Job Market Paper

• TFP Declines: Misallocation or Mismeasurement? 
• Online Appendix   Abstract

  This paper documents the sectoral growth paths of measured total factor productivity (TFP) in southern Europe during the boom that proceeded the great contraction (1996 to 2007). Using both aggregate and firm-level panel data, I show that TFP in sectors that displayed fast expansion, such as construction, dropped significantly, while in non-expanding sectors, such as manufacturing, it stayed stable. I evaluate the relevance of two alternative explanations of this phenomenon: capital misallocation (the increase in capital was directed to less productive firms) and labor quality mismeasurement (lower quality of incoming labor was not fully captured in the TFP calculation). I find that the misallocation channel is almost negligible. Moreover, worker-firm matched data shows that labor quality did deteriorate in the expanding sectors but not in the others, giving credence to the labor-quality mismeasurement hypothesis. A model featuring both the misallocation and the mismeasurement channels and calibrated to match the micro-level productivity distribution and labor quality distribution predicts that the drop in true TFP was small if labor quality is measured properly. Close

Working Papers

• Do the Rich Know Better? - Evidence from University Endowments
• Media Coverage Abstract

  This paper studies capital return inequality among university endowments. It combines university- level data on endowment size, capital returns, and portfolio allocations into a unified data set. Using panel data regression, I show a strong impact of size on investment return. Everything else the same, the biggest endowment has a capital return 8 percent higher than the smallest endowment. However, after adjusting for risk using Sharpe ratios, the strong positive correlation turns negligible or even negative. This result suggests that the higher return of bigger endowments can be attributed to risk compensation rather than to an informational premium. Close

• SOEs and China’s Productivity Deceleration: Firm-level Evidence, with Jorge Alvarez and Grace Li
• Slides   Abstract

  This paper documents the total factor productivity (TFP) growth path from 1998 to 2013 using both the aggregate data and the firm-level data of China. We find that the TFP growth is positive from 1998 to 2011 and then turn to flat and even negative. And careful comparison between the state- owned enterprises (SOEs) and private firms reveals that the slowing down of TFP growth of the SOEs is the major contributor to the TFP growth reversal of the whole manufacturing sector. Moreover, we rejected a possible explanation that manufacturing TFP growth slowing down may due to the sectoral factor after the decomposition analysis. Close