Aggregate Productivity Loss and the Theil Index of Inequality
This paper suggests that the difference in the Theil indices of inequality between two economies approximately measures the relative loss of aggregate productivity caused by distortions in labor allocation. Moreover, the Theil index itself can be interpreted approximately as the possible maximum loss of aggregate productivity caused by these distortions.
|Date of creation:||01 Mar 2008|
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tecipa-283, University of Toronto, Department of Economics.
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- Richard Rogerson & Diego Restuccia, 2004. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," 2004 Meeting Papers 69, Society for Economic Dynamics.
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- Frank A Cowell, 2003.
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STICERD - Distributional Analysis Research Programme Papers
67, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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