Plant-Size Distribution and Cross-Country Income Differences

37 Pages Posted: 9 Jun 2008 Last revised: 3 Jun 2021

See all articles by Laura Alfaro

Laura Alfaro

Harvard University

Andrew Charlton

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Fabio Kanczuk

University of São Paulo (USP) - Department of Economics

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Date Written: June 2008

Abstract

We investigate, using plant-level data for 79 developed and developing countries, whether differences in the allocation of resources across heterogeneous plants are a significant determinant of cross-country differences in income per worker. For this purpose, we use a standard version of the neoclassical growth model augmented to incorporate monopolistic competition among heterogeneous plants. For our preferred calibration, the model explains 58% of the log variance of income per worker. This figure should be compared to the 42% success rate of the usual model.

Suggested Citation

Alfaro, Laura and Charlton, Andrew and Kanczuk, Fabio, Plant-Size Distribution and Cross-Country Income Differences (June 2008). NBER Working Paper No. w14060, Available at SSRN: https://ssrn.com/abstract=1142232

Laura Alfaro (Contact Author)

Harvard University ( email )

Cambridge, MA 02138
United States

Andrew Charlton

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Fabio Kanczuk

University of São Paulo (USP) - Department of Economics ( email )

Av. Prof. Luciano Gualberto 908
Sao Paulo SP, 05508-900
Brazil
011-55-11-818-5915 (Phone)
011-55-11-3661-7333 (Fax)

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