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Working Paper
Financial Development and International Trade
This paper studies the industry-level and aggregate implications of financial development on international trade. I set up a multi-industry general equilibrium model of international trade with input-output linkages and heterogeneous firms subject to financial frictions. Industries differ in capital-intensity, which leads to differences in external finance dependence. The model is parameterized to match key features of firm-level data. Financial development leads to substantial reallocation of international trade shares from labor- to capital-intensive industries, with minor effects at the ...
Working Paper
The Aggregate Implications of Size Dependent Distortions
This paper examines the aggregate implications of size-dependent distortions. These regulations misallocate labor across firms and hence reduce aggregate productivity. It then considers a case-study of labor laws in France where firms that have 50 employees or more face substantially more regulation than firms that have less than 50. The size distribution of firms is visibly distorted by these regulations: there are many firms with exactly 49 employees. A quantitative model is developed with a payroll tax of 0.15% that only applies to firm above 50 employees. Removing the regulation improves ...
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Lights, camera,...income! Estimating poverty using national accounts, survey means, and lights
In this paper, we try to understand whether measures of GDP per capita taken from national accounts or measures of mean income or consumption derived from household surveys better proxy for true income per capita. We propose a data-driven method to assess the relative quality of GDP per capita versus survey means by comparing the evolution of each series to the evolution of satellite-recorded nighttime lights. Our main assumption, which is robust to a variety of specification checks, is that the measurement error in nighttime lights is unrelated to the measurement errors in either national ...
Report
Accounting for breakout in Britain: The Industrial Revolution through a Malthusian lens
This paper develops a simple dynamic model to examine the breakout from a Malthusian economy to a modern growth regime. It identifies several factors that determine the fastest rate at which the population can grow without engendering declining living standards; this is termed maximum sustainable population growth. We then apply the framework to Britain and find a dramatic increase in sustainable population growth at the time of the Industrial Revolution, well before the beginning of modern levels of income growth. The main contributions to the British breakout were technological improvements ...
Report
Germs, Social Networks, and Growth
Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, where do these differences come from and how large are their effects? Using network analysis tools, we explore how different social network structures affect technology diffusion and thereby a country's rate of growth. The correlation between high-diffusion networks and income is strongly positive. But when we use a model to isolate the effect of a change in social networks, the effect can be positive, negative, or zero. The reason is that networks diffuse ideas and disease. Low-diffusion ...
Working Paper
Explaining Educational Attainment across Countries and over Time
Consider the following facts. In 1950, the richest countries attained an average of 8 years of schooling whereas the poorest countries 1.3 years, a large 6-fold difference. By 2005, the difference in schooling declined to 2-fold because schooling increased faster in poor than in rich countries. What explains educational attainment differences across countries and their evolution over time? We consider an otherwise standard model of schooling featuring non- homothetic preferences and a labor supply margin to assess the quantitative contribution of productivity and life expectancy in explaining ...
Working Paper
Can Self-Help Groups Really Be 'Self-Help'?
We provide an experimental and theoretical evaluation of a cost-reducing innovation in the delivery of "self-help group" microfinance services, in which privatized agents earn payments through membership fees for providing services. Under the status quo, agents are paid by an outside donor and offer members free services. In our multi-country randomized control trial we evaluate the change in this incentive scheme on agent behavior and performance, and on overall village-level outcomes. We find that privatized agents start groups, attract members, mobilize savings, and intermediate loans at ...
Discussion Paper
Fragmentation in workforce development and efforts to coordinate regional workforce development systems
The importance of human capital in regional economic competitiveness is increasingly apparent. However, structural changes, fragmentation, the instability of funding, and other factors have led to challenges for workforce development providers as well as workforce development systems. This fragmentation has created a less coherent and coordinated workforce development system. Often, metropolitan areas have many programs and policies in place to train workers for jobs that require sub-baccalaureate credentials or skills. The lack of coordination in local training systems may limit the ...
Report
The home market, trade, and industrial structure
Does national market size matter for industrial structure? This has been suggested by theoretical work on "home market" effects, as in Krugman (1980, 1995). In this paper, I show that what previously was regarded as an assumption of convenience ? transport costs only for the differentiated goods ? matters a great deal. In a focal case in which differentiated and homogeneous goods have identical transport costs, the home market effect disappears. The paper discusses available evidence on the relative trade costs for differentiated and homogeneous goods. No compelling argument is found that ...
Journal Article
The Aggregate Implications of Size-Dependent Distortions
This article examines the aggregate implications of size-dependent distortions. These regulations misallocate labor across firms and hence reduce aggregate productivity. The author then considers a case study of labor laws in France, where firms with 50 employees or more face substantially more regulation than firms with fewer than 50. The size distribution of firms is visibly distorted by these regulations: There are many firms with exactly 49 employees. A quantitative model is developed with a payroll tax of 0.15 percent that applies only to firms with more than 50 employees. Removing the ...