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Repository for exchanging materials for DevII (Eco 842) at The GC
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Readings 10/14 #5

Open jhconning opened 2 years ago

jhconning commented 2 years ago

To reiterate what we laid out at the end of last class, this week we'll discuss these papers:

The first two papers, which we didn't get to cover last week, deal with (endogenous) property rights insecurity and their consequences. The Baker-Conning paper is also an introduction to comparative statics of models with multiple equilibria and coordination failure which have many other applications in development economics (e.g. poverty traps, "big push" models, environmental resource degradation, etc).

Though the paper is technical the backdrop to the paper includes large literatures in economic history and development on 'agrarian transitions,' the transformation of customary tenures, and the emergence of markets in private property rights to land and labor. To many economic historians -- neo-classical and marxian alike -- changes in property rights or in the 'social relations of production' were a necessary step in the rise of agricultural productivity and the emergence of agrarian capitalism and the structural transformation of the economy. For a brief, opinionated, introduction to some of the issues see Robert C. Allen's short chapter, or look up 'Brenner debates."

Similar debates are being replicated around the world again today: when should customary tenures best left to evolve on their own or do they get stuck in dysfunction leading to insecurity and land resource degradation, when are government-led programs to title and privatize lands necessary to jump-start processes and escape low-productivity traps, and when instead might they trigger inefficient races for property rights or land grabs? The paper I've shared is stripped of a lot of this discussion, but if you are interested see the introduction to this longer version of the paper, focused more on Africa.

The Goldstein and Udry is a theory-motivated empirical paper looks at evidence for plot-level misallocation and its causes that tries to carefully control for unobserved heterogeneity.

The Hsieh and Klennow 2009 paper is an influential study that tries to explain measured TFP differences in manufacturing firms in USA, China, and India in a framework that allows monopolistic competition between producers. It has become a standard framework for a quite large 'misallocation' literature that followed.

Swapnil and Victor will share a reaction paper to the HK09 paper. Please share your question/comments for the papers before class on this thread.

Links to the papers and slides here

jhconning commented 2 years ago

Hi folks. It would be useful to have your questions and reaction papers the morning of class !!

I've placed some slides on misallocation studies here which restate and complement the reaction paper by Swapnil and Victor which gets into the model in more depth. Both these items and others are at the bottom of the class page

rojas8 commented 2 years ago

Hsieh & Klenow (2014)

  1. In the life cycle of plants, one interpretation is that “establishment grow with age as they invest in new technologies, develop new markets, and produce a wider array of higher quality products”. What happens with small countries that have small economies (small markets)? They have a natural constraint for growing, therefore they need to trade and sell their products in the international market. How would it be possible to compete with products already positioned in the market, especially if there is a quota limit? Could these be considered barriers that influence the life cycle and average productivity?
  2. Some doubts and questions:
    • In page 1046, the authors mentioned they use “weight industries”. Does it mean that they use the importance of a specific industry in the total value of the industrial sector?
    • In page 1047, what does it mean that they “follow a synthetic cohort” over 40 years? Do they build their own data based on real data?
    • For India and Mexico, I wonder what happens with those firms that are bought and are assigned new names although they are not new firms. Is it possible to capture this or are they generating certain bias in the data?
    • In page 1056, it is stated that “each plant is a monopolistic competitor choosing its labor and capital inputs (and therefore its output and price) to maximize current profits”. In a highly globalized world, new firms would be price takers. Would this affect the model?
alexkmc33 commented 2 years ago

Question related to Baker-Conning (2021)

  1. According to equation 14, it seems that the optimal labor share in enclosed land is an increasing function of the share of enclosed land, te. On page 13, it is written that when we are at the low TFP state, the market equilibrium wage falls as labor returns in the commons are debased. I get it that w(te) is decreasing in the functional form but cannot link it with the debase comment. Does it mean that there are more labor into the common sector? Then does it mean that the labor demand in the enclosed sector is decreasing in te? In this case, I am having trouble with the interpretation of equation 14.

  2. I am not sure what measure te has in equation 23. If we are introducing a noise in theta, should the integral be respect to theta and theta should be in the equation 23?

  3. When we are in the low TFP economy, I see that the landlord relative share increases with te at an increasing rate. But I am not sure why this is aggravating income inequality. Does this mean that the income distribution becomes more dispersed?

  4. What does enclosure from below or not mean in page 24?

Question about Klenow, Hsieh (2014).

  1. I am not sure why the lower survivor growth than overall growth suggests that exit is negatively correlated with size.

  2. In the 2009 and 2014 paper, in calculating the A_ia, it seems that the papers do not account for the possibility of endogeneity in factors and productivity. Are they method robust to this problem since it is not estimation?

Emanuel-Agu commented 2 years ago

Hsieh and Klenow (2009):

  1. While the focus is set on the misallocation, I think we cannot neglect that efficiency is affected by misallocation. How could the model be implemented to identify this interaction?

  2. The period the authors refer to coincides with the huge leap in China’s (1998-2005) and India’s (1987-1994) representation in the world’s GDP. If misallocations would have been important hindrances for an even large economic growth in these countries, (a) Which would have been the magnitude of the “next leap” for the future decades (considering some proportions of the misallocations will be solved); (b) Have some paper addressed this speculation and contributed extending this line of research?

  3. I would like to find an explanation for the following fact: the distribution of physical productivity (TFPQ) is surprisingly constant for the three countries, while, given its definition, the variable is not expressed in the base in some country/year (for example taking the US 1997 as base equal to 1).

  4. In China, the TFPQ has risen constantly during the first five years of the 21st century (figure IV). This would suggest that the adoption of new technology does play an important role in the increase of the country’s TFP. As I understand, there exists a relevant factor for the TFP that is not mentioned in the paper: migrations from rural to urban areas require the state authorization (hukou). If this is reasonable, something important is missing in the description of disparities in TFP within the country.

TaeLee1085 commented 2 years ago

Hsieh and Klenow (2009)

Baker and Conning (2021)