EconPapers    
Economics at your fingertips  
 

On Average Establishment Size across Sectors and Countries

Pedro Bento and Diego Restuccia ()

Working Papers from University of Toronto, Department of Economics

Abstract: We construct a new dataset for the average employment size of establishments across sectors and countries from hundreds of sources. Establishments are larger in manufacturing than in services, and in each sector they are larger in richer countries. The cross-country income elasticity of establishment size is remarkably similar across sectors, about 0.3. We discuss these facts in light of several prominent theories of development such as entry costs and misallocation. We then quantify the sectoral and aggregate impact of entry costs and misallocation in an otherwise standard two-sector model of structural transformation with endogenous firm entry and firm-level productivity. We find that observed measures of misallocation account for the entire range of establishment-size differences across sectors and countries and almost 50 percent of the difference in non-agricultural GDP per capita between rich and poor countries.

Keywords: establishment size; manufacturing; services; distortions; misallocation; productivity. (search for similar items in EconPapers)
JEL-codes: O1 O4 O5 E02 E1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ent, nep-mac and nep-tid
Date: 2018-08-18
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.economics.utoronto.ca/public/workingPapers/tecipa-612.pdf Main Text (application/pdf)

Related works:
Working Paper: On Average Establishment Size across Sectors and Countries (2018) Downloads
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:tor:tecipa:tecipa-612

Access Statistics for this paper

More papers in Working Papers from University of Toronto, Department of Economics 150 St. George Street, Toronto, Ontario.
Bibliographic data for series maintained by RePEc Maintainer ().

 
Page updated 2019-04-18
Handle: RePEc:tor:tecipa:tecipa-612