Misallocation and Productivity Growth: a Meta-analysis

Maurice Bun, Theoplasti Kolaiti and Tolga Özden

Working Papers from DNB

Abstract: We use a meta-analysis to quantify the impact of misallocation of production factors on aggregate productivity. A key estimate in empirical studies on misallocation is the implied aggregate total factor productivity (TFP) loss due to the sub-optimal allocation of resources across firms. In our meta-analysis, we correlate this effect size with various study characteristics. First, we find that the TFP growth effect size is smaller than the level effect size. Second, we make a distinction between studies following a direct or indirect approach, where the former relates misallocation to one or more specific factors while the latter quantifies the overall effect of all possible sources. We find that studies following a direct approach generally report a smaller TFP loss than those using an indirect approach. Third, we find that the extent of misallocation and the corresponding productivity loss depends on the country of analysis. In particular, there is a negative correlation between TFP loss and the level of income.

Keywords: meta-analysis; misallocation; productivity (search for similar items in EconPapers)
JEL-codes: C40 D24 O47 (search for similar items in EconPapers)
Date: 2023-04
New Economics Papers: this item is included in nep-eff, nep-fdg and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:774

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