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Resource Misallocation and Productivity: Evidence from Mexico
Author: Florian Misch and Christian Saborowski
Series:
IMF Working Papers
Volume/Issue:
Volume 2018: Issue 112
Language:
English
Publication Date:
15 May 2018
DOI:
https://doi.org/10.5089/9781484353578.001
ISBN:
9781484353578
ISSN:
1018-5941
Pages:
32
Keywords:
WP; resource misallocation; market concentration; dependent variable; TFP gain; Productivity; Distortions Author’s; output wedge; wage bill; industry-state pair; Total factor productivity; Corruption; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper explores the role for specific structural distortions in explaining Mexico’s weak productivity growth through the resource misallocation channel. The paper makes two contributions. First, we validate the approach of measuring misallocation indirectly (Hsieh and Klenow, 2009) by illustrating a close correlation between misallocation and per capita incomes across Mexican states. Second, we exploit the large variation in resource misallocation within industries and across states together with unusually rich data at the firm, local, and industry level to shed light on its determinants. We identify several well-defined distortions that have a statistically and economically meaningful effect on productivity via resource misallocation.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund