The Micro and Macro Productivity of Nations

Stephen Ayerst, Duc Nguyen and Diego Restuccia

No 32750, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine aggregate productivity differences across nations using cross-country firm-level data and a quantitative model of production heterogeneity with distortions featuring operation decisions (selection) and productivity-enhancing investments (technology). Empirically, less developed countries feature higher distortions and larger dispersion in firm-level productivity, mostly resulting from the higher prevalence of unproductive firms. Quantitatively, measured cross-country differences in the elasticity of distortions with respect to firm productivity generate the bulk of empirical patterns and over two-thirds of cross-country labor productivity differences. Both selection and technology channels are important. Variation in static misallocation also plays an important role, albeit smaller.

JEL-codes: O11 O14 O4 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-bec and nep-eff
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Working Paper: The Micro and Macro Productivity of Nations (2024)
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