Tuesday, January 3, 2012

economic history job market candidates, 2011-2012

Part of a continuing series

Nicolas Ziebarth is getting his PhD from Northwestern and lists economic history as a primary field, which is interesting in and of itself -- usually economic historians try to sell themselves in a more actively-demanded area of specialization (labor economics or development, for example) and list economic history as a secondary field just to keep job prospects as open as possible.

He is interested in the role that resource misallocation plays in economic development. (Anyone out there in development familiar with this idea and can give a quick summary? Leave a comment!) His job market paper looks at its effects during the Great Depression. "Misallocation and Productivity During the Great Depression":
Abstract: Aggregate productivity fell by 18% between 1929 and 1933. Existing explanations for this decline have focused on unobserved shifts in factor inputs such as labor hoarding. I develop a new hypothesis that focuses on the role of resource misallocation between heterogeneous plants. Using a novel plant-level dataset, I study two industries: manufactured ice and cement. I decompose the overall change in industry-level productivity into effcient productivity shifts and misallocation as in Hsieh and Klenow (2009). Increases in misallocation between 1929 and 1931 can explain at a minimum 50% of the decline in productivity for cement, around 20% between 1931 and 1933, and 10 to 15% for 1933 to 1935. I estimate that increases in misallocation can explain 50% of the total decline in industry productivity for manufactured ice between 1929 and 1935. In order to explain these findings, I develop a model of financial frictions that relates misallocation to dispersion in working capital interest rates. If banks are unwilling to take on additional leverage to fund the most productive plants, credit becomes misallocated resulting in factor misallocation and lower aggregate productivity. My model therefore explains the empirically observed increase in misallocation through an increase in the marginal cost of leverage. I argue that these empirical and theoretical results provide another role for the non- monetary effects of the banking crisis during the Depression (Bernanke, 1983a): the collapse of aggregate productivity.
At the website I linked to he also has a paper which seems like more of a "big picture" project; the kind of economic history I find more interesting. He examines traditional models of "backwardness" of developing countries in "Are China and India Backward? Evidence from the 19th Century U.S. Census of Manufactures". The abstract:
Hsieh and Klenow (2009) argue that a large fraction of aggregate TFP differences between the U.S. and the developing countries of China and India can be explained by factor misallocation. Their interpretation is that this misallocation is due to institutions and policies in these developing countries that redirect resources from productive to unproductive firms. Using the U.S. Census of Manufactures from the late 19th century, I find that the level of dispersion in these modern, less developed countries is very similar to that in the 19th century U.S. What these countries share are not similar institutions but rather similar levels of economic development. The institutions of the U.S. at this time were much better than India or China in terms of protecting property rights and allocating resources to the most productive firms. This suggests that the Hsieh-Klenow measure of imperfections is not solely related to institutions but also the level of development. I apply their accounting procedure to the U.S. and find that between 4% and 7% of manufacturing TFP growth in the 20th century can be attributed to a more efficient intra-industry allocation of resources.
The fact that neither in terms of economic development nor institutions are the U.S. and China/India similar, and the fact that the international context is quite different, makes me question the comparison, but it's still an interesting question. And he tries to frame his work in the context of the latest theoretical work by Acemoglu (which goes to the source of how precisely institutions do impact growth, instead of just saying that they matter), though he is really building off of earlier work by Hsieah and Klenow and going in a somewhat different direction -- with implications for the institutional and economic perspective. 

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