Measuring Trends and Persistence in Capital and Labor Misallocation

Key Factors Behind Productivity Trends in EU Countries

“…The decline in productivity-enhancing reallocation documented in Section 2.3 could be partly cyclical, as crises are moments of maximum churning, but could also be structural. The reason is that the increase in the misallocation of resources in advanced economies pre-dates the global financial crisis, as shown in Chart 26 (see also Gamberoni et al 2016, Gopinath et al, 2017Calligaris et al, 2018;and Bun and de Winter, 2019). The observed increase in misallocation over time could be an important factor behind the declining productivity growth rates shown in Section 2.1.…”

“…Some of these factors, such as heterogeneity in mark ups and production technologies, do not strictly cause misallocation. Recent studies (Ho and Ruzic, 2018;David and Venkateswaran, 2019;Bun and de Winter, 2019) disentangle the various sources of dispersion in wedges. Controlling for the various other sources, the contribution of pure misallocation becomes smaller.…”

Productivity in the Netherlands

“…Bondt (2019) appeals to the increase in the self-employed persons. Jonkers (2019) highlights the increase in total hours worked despite the aging population, and Bun and Winter (2019) explore the increasing capital misallocation arising from a combination of small productive and large unproductive firms.…”