Entry costs, misallocation, and cross-country income and TFP differences

Levon Barseghyan and Riccardo DiCecio

No 2009-005, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Entry costs vary dramatically across countries. To assess their impact we construct a model with endogenous entry and operation decisions by firms and calibrate it to match the U.S. distribution of firms by age and size. Higher entry costs lead to greater misallocation of productive factors and lower TFP and output. In the model, countries with entry costs in the lowest decile of the distribution have 2.32 times higher TFP (3.43 in the data) than countries in the highest decile. As in the data, higher entry costs are associated with higher mean and variance of the employment distribution across firms.

Keywords: Industrial productivity; Economic development (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-ent
References: View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://research.stlouisfed.org/wp/2009/2009-005.pdf (application/pdf)

Related works:
Working Paper: Entry Costs, Misallocation, and Cross-Country Income and TFP Differences (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2009-005

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().