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The misallocation of land and other factors of production in India

Gilles Duranton (), Ejaz Ghani (), Arti Grover () and William Kerr ()

No 7221, Policy Research Working Paper Series from The World Bank

Abstract: This paper quantifies the misallocation of manufacturing output and factors of production between establishments across Indian districts during 1989-2010. It first distills a number of stylized facts about misallocation in India, and demonstrates the validity of misallocation metrics by connecting them to regulatory changes in India that affected real property. With this background, the study next quantifies the implications and determinants of factor and output misallocation. Although more-productive establishments in India tend to produce more output, factors of production are grossly misallocated. A better allocation of output and factors of production is associated with greater output per worker. Misallocation of land plays a particularly important role in these challenges.

Keywords: Economic Theory&Research; Labor Policies; Urban Housing; Urban Slums Upgrading; Urban Services to the Poor (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2015-03-23
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7221

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