Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-23T22:37:10.974Z Has data issue: false hasContentIssue false
  • English
  • Français

KNOWLEDGE MISALLOCATION AND GROWTH

Published online by Cambridge University Press:  25 March 2014

Xavier Raurich ,
Fernando Sánchez-Losada  and
Montserrat Vilalta-Bufí
Xavier Raurich*
Affiliation:
Universitat de Barcelona and Centre de Recerca en Economia del Benestar (CREB)
Fernando Sánchez-Losada
Affiliation:
Universitat de Barcelona and Centre de Recerca en Economia del Benestar (CREB)
Montserrat Vilalta-Bufí
Affiliation:
Universitat de Barcelona and Centre de Recerca en Economia del Benestar (CREB)
*
Address correspondence to: Xavier Raurich, Universitat de Barcelona, Departament de Teoria Econòmica, Facultat d'Economia i Empresa, Avinguda Diagonal 696, 08034 Barcelona, Spain; e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

We develop a growth model where knowledge is embodied in individuals and diffused across sectors through labor mobility. The existence of labor mobility costs constrains mobility and thus generates labor misallocation. Different levels of labor misallocation imply different levels of exploitation of available knowledge and therefore different total factor productivity across countries. We derive a positive relationship between growth and labor mobility, which is consistent with the empirical evidence, by assuming aggregate constant returns to capital. We also analyze the short- and long-run effects of labor mobility costs in the case of decreasing returns to capital. It turns out that changes in mobility costs have larger economic effects when different types of workers have small rather than large complementarities. Finally, we show that different labor income taxes or labor market tightness imply different rates of labor mobility and therefore can explain differences in Gross Domestic Product across countries.

Keywords

Economic GrowthLabor MobilityKnowledge Misallocation
Type
Articles
Information
Macroeconomic Dynamics , Volume 19 , Issue 7 , October 2015 , pp. 1540 - 1564
Copyright
Copyright © Cambridge University Press 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Almeida, Paul and Kogut, Bruce (1999) Localization of knowledge and the mobility of engineers in regional networks. Management Science 45, 905–917.CrossRefGoogle Scholar
Andersen, Thomas Barnebeck and Dalgaard, Carl-Johan (2011) Flows of people, flows of ideas, and the inequality of nations. Journal of Economic Growth 16, 1–32.CrossRefGoogle Scholar
Arrow, Kenneth J. (1962) The economic implications of learning by doing. Review of Economic Studies 29, 155–173.CrossRefGoogle Scholar
Audretsch, David B. and Feldman, Maryann P. (1996) R&D spillovers and the geography of innovation and production. American Economic Review 86, 630–640.Google Scholar
Banerjee, Abhijit V. and Moll, Benjamin (2010) Why does misallocation persist? American Economic Journal: Macroeconomics 2, 189–206.Google Scholar
Barro, Robert J. (1990) Government spending in a simple model of endogenous growth. Journal of Political Economy 98, 103–125.CrossRefGoogle Scholar
Barseghyan, Levon and DiCecio, Ricardo (2011) Entry costs, industry structure, and cross-country income and TFP differences. Journal of Economic Theory 146, 1828–1851.CrossRefGoogle Scholar
Blanchflower, David G. and Oswald, Andrew J. (2013) Does High Home-Ownership Impair the Labor Market? Working paper 13-3, Peterson Institute for International Economics.CrossRefGoogle Scholar
Dixit, Avinash and Rob, Rafael (1994) Switching costs and sectoral adjustments in general equilibrium with uninsured risk. Journal of Economic Theory 62, 48–69.CrossRefGoogle Scholar
Fernald, John and Neiman, Brent (2011) Growth accounting with misallocation: Or, doing less with more in Singapore. American Economic Journal: Macroeconomics 3, 29–74.Google Scholar
Glaeser, Edward L., Kallal, Hedi D., Scheinkman, Jose A., and Shleifer, Andrei (1992) Growth in cities. Journal of Political Economy 100, 1126–1152.CrossRefGoogle Scholar
Hall, Robert E. and Jones, Charles I. (1999) Why do some countries produce so much more output per worker than others? Quarterly Journal of Economics 114, 83–116.CrossRefGoogle Scholar
Hanson, Gordon H. (2001) Scale economies and the geographic concentration of industry. Journal of Economic Geography 1, 255–276.CrossRefGoogle Scholar
Heston, Alan, Summers, Robert, and Aten, Bettina (2012) Penn World Table Version 7.1, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania.Google Scholar
Hsieh, Chang-Tai and Klenow, Peter J. (2009) Misallocation and manufacturing TFP in China and India. Quarterly Journal of Economics 124, 1403–1448.CrossRefGoogle Scholar
Hsieh, Chang-Tai and Klenow, Peter J. (2010) Development accounting. American Economic Journal: Macroeconomics 2, 207–223.Google Scholar
Jolivet, Grégory, Postel-Vinay, Fabien, and Robin, Jean-Marc (2006) The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US. European Economic Review 50, 877–907.CrossRefGoogle Scholar
Jones, Charles I. (2011) Intermediate goods and weak links in the theory of economic development. American Economic Journal: Macroeconomics 3, 1–18.Google Scholar
Jovanovic, Bojan and Moffitt, Robert (1990) An estimate of a sectoral model of labor mobility. Journal of Political Economy 98, 827–852.CrossRefGoogle Scholar
Klenow, Peter J. and Rodriguez-Clare, Andrés (1997) Economic growth: A review essay. Journal of Monetary Economics 40, 597–617.CrossRefGoogle Scholar
Lagos, Ricardo (2006) A model of TFP. Review of Economic Studies 73, 983–1007.CrossRefGoogle Scholar
Lee, Donghoon and Wolpin, Kenneth I. (2006) Intersectoral labor mobility and the growth of the service sector. Econometrica 74, 1–46.CrossRefGoogle Scholar
Lucas, Robert E. (1993) Making a miracle. Econometrica 61, 251–272.CrossRefGoogle Scholar
Machin, Stephen, Salvanes, Kjell G., and Pelkonen, Panu (2012) Education and mobility. Journal of the European Economic Association 10, 417–450.CrossRefGoogle Scholar
McGrattan, Ellen R. and Schmitz, James A. Jr. (1999) Explaining cross-country income differences. In Taylor, John B. and Woodford, Michael (eds.), Handbook of Macroeconomics, Vol. 1, Part A, pp. 669–737. Amsterdam: North-Holland.CrossRefGoogle Scholar
Moscarini, Giuseppe (2001) Excess worker reallocation. Review of Economic Studies 68, 593–612.CrossRefGoogle Scholar
Moscoso Boedo, Hernan J. and Mukoyama, Toshihiko (2012) Evaluating the effects of entry regulations and firing costs on international income differences. Journal of Economic Growth 17, 143–170.CrossRefGoogle Scholar
OECD. Stat, Data on Total Labor Tax Wedge for year 1997, http://www.oecd.org. Accessed 20 January 2013.Google Scholar
Ortigueira, Salvador and Santos, Manuel (1997) On the speed of convergence in endogenous growth models. American Economic Review 87, 383–399.Google Scholar
Parente, Stephen L. and Prescott, Edward C. (2004) A unified theory of the evolution of international income levels. Federal Reserve Bank of Minneapolis Staff Report 333.Google Scholar
Poschke, Markus (2009) Employment protection, firm selection, and growth. Journal of Monetary Economics 56, 1074–1085.CrossRefGoogle Scholar
Prescott, Edward C. (1998) Needed: A theory of total factor productivity. International Economic Review 39, 525–551.CrossRefGoogle Scholar
Prescott, Edward C. (2004) Why do Americans work so much more than Europeans? Federal Reserve Bank of Minneapolis Quarterly Review 28, 2–13.Google Scholar
Rebelo, Sergio (1991) Long-run policy analysis and long-run growth. Journal of Political Economy 99, 500–521.CrossRefGoogle Scholar
Restuccia, Diego and Rogerson, Richard (2008) Policy distortions and aggregate productivity with heterogeneous establishments. Review of Economic Dynamics 11, 707–720.CrossRefGoogle Scholar
Restuccia, Diego and Rogerson, Richard (2013) Misallocation and productivity. Review of Economic Dynamics 16, 1–10.CrossRefGoogle Scholar
Rogerson, Richard (1987) An equilibrium model of sectoral reallocation. Journal of Political Economy 95, 824–834.CrossRefGoogle Scholar
Romer, Paul M. (1986) Increasing returns and long run growth. Journal of Political Economy 94, 1002–1037.CrossRefGoogle Scholar
Romer, Paul M. (1990) Endogenous technological change. Journal of Political Economy 98, S71–102.CrossRefGoogle Scholar
Steger, Thomas M. (2007) Flexibility, sectoral hysteresis, and downturns. Macroeconomic Dynamics 11, 128–148.CrossRefGoogle Scholar
Thoenig, Mathias and Verdier, Thierry (2010) A macroeconomic perspective of knowledge management. Journal of Economic Growth 15, 33–63.CrossRefGoogle Scholar