Banca de DEFESA: Thiago Trafane Oliveira Santos

Uma banca de DEFESA de DOUTORADO foi cadastrada pelo programa.
STUDENT : Thiago Trafane Oliveira Santos
DATE: 31/07/2024
TIME: 09:00
LOCAL: Vídeo Conferência
TITLE:

Essays on firm heterogeneity and market-power-driven misallocation

KEY WORDS:

TFP, misallocation, Cournot model, firm size, Zipf's law

PAGES: 154
BIG AREA: Ciências Sociais Aplicadas
AREA: Economia
SUMMARY:

This work comprises three papers that explore the interplay of firm heterogeneity and market-power-driven misallocation. The first paper addresses Zipf's law, which states that the probability of a variable being larger than x is roughly inversely proportional to x. More specifically, this paper evaluates if this ``law'' holds for the distribution of firm size by the number of employees in Brazil. We use publicly available binned annual data from the Central Register of Enterprises (CEMPRE), which is held by the Brazilian Institute of Geography and Statistics (IBGE) and covers all formal organizations. Remarkably, we find Zipf's law provides a very good, although not perfect, approximation to data for each year between 1996 and 2020 at the economy-wide level and also for agriculture, industry, and services alone. However, a lognormal distribution also performs well and even outperforms Zipf's law in certain cases. In the second paper, we develop a static Cournot model that, using mainly macroeconomic data, decomposes total factor productivity (TFP) into technology and allocative efficiency components, measured by the distance from the optimal allocation. Our approach is complementary to existing methods from the growth-accounting literature, which use highly general models that do not impose any specific market structure, but require comprehensive firm-level data that are hardly available. Applying the proposed framework to Brazil for 2000-2019, we find an upward trend in the allocative efficiency, reflecting the observed increase in the labor share and thus the estimated decrease in the aggregate markup in the country, in sharp contrast with most developed countries. Moreover, we find that the cycles in Brazilian TFP are mainly due to allocative efficiency, with the economic boom from the mid2000s being explained essentially by efficiency gains. The technology component of TFP grows much more steadily, around 0.8-0.9% per year, suggesting it reflects structural characteristics of the economy. Finally, the third paper employs the Cournot model developed in the second article in the Penn World Table, decomposing TFP from 1950 to 2019 for up to a hundred countries. Utilizing this decomposition, we revisit key facts of economic growth. On the one hand, we evaluate the world income frontier as proxied by the US, finding that changes in misallocation can significantly impact short-run growth. For example, during 2001-2007, the US witnessed notable technology improvement coupled with declining allocative efficiency, suggesting that the dot-com boom and advancements in information technology led to productivity gains but concentrated in certain firms. On the other hand, we examine the economic performance around the world. Our analysis reveals that misallocation plays a significant role in explaining cross-country income differences, particularly within low-income countries, even though a substantial unexplained portion persists. In contrast, misallocation does not clearly emerge as a primary driver of economic growth variations across countries or over time. Finally, limited support for the convergence hypothesis in allocative efficiency suggests misallocation's link with long-lasting country-specific factors, such as institutions, rather than transient phenomena like the diffusion of innovations.

COMMITTEE MEMBERS:
Externo à Instituição - ALEXANDRE BALDUINO SOLLACI - FMI
Presidente - 1642911 - DANIEL OLIVEIRA CAJUEIRO
Interno - 1550794 - JOSE GUILHERME DE LARA RESENDE
Interno - 1229140 - ROBERTO DE GOES ELLERY JUNIOR
Externo à Instituição - TOMAS RODRIGUEZ MARTINEZ - Insper