Productivity and Reallocation

Transcription

1 Productvty and Reallocaton

2 Motvaton Recent studes hghlght role of reallocaton for productvty growth. Market economes exhbt: Large pace of output and nput reallocaton wth substantal role for entry/ext. Large dfferences n measured productvty across producers Productvty enhancng market selecton and reallocaton from less to more productve busnesses Magntude depends upon sector, country, measure (labor vs. TFP) open questons: Impact on workers vs. Impact on frms Role of nsttutons/market structure

3 DECOMPOSITIO OF PRODUCTIVITY I LITERATURE Smple ndustry ndex: P t / ndex of ndustry productvty P t ' j e0i s et ω et () s et / share of plant e n ndustry (e.g., output share) ωet / ndex of plant-level productvty (typcally log TFPet or log LPet)

4 M ethod (Lke Baly, Hulten, and Campbell (992)): P t ' j e 0C s et& ω et (WITHI) % j e 0C (ω et& & P t& ) s et (BETWEE) % j e0 C ω et s et (CROSS) () % j e 0 s et (ω et & P t& ) & j e 0 X s et& (ω et& & P t& ) (ET ETRY) C / contnung plants, / entrants, X /exters ISSUES:! Integrated treatm ent of entry/ext.! Freq uency

5 Comments on Decomposton n Lterature Some questons about how to nterpret aggregate ndex defned n ths manner Typcal check (e.g., BHC and FHK) to see how ths ndex performs relatve to standard aggregate measures Common result magntudes very smlar and correlatons hgh ot clear what correct aggregate ndex s Standard aggregate ndexes not well-justfed on theoretcal grounds (e.g., Fsher condtons under whch aggregate producton functon exsts are very strngent) Standard decomposton summarzes changes n actvty weghted mcro dstrbuton

6 Measurement of Plant-level Productvty tfp = y α l l α k k α m m α e e t All varables n logs, dffcult measurement Issues on outputs and nputs and factor elastctes

7 Decomposton of TFP n U.S. Mfg et Entry (26.00%) Wthn Plant (48.00%) Reallocaton (26.00%)

8 Contrbuton of Contnung Establshments vs. et Entry to U.S. Manufacturng Labor Productvty Growth, Shares Contnung Establshments et Entry

9 Contrbuton of Contnung Establshments vs. et Entry to U.S. Retal Trade Labor Productvty Growth, Shares Contnung Establshments et Entry

10 Producer Heterogenety: What are we measurng? Lmtaton of most studes of productvty and reallocaton: Plant-level output measured as deflated revenue usng ndustry deflator More than just a measurement problem Dfferences n measured productvty may be capturng dfferences n market power so results on productvty and reallocaton may be capturng demand factors Market selecton should be on proftablty but postve/normatve aspects of selecton depend crtcally on whether selecton s on effcency or market power

11 Polcy Implcatons Many reforms n transton/emergng economes amed at makng markets more compettve And obvously plays role n all countres (e.g., anttrust, deregulaton, etc. n U.S.) Whch and how much do product, credt, labor market dstortons matter? Focus n ths paper market power

12 Outlne of Paper Theory: Dfferentated product model Prces depend upon both cost/effcency (-) and demand factors () Selecton on effcency (costs/productvty) and demand factors Rases some questons regardng welfare (why demand elastctes vary across producers) Emprcal analyss: Unque data on busnesses wth measures of physcal quanttes and prces (Drect approach as opposed to ndrect approach of Meltz, Tybout, etc.) Productvty, prces and reallocaton wth corrected measure of productvty

13 ( ) = I I I I d q q qd qd qd y U δ α p p q δ α = x q ω = = w p p p ω δ α π

14 w p p ω δ α = p α φ *= w ω δ φ φ < φ* wll not fnd operatons proftable ( ) ( ) 0,, * 4 0 * 2 = = s dw d w d f V u u l e w w e ω ω δ ω φ ω δ ω δ φ φ

15 Data and Measurement Census of Manufactures for 982, 987, 992, 997 Physcal quantty/prce data avalable for selected sectors: Ths verson uses concrete, roasted coffee, whte pan bread TFPQ (physcal) and TFPR (revenue) measured usng std. ndex number approach (output less cost-share weghted nputs) Materals measured as cost of materals wth ndustry materals deflator Implcatons for nterpretaton of TFPQ:

16 Basc Facts Heterogenety and persstence n prces, TFPQ, TFPR Prces and TFPQ nversely related Makes sense more effcent/low cost producers have lower prces Var(TFPQ)>Var(TFPR) Hgh rates of entry/ext

17 Three man exercses Selecton equaton: Ext = f(tfpq, prces) TFPQ s, n prncple, a good ndex of cost/effcency Controllng for TFPQ mples controllng for cost/effcency so can solate demand factors Evoluton of TFPR, TFPQ, prces (contnuers, entry, ext) Productvty and reallocaton decompostons usng TFPQ and TFPR

18 Ext Regressons Unweghted Intal Condtons n Year t-k: Specfcaton Specfcaton 2 Specfcaton 3 Specfcaton 4 Log(TFPR) (0.02) Log(TFPQ) (0.09) Log(Prce) (0.04) (0.02) (0.045) Weghted (Revenue Weghts) Intal Condtons n Year t-k: Specfcaton Specfcaton 2 Specfcaton 3 Specfcaton 4 Log(TFPR) (0.07) Log(TFPQ) (0.04) Log(Prce) (0.02) (0.05) (0.023)

19 Unweghted Dependent Varable: Log(TFPR) Log(TFPQ) Log(Prce) Ext Dummy (0.005) (0.005) (0.002) Entry Dummy (0.004) 0.07 (0.005) (0.002) Weghted (Revenue Weghts) Dependent Varable: Log(TFPR) Log(TFPQ) Log(Prce) Ext Dummy (0.006) (0.007) (0.004) Entry Dummy (0.006) (0.007) (0.004)

20 Productvty Decomposton for Measure Total Wthn Between Cross Entry Ext et Entry ΔLog(TFPR) ΔLog(TFPQ)

21 Man Fndngs Extng busnesses have lower prces and lower productvty (ether TFPQ or TFPR) than ncumbents or entrants. Enterng busnesses have lower prces than ncumbents. Enterng busnesses have hgher TFPQ but not hgher TFPR than ncumbents Decompostons of aggregate TFPQ vs. TFPR suggests that the results n the exstng lterature may have overstated the contrbuton of net entry.

22 Demand vs. Effcency n Selecton? Lower productvty establshments and lower prce establshments are more lkely to ext. Controllng for both prce and productvty effects smultaneously shows that both factors are mportant for survval as mpled by the theory.

23 Where do we go from here? Theory: ature of product dfferentaton/market structure: Welfare consequences? Jont dstrbuton of demand and cost/effcency matters how does ths vary by sector, country, tme? Evdence: More sectors More structure (estmate producton/demand functons?) The World? Dstortons n product, credt, labor markets all are relevant for productvty and reallocaton.