-income distribution over time, self-selection needs to take place under barriers to sectoral mobility that misallocate workers across sectors. We find that removing such barriers prompt 30% of the workforce to reallocate and aggregate output to increase by 17%. The third chapter extends the standard model of firm-level factor misallocation in a closed economy in two dimensions. First, I introduce idiosyncratic demand shocks. This allows me to evaluate whether metrics of misallocation predict plants' survival, a test used to claim that misallocation metrics are empirically swamped by demand shocks. I argue that unconditional estimates in this test are biased in the presence of firms' selection, which would explain the puzzling empirical findings. Second, I compute the TFP gains of removing misallocation both within and across industries. I quantify the importance of inter-industry misallocation and explore its potential role in explaining TFP gaps across countries.
Item Metadata
Title |
Essays on factor misallocation
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Creator | |
Publisher |
University of British Columbia
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Date Issued |
2018
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Description |
This thesis studies different implications of micro-level factor misallocation across heterogeneous agents. It consists of three chapters.
The first chapter examines the impact of firm-level factor misallocation on an open economy’s comparative advantage. After providing empirical evidence on how Colombian metrics of firm-level misallocation are related to measures of its revealed comparative advantage, I explore the general equilibrium effects of such misallocation and its impact on industries' export capabilities. I compute a counterfactual equilibrium in which the misallocation is removed in Colombia. The reallocation of factors leads to an important change in the country's industrial structure and a rise in the exports-to-GDP ratio of 18 p.p. This industrial composition effect is absent in the workhorse models of firm-level factor misallocation under closed economies.
Based on a co-authored paper with Tomasz Święcki, the second chapter studies the origin of the income gaps between agricultural and non-agricultural workers in developing countries. We use Indonesian data to document a robust premium for workers who move out of agriculture and a loss for those who move into agriculture, even if they do not migrate. We argue that to generate simultaneously these within-worker premia and the main moments of the joint sector-income distribution over time, self-selection needs to take place under barriers to sectoral mobility that misallocate workers across sectors. We find that removing such barriers prompt 30% of the workforce to reallocate and aggregate output to increase by 17%.
The third chapter extends the standard model of firm-level factor misallocation in a closed economy in two dimensions. First, I introduce idiosyncratic demand shocks. This allows me to evaluate whether metrics of misallocation predict plants' survival, a test used to claim that misallocation metrics are empirically swamped by demand shocks. I argue that unconditional estimates in this test are biased in the presence of firms' selection, which would explain the puzzling empirical findings. Second, I compute the TFP gains of removing misallocation both within and across industries. I quantify the importance of inter-industry misallocation and explore its potential role in explaining TFP gaps across countries.
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Genre | |
Type | |
Language |
eng
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Date Available |
2018-08-10
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Provider |
Vancouver : University of British Columbia Library
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Rights |
Attribution-NonCommercial-NoDerivatives 4.0 International
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DOI |
10.14288/1.0370967
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URI | |
Degree | |
Program | |
Affiliation | |
Degree Grantor |
University of British Columbia
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Graduation Date |
2018-09
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Campus | |
Scholarly Level |
Graduate
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Rights URI | |
Aggregated Source Repository |
DSpace
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Rights
Attribution-NonCommercial-NoDerivatives 4.0 International