Developing and Analyzing Firm Level Moments on Productivity and Reallocation

Productivity growth is the main driver of long-run increases in per capita income and welfare. This project investigates the effect of idiosyncratic (firm-level) policy distortions on aggregate outcomes. Exploiting firm-level data for a number of countries, it shows that there is substantial and systematic cross-country variation in covariance between size and productivity in the same industry. The project shows that the differences in the distortions that account for the size-productivity covariance (degree to which size and productivity move in tandem) imply substantial differences in aggregate performance.

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