Plant-Size Distribution and Cross-Country Income Differences

Laura Alfaro (), Andrew Charlton and Fabio Kanczuk ()

No 14060, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: O1 (search for similar items in EconPapers)
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Date: 2008-06
Note: EFG LS
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