Working Papers

Do Productivity Shocks Cause Inputs Misallocation?

Under Review

This paper investigates how productivity dispersion relates to input misallocation using a model with staggered productivity shocks that create wedges between anticipated and realized productivity for any production input. With inputs allocated optimally ex ante but suboptimally ex post, dispersion in realized productivity contributes to ex post input misallocation. Analyzing European firm data from 2000–2017 reveals significant co-movement between productivity dispersion and capital/labor misallocation across industries. Productivity dispersion explains a substantial share of capital and labor misallocation (40% and 70%), and 10% of materials misallocation, confirming its key role in allocation frictions.

[Versions Repo (arXiv)] [Preprint

In Search of (Factor-Biased) Learning by Exporting 

Joint with Joonkyo Hong

Draft coming soon!

We develop a novel production function framework to analyze learning-by-exporting with the factor-specific productivity dynamics. Contrary to common practices that view learning-by-exporting as a Hicks-neutral shifter, exporting has varied impacts on factor-augmenting productivities in our framework. Analyzing a historical period in Colombia from 1981 to 1991, we find that (1) skilled and unskilled labor are complements; (2) exporting does not improve the Hicks-neutral productivity, confirming earlier work; and (3) unskilled labor efficiency rises both absolutely and relative to skilled labor after exporting, leading exporters to become more skill-intensive. Our findings suggest a new insight into trade liberalization. Trade liberalization could have facilitated export-led industrialization, driving manufacturing productivity gains through the adoption of unskilled labor-saving technology and capitalizing on scale economies.