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Superstores or mom and pops? Technolgy adoption and productivity differences in retail trade

  • David Lagakos

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.

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Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 428.

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Date of creation: 2009
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Handle: RePEc:fip:fedmsr:428
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