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Structural change and misallocation. Firm-level evidence from Poland

Jan Hagemejer and Joanna Tyrowicz ()

No 32, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: Early transition literature linked large number of firm failures with the inability to overcome the pre-transition misallocation of resources, i.e. the inadequate capital-labor ratio. We look at the link between misallocation and firm survival using a rich firm-level dataset of over 1600 manufacturing plants established in a centrally planned economy after 1945. Our duration models include the standard Olley-Pakes misallocation measures as well as firm-level counterfactual level of capital that takes into account the present day market allocation and productivity. We show that i) misallocation was rather a firm-level than sector-level phenomenon and more importantly ii) it did not have a sizeable effect on the actual firm survival. Moreover, privatization tends to be negatively related to firm survival. This may imply both inappropriate self-selection into privatization programs and possibly inadequate implementation of the privatization.

Keywords: misallocation; privatization; transition (search for similar items in EconPapers)
JEL-codes: P31 D24 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ent and nep-tra
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:fme:wpaper:32

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