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Jel Classification:O10 

Working Paper
Evidence on the Within-Industry Agglomeration of R&D, Production, and Administrative Occupations

To date, most empirical studies of industrial agglomeration rely on data where observations are assigned an industry code based on classification systems such as NAICS in North America and NACE in Europe. This study combines industry data with occupation data to show that there are important differences in the spatial patterns of occupation groups within the widely used industry definitions. We focus on workers in manufacturing industries, whose occupations almost always fit into three groups: production, administrative, or R&D. We then employ two approaches to document the spatial ...
Working Paper Series , Paper WP-2016-20

Working Paper
Firm Entry and Exit and Aggregate Growth

Applying the Foster, Haltiwanger and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as ...
Globalization Institute Working Papers , Paper 411

Patterns of rainfall insurance participation in rural India

This paper describes the contract design and institutional features of an innovative rainfall insurance policy offered to smallholder farmers in rural India and presents preliminary evidence on the determinants of insurance participation. Insurance take-up is found to be decreasing in basis risk between insurance payouts and income fluctuations, higher among wealthy households, and lower among households that are credit constrained. These results match predictions of a simple neoclassical model appended with borrowing constraints. Other patterns are less consistent with the benchmark model. ...
Staff Reports , Paper 302

Firm Entry and Exit and Aggregate Growth

Using data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to firm entry and exit during fast-growth episodes compared to slow-growth episodes. Studies of other countries confirm this empirical relationship. We develop a model of endogenous firm entry and exit based on Hopenhayn (1992). Firms enter with efficiencies drawn from a distribution whose mean grows over time. After entering, a firm?s efficiency grows with age. In the calibrated model, reducing entry costs or barriers to technology adoption generates the pattern we document in the data. ...
Staff Report , Paper 544

An Assignment Model of Knowledge Diffusion and Income Inequality

Randomness in individual discovery disperses productivities, whereas learning from others keeps productivities together. Long-run growth and persistent earnings inequality emerge when these two mechanisms for knowledge accumulation are combined. This paper considers an economy in which those with more useful knowledge can teach others, with competitive markets assigning students to teachers. In equilibrium, students with an ability to learn quickly are assigned to teachers with the most productive knowledge. This sorting on ability implies large differences in earnings distributions ...
Staff Report , Paper 509

Working Paper
Modernization and Discrete Measures of Democracy

We reassess the empirical evidence for a positive relationship between income and democracy, commonly known as the ?modernization hypothesis,? using discrete democracy measures. While discrete measures have been advocated in the literature, they pose estimation problems under fixed effects due to incidental parameter issues. We use two methods to address these issues, the bias-correction method of Fernandez-Val, which directly computes the marginal effects, and the parameterized Wooldridge method. Estimation under the Fernandez-Val method consistently indicates a statistically and ...
Working Paper Series , Paper 2014-1

Working Paper
Firm-Embedded Productivity and Cross-Country Income Differences

We measure the contribution of firm-embedded productivity to cross-country income differences. By firm-embedded productivity we refer to the components of productivity that differ across firms and that can be transferred internationally, such as blueprints, management practices, and intangible capital. Our approach relies on microlevel data on the cross-border operations of multinational enterprises (MNEs). We compare the market shares of the exact same MNE in different countries and document that they are about four times larger in developing than in high-income countries. This finding ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 39

Discussion Paper
Remittances and COVID-19: A Tale of Two Countries

Looking at the effects of the COVID-19 pandemic on workers' remittances flowing from the United States, this article focuses on the experiences of two countries, El Salvador and Mexico, which account for approximately 30 percent of all immigrants currently residing in the United States. Following the second quarter's economic lockdown, transfers to these countries experienced perplexing dynamics. Specifically, remittances to El Salvador witnessed a record 40 percent sudden drop, while Mexico recorded an unexpected 35 percent increase. We discuss some of the narratives proposed to explain this ...
Policy Hub , Paper 2020-12

Online Appendix for: How Do Voters Respond to Welfare vis-à-vis Public Good Programs? An Empirical Test for Clientelism

This appendix accompanies Staff Report 605: How Do Voters Respond to Welfare vis-à-vis Public Good Programs? An Empirical Test for Clientelism.
Staff Report , Paper 638

Journal Article
The Visible Hand: The Role of Government in China’s Long-Awaited Industrial Revolution

China is undergoing its long-awaited industrial revolution. There is no shortage of commentary and opinion on this dramatic period, but few have attempted to provide a coherent, in-depth, politicaleconomic framework that explains the fundamental mechanisms behind China?s rapid industrialization. This article reviews the New Stage Theory of economic development put forth by Wen (2016a). It illuminates the critical sequence of developmental stages since the reforms enacted by Deng Xiaoping in 1978: namely, small-scale commercialized agricultural production, proto-industrialization in the ...
Review , Volume 98 , Issue 3 , Pages 189-226


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