Full Citation
Title: Measuring Factor Misallocation across Industries: General Methods and Evidence on the Great Recession
Citation Type: Conference Paper
Publication Year: 2017
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Abstract: The prior literature measuring factor misallocation depends on the restrictive assumption that output elasticities are constant across production units. Such approaches cannot provide credible evidence on misallocation across industries. This paper develops more robust methods to measure misallocation and applies them to investigate the capital and labour allocation across 473 U.S. manufacturing industries. This reveals substantial factor misallocation across industries with potential output gains from an efficient reallocation of 22 − 64%. The degree of misallocation varies over time and increased during the Great Recession, which contributed about 10 − 60% to the observed decline in manufacturing output. JEL codes: E23, E32, O11, D61
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Authors: Schelkle, Thomas
Conference Name: Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking
Publisher Location: Vienna
Data Collections: IPUMS USA
Topics: Methodology and Data Collection, Other
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