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Human Capital Misallocation, TFP, and Redistributive Policies

Author

Listed:
  • Debasis Bandyopadhyay

    (Faculty of Business and Economics, University of Auckland)

  • Ian King

    (School of Economics, The University of Queensland)

  • Xueli Tang

    (Deakin University)

Abstract

We analyse the impact of income inequality and redistribution on the misallocation of resources and TFP, in economies with financial market imperfections. We calibrate a model based on Benaboui's (2002) model of human capital, but with the addition of physical capital. In the absence of a credit market TFP losses due to misallocation can be signifcant and are comparable in size to those found in Hsieh and Klenow (2009). However, redistributive policies aimed at reducing these TFP losses have only small positive effects on TFP but large negative e§ects on per capita output.

Suggested Citation

  • Debasis Bandyopadhyay & Ian King & Xueli Tang, 2017. "Human Capital Misallocation, TFP, and Redistributive Policies," Discussion Papers Series 585, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uq2004:585
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    File URL: http://www.uq.edu.au/economics/abstract/585.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    heterogeneous agents; misallocation; TFP; redistribution;

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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