CES-WP-09-04
Misallocation and Manufacturing TFP in China and India
Chang-Tai Hsieh, Peter Klenow
February 01, 2009
Resource misallocation can lower aggregate total factor productivity (TFP). We use
micro data on manufacturing establishments to quantify the potential extent of misallocation in
China and India compared to the U.S. Compared to the U.S., we measure sizable gaps in
marginal products of labor and capital across plants within narrowly-defined industries in China
and India. When capital and labor are hypothetically reallocated to equalize marginal products to
the extent observed in the U.S., we calculate manufacturing TFP gains of 30-50% in China and
40-60% in India.
60 Pages 284133 Bytes
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CES-WP-09-03
Spatial Influences on the Employment of U.S. Hispanics: Spatial Mismatch, Discrimination, or Immigrant Networks?
Judith Hellerstein, Melissa McInerney, David Neumark
January 01, 2009
Employment rates of Hispanic males in the United States are considerably lower than
employment rates of whites. In the data used in this paper, the Hispanic male employment rate is
61 percent, compared with 83 percent for white men.1 The question of the employment
disadvantage of Hispanic men likely has many parallels to the question of the employment
disadvantage of black men, where factors including spatial mismatch, discrimination, and labor
market networks have all received attention as contributing factors. However, the Hispanic
disadvantage has been much less studied, and the goal of this paper is to bridge that gap. To that
end, we present evidence that tries to assess which of the three factors listed above appears to
contribute to the lower employment rate of Hispanic males. We focus in particular on immigrant
Hispanics and Hispanics who do not speak English well.
38 Pages 295131 Bytes
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CES-WP-09-02
Bank Crises and Investor Confidence
Una Okonkwo Osili, Anna Paulson
January 01, 2009
In addition to their direct effects, episodes of financial instability may decrease investor
confidence. Measuring the impact of a crisis on investor confidence is complicated by the fact
that it is difficult to disentangle the effect of investor confidence from coincident direct effects of
the crisis. In order to isolate the effects of financial crises on investor confidence, we study the
investment behavior of immigrants in the U.S. Our findings indicate that systemic banking crises
have important effects on investor behavior. Immigrants who have experienced a banking crisis
in their countries of origin are significantly less likely to have bank accounts in the U.S. This
finding is robust to including important individual controls like wealth, education, income, and
age. In addition, the effect of crises is robust to controlling for a variety of country of origin
characteristics, including measures of financial and economic development and specifications
with country of origin fixed effects.
33 Pages 147860 Bytes
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CES-WP-09-01
Neighbors and Co-Workers: The Importance of Residential Labor Market Networks
Judith Hellerstein, Melissa McInerney, David Neumark
January 01, 2009
We specify and implement a test for the importance of network effects in determining the
establishments at which people work, using recently-constructed matched employer-employee
data at the establishment level. We explicitly measure the importance of network effects for
groups broken out by race, ethnicity, and various measures of skill, for networks generated by
residential proximity. The evidence indicates that labor market networks play an important role
in hiring, more so for minorities and the less-skilled, especially among Hispanics, and that labor
market networks appear to be race-based.
47 Pages 452988 Bytes
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CES-WP-08-41
Cementing Relationships: Vertical Integration, Foreclosure, Productivity, and Prices
Ali Hortacsu, Chad Syverson
December 01, 2008
This paper empirically investigates the possible market power effects of vertical
integration proposed in the theoretical literature on vertical foreclosure. It uses a rich data set of
cement and ready-mixed concrete plants that spans several decades to perform a detailed case
study. There is little evidence that foreclosure is quantitatively important in these industries.
Instead, prices fall, quantities rise, and entry rates remain unchanged when markets become more
integrated. These patterns are consistent, however, with an alternative efficiency-based
mechanism. Namely, higher productivity producers are more likely to vertically integrate and are
also larger, more likely to survive, and charge lower prices. We find evidence that integrated
producers’ productivity advantage is tied to improved logistics coordination afforded by large
local concrete operations. Interestingly, this benefit is not due to firms’ vertical structures per se:
non-vertical firms with large local concrete operations have similarly high productivity levels.
61 Pages 221520 Bytes
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