Superstores or Mom and Pops? Technology Adoption and Productivity Differences in Retail Trade

Federal Reserve Bank of Minneapolis Staff Report No. 428

Posted: 17 Jun 2009 Last revised: 26 Jun 2009

See all articles by David Lagakos

David Lagakos

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 2009

Abstract

I document that cross-country productivity differences in retail trade, which employs around 20% of workers, are accounted for, in large part, by compositional differences. In richer countries most retailing is done in modern stores, with high measured output per worker, whereas in developing countries, retail trade is dominated by less-productive traditional stores. I hypothesize that developing countries rationally adopt few modern stores since car ownership rates are low. A simple quantitative model of home production supports the role of cars in determining the composition of retail technologies used and retail-sector productivity differences across countries.

Keywords: technology adoption, productivity differences, retail trade

JEL Classification: 011, 033, 047, L81

Suggested Citation

Lagakos, David, Superstores or Mom and Pops? Technology Adoption and Productivity Differences in Retail Trade (June 2009). Federal Reserve Bank of Minneapolis Staff Report No. 428, Available at SSRN: https://ssrn.com/abstract=1418124

David Lagakos (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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