Essays in firm dynamics and misallocation
- Autores: Sampreet Singh Goraya
- Directores de la Tesis: Julian di Giovanni (dir. tes.), Manuel García-Santana (codir. tes.)
- Lectura: En la Universitat Pompeu Fabra ( España ) en 2021
- Idioma: inglés
- Tribunal Calificador de la Tesis: Diego Restuccia (presid.), Nezih Guner (secret.), Giacomo Ponzetto (voc.)
- Programa de doctorado: Programa de Doctorado en Economía, Finanzas y Empresa por la Universidad Pompeu Fabra
- Materias:
- Enlaces
- Tesis en acceso abierto en: TDX
- Resumen
This dissertation consists of three essays that investigate the drivers of the misallocation of resources and its macroeconomic implications. I employ micro-level datasets in conjunction with cutting-edge econometric techniques to document stylized facts and examine underlying mechanisms using quantitative models of producer heterogeneity and firm dynamics.
In the first chapter, I investigate the relative importance of the caste system in explaining resource misallocation in India and quantify its impact on aggregate productivity. I document three main stylized facts. First, firms of historically disadvantaged castes have a higher average revenue product of capital, arpk, relative to firms owned by high castes, whereas no significant differences in the average revenue product of labor, arpl, exist. Second, across-caste dispersion in arpk is primarily driven by small and young firms. Third, the majority of this dispersion is concentrated in financially underdeveloped regions in India. In a quantitative model of entrepreneurship, I find that the majority of across-caste dispersion in $arpk$ is explained by differences in access to credit and that such asymmetries reduce aggregate total factor productivity by 6% to 10%.
In the second chapter, co-authored with Andrea Chiavari, we study the rise of intangible capital. In the last few decades, intangible investment has increased dramatically, and by 2015 it accounted for more than 30\% of aggregate investment. However, we know still little about its importance in the production process and its associated properties. We estimate the firm-level production function finding that intangible capital is an important factor for production, whose share increased from 0.03 to 0.12, at the expense of the labor. We label this phenomenon Intangible Capital Biased Technological Change (IBTC). Further, we provide novel empirical evidence showing that the investment process of intangible capital is associated with higher sunk costs, meaning that it entails higher investment adjustment costs relative to tangible capital. Finally, using a model of firms and investment dynamics, we show that IBTC can jointly explain most of the trends witnessed in the US economy since the 1980s. Specifically, it quantitatively explains the rise in the average firm size and concentration, the changes in aggregate factor shares, the increase in the profit rate, the decline in the tangible capital investment rate, and the decrease in allocative efficiency.
In the third chapter, co-authored with Jurica Zrnc, we provide evidence of market power in public procurement. Firms with ex-ante similar markups witness a 10\% increase after winning a public procurement contract relative to firms that sell only to the private sector. Parallel with this increase in markups, profits increase as well, while labor share declines. Limited competition in public procurement is a potential driver behind these findings, given that 35\% of contracts are awarded in a single bid procurement procedure. We show that single bid procurement consistently incurs higher prices than expected by the procuring body relative to a multi-bid setting, even for standardized products. Similarly, single bid procedures are also associated with an increase in firm-level markups.
