Publications
Publications
- 2007
- HBS Working Paper Series
Plant-Size Distribution and Cross-Country Income Differences
By: Laura Alfaro, Andrew Charlton and Fabio Kanzcuk
Abstract
We investigate, using plant-level data for 79 developed and developing countries, whether differences in the allocation of resources across heterogeneous plants are a significant determinant of cross-country differences in income per worker. For this purpose, we use a standard version of the neoclassical growth model augmented to incorporate monopolistic competition among heterogeneous plants. For our preferred calibration, the model explains 58% of the log variance of income per worker. This figure should be compared to the 42% success rate of the usual model.
Keywords
Heterogeneous Plants; Productivity; Policy Distortions; Wages; Equality and Inequality; Resource Allocation; Macroeconomics
Citation
Alfaro, Laura, Andrew Charlton, and Fabio Kanzcuk. "Plant-Size Distribution and Cross-Country Income Differences." Harvard Business School Working Paper, No. 07-086, May 2007. (Revised May 2008, August 2008. NBER Working Paper Series, No. 14060, June 2008)