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The Size and Life-Cycle Growth of Plants: The Role of Productivity, Demand and Wedges


Time: 10:00 am-11:30 am, Oct. 14th, 2022

Platform: Zoom

Speaker: Marcela Eslava

(The University of Los Andes)

Link: https://us06web.zoom.us/j/81626164288?pwd=Zmp1VG41dXF0by9UZTBRVkxSbjJWZz09

Meeting ID: 816 2616 4288

Passcode: inse



What determines the distribution of establishments in terms of size and life-cycle growth? How are those determinants related to aggregate productivity? We provide novel answers by developing a framework that uses price and quantity information on establishments’ outputs and inputs to jointly estimate the demand and production parameters, and subsequently establishments’ quality-adjusted productivity, deriving both micro-level and aggregate implications. We find that the dominant source of variation in establishment size is variation in quality/product appeal but that variation in technical efficiency plays an important supporting role. Multiple factors dampen dispersion in establishment size including dispersion in input (quality adjusted) prices, markups, and residual wedges. Relatively moderate dampening factors induce large aggregate allocative efficiency losses relative to their absence. We show that joint estimation of the parameters of the demand and production function crucially affects inferences on the determinants of the size distribution of firms and their implications for aggregate productivity.



Professor Marcela Eslava is a Professor and Dean of Economics in the Faculty of Economics at The University of Los Andes. Her research agenda focuses on economic development, from the relationship between business dynamics, employment, productivity and regulations. Her work has been published in the American Economic ReviewReview of Economics and Statistics, and Journal of Development Economy. Marcela is currently a member of the Regional Standing Committee for Latin America of the Econometric Society and the Administrative Council of the Research Institute for Development, Growth and Economics (RIDGE), and a research affiliate of the Innovations for Poverty Action SME program. She obtained a Ph.D. in Economics from the University of Maryland at College Park in 2004.