A Detailed Anatomy of Factor Misallocation in India

This paper complements the results of earlier work on factor misallocation. The paper first expands the methodology and provides two important decompositions for the main indices. The main result is that factor and output misallocation across distr...

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Main Authors:	Duranton, Gilles, Ghani, Ejaz, Goswami, Arti Grover, Kerr, William
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	SANITATION EMPLOYMENT FINANCIAL SERVICES RIGHTS ECONOMIC GROWTH FREE TRADE AGREEMENT PRODUCTION LAGS POLITICS NATIONAL ECONOMY INTEREST INCOME INTEREST RATE EXCHANGE INFORMATION POLITICAL ECONOMY EFFECTS INCENTIVES DISTRIBUTION VARIABLES FACTORS OF PRODUCTION PRICE TAX INPUTS CITIES RETURNS TO SCALE PAYMENTS MOBILITY OF LABOR FREE TRADE AGRICULTURAL OUTPUT PRODUCTION PROCESS DEVELOPMENT LABOR MARKET CAPITAL INTENSITY TOTAL FACTOR PRODUCTIVITY TRAINING TELECOMMUNICATIONS LOW-INCOME COUNTRIES STAMP DUTY CONSTANT RETURNS TO SCALE LABOR PRODUCTIVITY PRODUCTIVITY WATER TRANSFERS MARKETS ORGANIZATIONS ECONOMIC POLICIES STANDARDS LABOR AVERAGING REAL ESTATE LIBERALIZATION ECONOMIC RESEARCH INFRASTRUCTURE TAXES LAND USE FACTOR MARKETS DATA AVAILABILITY REGULATIONS VALUE ADDED GUARANTEE OF UNIQUENESS WAGES POLICIES INTERNATIONAL TRADE BARRIERS FUTURE VALUE FOREIGN DIRECT INVESTMENT PRODUCTION FUNCTIONS MACROECONOMICS FOREIGN INVESTMENT POPULATION DENSITY URBAN AREAS CONSUMERS MEASUREMENT SHARES ASSETS TRADE LIBERALIZATION LABOUR PRODUCTIVITY STAMP DUTIES ECONOMIC MODELS ECONOMICS PRODUCTION FUNCTION OUTPUT MANAGEMENT ROADS INSURANCE TAXATION MANUFACTURING INDUSTRIES TRADE RAILWAYS GOODS LAND THEORY FIXED ASSETS EDUCATION INVESTMENT COMPARATIVE ADVANTAGE SHARE LAND USE REGULATIONS COLLATERAL SUPPLY BANKING INNOVATION FINANCIAL SUPPORT COMMUNICATION TOTAL OUTPUT LEGAL DEVELOPMENT LABOUR LABOR MARKETS GOVERNMENTS URBAN POPULATION POSITIVE EFFECTS PROPERTY MARKETS MARKET REGULATIONS PRICES ECONOMIES DEVELOPMENT POLICY COMPETITION
Online Access:	http://documents.worldbank.org/curated/en/2016/01/25837756/detailed-anatomy-factor-misallocation-india http://hdl.handle.net/10986/23720

id	okr-10986-23720
recordtype	oai_dc
spelling	okr-10986-237202021-04-23T14:04:16Z A Detailed Anatomy of Factor Misallocation in India Duranton, Gilles Ghani, Ejaz Goswami, Arti Grover Kerr, William SANITATION EMPLOYMENT FINANCIAL SERVICES RIGHTS ECONOMIC GROWTH FREE TRADE AGREEMENT PRODUCTION LAGS POLITICS NATIONAL ECONOMY INTEREST INCOME INTEREST RATE EXCHANGE INFORMATION POLITICAL ECONOMY EFFECTS INCENTIVES DISTRIBUTION VARIABLES FACTORS OF PRODUCTION PRICE TAX INPUTS CITIES RETURNS TO SCALE PAYMENTS MOBILITY OF LABOR FREE TRADE AGRICULTURAL OUTPUT PRODUCTION PROCESS DEVELOPMENT LABOR MARKET CAPITAL INTENSITY TOTAL FACTOR PRODUCTIVITY TRAINING TELECOMMUNICATIONS LOW-INCOME COUNTRIES STAMP DUTY CONSTANT RETURNS TO SCALE LABOR PRODUCTIVITY PRODUCTIVITY WATER TRANSFERS MARKETS ORGANIZATIONS ECONOMIC POLICIES STANDARDS LABOR AVERAGING REAL ESTATE LIBERALIZATION ECONOMIC RESEARCH INFRASTRUCTURE TAXES LAND USE FACTOR MARKETS DATA AVAILABILITY REGULATIONS VALUE ADDED GUARANTEE OF UNIQUENESS WAGES POLICIES INTERNATIONAL TRADE BARRIERS FUTURE VALUE FOREIGN DIRECT INVESTMENT PRODUCTION FUNCTIONS MACROECONOMICS FOREIGN INVESTMENT POPULATION DENSITY URBAN AREAS CONSUMERS MEASUREMENT SHARES ASSETS TRADE LIBERALIZATION LABOUR PRODUCTIVITY STAMP DUTIES ECONOMIC MODELS ECONOMICS PRODUCTION FUNCTION OUTPUT MANAGEMENT ROADS INSURANCE TAXATION MANUFACTURING INDUSTRIES TRADE RAILWAYS GOODS LAND THEORY FIXED ASSETS EDUCATION INVESTMENT COMPARATIVE ADVANTAGE SHARE LAND USE REGULATIONS COLLATERAL SUPPLY BANKING INNOVATION FINANCIAL SUPPORT COMMUNICATION TOTAL OUTPUT LEGAL DEVELOPMENT LABOUR LABOR MARKETS GOVERNMENTS URBAN POPULATION POSITIVE EFFECTS PROPERTY MARKETS MARKET REGULATIONS PRICES ECONOMIES DEVELOPMENT POLICY COMPETITION This paper complements the results of earlier work on factor misallocation. The paper first expands the methodology and provides two important decompositions for the main indices. The main result is that factor and output misallocation across districts is at least as important as misallocation within districts. Second, the paper provides an exploration of the service sector that complements earlier work on manufacturing. The analysis shows that labor plays a fundamental role for misallocation in services, whereas land is the determining factor in manufacturing. Third, the paper expands our earlier work on the effects of policies on misallocation by looking at a much broader range of policies, and find strong evidence of their effects on misallocation. Finally, the paper take steps towards the identification of the causal effect of misallocation on output per worker by developing a novel instrumental variable approach and a simulation approach that allows for checking the consistency of the empirical results. 2016-02-02T23:45:51Z 2016-02-02T23:45:51Z 2016-01 Working Paper http://documents.worldbank.org/curated/en/2016/01/25837756/detailed-anatomy-factor-misallocation-india http://hdl.handle.net/10986/23720 English en_US Policy Research Working Paper;No. 7547 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	SANITATION EMPLOYMENT FINANCIAL SERVICES RIGHTS ECONOMIC GROWTH FREE TRADE AGREEMENT PRODUCTION LAGS POLITICS NATIONAL ECONOMY INTEREST INCOME INTEREST RATE EXCHANGE INFORMATION POLITICAL ECONOMY EFFECTS INCENTIVES DISTRIBUTION VARIABLES FACTORS OF PRODUCTION PRICE TAX INPUTS CITIES RETURNS TO SCALE PAYMENTS MOBILITY OF LABOR FREE TRADE AGRICULTURAL OUTPUT PRODUCTION PROCESS DEVELOPMENT LABOR MARKET CAPITAL INTENSITY TOTAL FACTOR PRODUCTIVITY TRAINING TELECOMMUNICATIONS LOW-INCOME COUNTRIES STAMP DUTY CONSTANT RETURNS TO SCALE LABOR PRODUCTIVITY PRODUCTIVITY WATER TRANSFERS MARKETS ORGANIZATIONS ECONOMIC POLICIES STANDARDS LABOR AVERAGING REAL ESTATE LIBERALIZATION ECONOMIC RESEARCH INFRASTRUCTURE TAXES LAND USE FACTOR MARKETS DATA AVAILABILITY REGULATIONS VALUE ADDED GUARANTEE OF UNIQUENESS WAGES POLICIES INTERNATIONAL TRADE BARRIERS FUTURE VALUE FOREIGN DIRECT INVESTMENT PRODUCTION FUNCTIONS MACROECONOMICS FOREIGN INVESTMENT POPULATION DENSITY URBAN AREAS CONSUMERS MEASUREMENT SHARES ASSETS TRADE LIBERALIZATION LABOUR PRODUCTIVITY STAMP DUTIES ECONOMIC MODELS ECONOMICS PRODUCTION FUNCTION OUTPUT MANAGEMENT ROADS INSURANCE TAXATION MANUFACTURING INDUSTRIES TRADE RAILWAYS GOODS LAND THEORY FIXED ASSETS EDUCATION INVESTMENT COMPARATIVE ADVANTAGE SHARE LAND USE REGULATIONS COLLATERAL SUPPLY BANKING INNOVATION FINANCIAL SUPPORT COMMUNICATION TOTAL OUTPUT LEGAL DEVELOPMENT LABOUR LABOR MARKETS GOVERNMENTS URBAN POPULATION POSITIVE EFFECTS PROPERTY MARKETS MARKET REGULATIONS PRICES ECONOMIES DEVELOPMENT POLICY COMPETITION
spellingShingle	SANITATION EMPLOYMENT FINANCIAL SERVICES RIGHTS ECONOMIC GROWTH FREE TRADE AGREEMENT PRODUCTION LAGS POLITICS NATIONAL ECONOMY INTEREST INCOME INTEREST RATE EXCHANGE INFORMATION POLITICAL ECONOMY EFFECTS INCENTIVES DISTRIBUTION VARIABLES FACTORS OF PRODUCTION PRICE TAX INPUTS CITIES RETURNS TO SCALE PAYMENTS MOBILITY OF LABOR FREE TRADE AGRICULTURAL OUTPUT PRODUCTION PROCESS DEVELOPMENT LABOR MARKET CAPITAL INTENSITY TOTAL FACTOR PRODUCTIVITY TRAINING TELECOMMUNICATIONS LOW-INCOME COUNTRIES STAMP DUTY CONSTANT RETURNS TO SCALE LABOR PRODUCTIVITY PRODUCTIVITY WATER TRANSFERS MARKETS ORGANIZATIONS ECONOMIC POLICIES STANDARDS LABOR AVERAGING REAL ESTATE LIBERALIZATION ECONOMIC RESEARCH INFRASTRUCTURE TAXES LAND USE FACTOR MARKETS DATA AVAILABILITY REGULATIONS VALUE ADDED GUARANTEE OF UNIQUENESS WAGES POLICIES INTERNATIONAL TRADE BARRIERS FUTURE VALUE FOREIGN DIRECT INVESTMENT PRODUCTION FUNCTIONS MACROECONOMICS FOREIGN INVESTMENT POPULATION DENSITY URBAN AREAS CONSUMERS MEASUREMENT SHARES ASSETS TRADE LIBERALIZATION LABOUR PRODUCTIVITY STAMP DUTIES ECONOMIC MODELS ECONOMICS PRODUCTION FUNCTION OUTPUT MANAGEMENT ROADS INSURANCE TAXATION MANUFACTURING INDUSTRIES TRADE RAILWAYS GOODS LAND THEORY FIXED ASSETS EDUCATION INVESTMENT COMPARATIVE ADVANTAGE SHARE LAND USE REGULATIONS COLLATERAL SUPPLY BANKING INNOVATION FINANCIAL SUPPORT COMMUNICATION TOTAL OUTPUT LEGAL DEVELOPMENT LABOUR LABOR MARKETS GOVERNMENTS URBAN POPULATION POSITIVE EFFECTS PROPERTY MARKETS MARKET REGULATIONS PRICES ECONOMIES DEVELOPMENT POLICY COMPETITION Duranton, Gilles Ghani, Ejaz Goswami, Arti Grover Kerr, William A Detailed Anatomy of Factor Misallocation in India
geographic_facet	South Asia India
relation	Policy Research Working Paper;No. 7547
description	This paper complements the results of earlier work on factor misallocation. The paper first expands the methodology and provides two important decompositions for the main indices. The main result is that factor and output misallocation across districts is at least as important as misallocation within districts. Second, the paper provides an exploration of the service sector that complements earlier work on manufacturing. The analysis shows that labor plays a fundamental role for misallocation in services, whereas land is the determining factor in manufacturing. Third, the paper expands our earlier work on the effects of policies on misallocation by looking at a much broader range of policies, and find strong evidence of their effects on misallocation. Finally, the paper take steps towards the identification of the causal effect of misallocation on output per worker by developing a novel instrumental variable approach and a simulation approach that allows for checking the consistency of the empirical results.
format	Working Paper
author	Duranton, Gilles Ghani, Ejaz Goswami, Arti Grover Kerr, William
author_facet	Duranton, Gilles Ghani, Ejaz Goswami, Arti Grover Kerr, William
author_sort	Duranton, Gilles
title	A Detailed Anatomy of Factor Misallocation in India
title_short	A Detailed Anatomy of Factor Misallocation in India
title_full	A Detailed Anatomy of Factor Misallocation in India
title_fullStr	A Detailed Anatomy of Factor Misallocation in India
title_full_unstemmed	A Detailed Anatomy of Factor Misallocation in India
title_sort	detailed anatomy of factor misallocation in india
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/01/25837756/detailed-anatomy-factor-misallocation-india http://hdl.handle.net/10986/23720
_version_	1764454628558110720

A Detailed Anatomy of Factor Misallocation in India

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