In
the
Wrong
Hands:
Complementarities,
Resource
Allocation,
and Aggregate
TFP
Abstract:
I explore mismatch between
firm quality and firm management as a mechanism for variations in total
factor productivity (TFP) across countries. In my calibrated model,
even minor deviations from efficient (assortative) matching have
sizeable effects on output and productivity. Underlying this result is
the finding that the aggregate implications of matching frictions are
highly sensitive to the degree of complementarity between firm and
manager attributes. In addition, the relative dispersion of firm and
managerial attributes is also key to quantifying the aggregate effects
of matching frictions. The key model parameters are pinned down by
calibrating the model to U.S. observations on the firm-size
distribution and the level and distribution of managerial compensation.
My results imply that "crony capitalism", where key managerial
positions are allocated on the basis of political connections rather
than talent, imposes a substantial burden on economic welfare.
[PDF - coming soon] (major revision under way)
Deceptive
Redistribution
Ongoing
research
(preliminary
&
incomplete)
with
Guillermo
Ordoñez.
Abstract:
While economic and redistributive policies can be welfare enhancing in
an environment characterized by market failures and inequality, they
frequently generate private gains to those who hold public office. In a
setting with dispersed information about the policies' true motives we
ask how self-interested governments who fret over their perceived
integrity (reputation) balance legitimate needs for government action
with the temptations of rent-seeking. Compared to the previous
literature our model generates a richer trade-off structure between
redistribution and efficiency. We find that governments use transfers
strategically to conceal inefficient policy choices and excessive
office rents. Our model also offers novel economic insights into the
role of information frictions in shaping the governments' political
accountability.
[PDF - February 2011]
Ongoing
research
(preliminary
&
incomplete).
Abstract:
I develop a tractable assignment model with symmetric information
frictions as in Groes et al. (2009) in order to characterize the
distribution of talent as well as the interaction
between individuals and the organizations they are associated with.
Using matched individual-organization data sets I structurally estimate
the primitives of the model in addition to the
parameter that governs the interaction between the individual's and the
organization's attributes in the
production process.
[PDF - coming soon] (major
revision
under way)