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Plant-Size Distribution and Cross-Country Income Differences

In: NBER International Seminar on Macroeconomics 2008

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  • Laura Alfaro
  • Andrew Charlton
  • Fabio Kanczuk

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.

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This chapter was published in:

  • Jeffrey Frankel & Christopher Pissarides, 2009. "NBER International Seminar on Macroeconomics 2008," NBER Books, National Bureau of Economic Research, Inc, number fran08-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8244.

    Handle: RePEc:nbr:nberch:8244

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    1. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and Productivity in International Trade," Boston University - Institute for Economic Development 105, Boston University, Institute for Economic Development.
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