Misallocation and Productivity: Micro Evidence from Bangladesh

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dc.contributor.advisorAdamopoulos, Anastasios T.
dc.creatorJalil, Ferdous Bin
dc.date.accessioned2016-09-20T18:56:29Z
dc.date.available2016-09-20T18:56:29Z
dc.date.copyright2016-03-11
dc.date.issued2016-09-20
dc.date.updated2016-09-20T18:56:29Z
dc.degree.disciplineEconomics
dc.degree.levelDoctoral
dc.degree.namePhD - Doctor of Philosophy
dc.description.abstractAn important determinant of aggregate measured productivity is how resources are allocated across heterogeneous production units. Idiosyncratic distortions from institutional policies and factors can be a source for resource misallocation resulting in lower total factor productivity and aggregate output. Distortions create heterogeneity in production units: cause before-tax marginal revenue products to be higher in production units that face disincentives, and to be lower in production units that receive incentives. In the absence of distortions, production units equate marginal products with their corresponding factor prices, making resource allocations efficient because the more productive units proportionately use more resources. In the presence of distortions, they are equated with both factor prices and distortions, making equilibrium allocations dependent on both individual TFPs and distortions and resulting in aggregate output and TFP losses. Using detailed household farm-level data from Bangladesh, I measure the observed gross TFP of Bangladesh's agriculture. I find that capital and intermediate inputs are misallocated in Bangladesh. If resources were hypothetically reallocated across farms, then aggregate TFP could increase by more than 120% relative to the observed TFP. Using firm-level manufacturing data from Bangladesh, I develop a model to measure industry-level and aggregate TFP. If allocations were efficient, then aggregate TFP could increase by 95%. Capital is more misallocated than labor in manufacturing. I develop a two-sector model of agriculture and non-agriculture, each with an endogenous distribution of production units. Sector-wise, the distribution of active production units depends on the productivity of the unit operation and idiosyncratic distortions that the unit faces in that sector. I capture idiosyncratic distortions as a producer-sector-specific output tax that stands in as a catch-all for the policies and institutions that alter the relative prices faced by producers within each sector. I use micro-level data on manufacturing plants and farms and a quantitative framework to measure the distortions. I calibrate my model to the micro data from Bangladesh with observed distortions. I find that eliminating distortions in each sector raises productivity in that sector, but at the aggregate level it is only improvements in agricultural labor productivity that generate substantial structural change in the economy.
dc.identifier.urihttp://hdl.handle.net/10315/32336
dc.language.isoen
dc.rightsAuthor owns copyright, except where explicitly noted. Please contact the author directly with licensing requests.
dc.subjectAgriculture economics
dc.subject.keywordsTotal factor productivity
dc.subject.keywordsMisalllocation
dc.subject.keywordsManufacturing
dc.subject.keywordsAgriculture
dc.subject.keywordsDistortions
dc.subject.keywordsLabor productivity
dc.subject.keywordsAggregate productivity
dc.subject.keywordsFarm and firm-level data
dc.subject.keywordsLucas span-of-control
dc.subject.keywordsDecreasing returns
dc.subject.keywordsHeterogeneity
dc.subject.keywordsProductivity gains
dc.subject.keywordsProductivity losses
dc.subject.keywordsDual-economy
dc.titleMisallocation and Productivity: Micro Evidence from Bangladesh
dc.typeElectronic Thesis or Dissertation

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