Production Complexity, Talent Misallocation and Development (April 2022 version)
Abstract: In this paper, I document that in the manufacturing sector, richer countries tend to have more managers per plant, less workers per manager and larger plants on average. I extend a knowledge-based hierarchies model of the organization of production where the communication technology depends on the managerial level in the hierarchy and the abilities of subordinates. I estimate model parameters so that the model jointly produces plant size distribution and number of managers per plant in the U.S. My results show that size-dependent distortions have bigger effect on output relative to similar studies that ignore organizational differences among production units.
Abstract: This paper studies the relationship between bribery, plant size and economic development. Bribery is a transfer from one private party to government officials in order to ‘get things done’. Enterprise Surveys data shows that small plants spend a higher fraction of their output on bribery than big plants. In this paper, a one-sector growth model is developed in which size-dependent distortions, bribery opportunities, and different plant sizes coexist. Two sets of exercises are conducted in order to quantify the interplay of size-dependent distortions and bribery. First, the model parameters are calibrated to generate the plant size distribution of the U.S., by assuming the U.S. is free of distortions. Then, size-dependent distortions are introduced to the undistorted economy, and their effects with and without bribery opportunities are compared. Counterfactual exercises show that size-dependent distortions become less distortionary in the presence of bribery opportunities since plants are able to avoid distortions by paying larger bribes. Second, the model is calibrated with distortions and bribery opportunities using Turkish data. The results indicate that the inferred level of distortions are sizable for all plants. The removal of distortions can have a substantial effect on both the output and the mean plant size: Output and mean plant size in Turkey could increase by 63.6% and 82.5% respectively.
joint with Orhan Torul
The Journal of Economic Inequality, 2020, 18 (2), 239–259.
Abstract: We investigate the evolution of Turkey’s wage, income and consumption inequalities using a cross-country comparable methodology and the Turkish Statistical Institute’s Household Budget Survey and the Survey of Income and Living Conditions micro data sets. Turkey’s wage, income and consumption inequalities all exhibit downward time trends over the 2002-2016 period. This observation aligns well with the rapid minimum wage growth over the period. While wage inequality estimates display strong countercyclicality, income and consumption inequalities exhibit rather acyclical time-series movements. While recent education premium estimates of Turkey are similar to those in the early 2000s, estimates of recent gender and experience premiums, as well as residual wage inequality are lower. Income and consumption inequality estimates exhibit similar time trends with moderate level differences, and these trends are robust to the choice of inequality metrics.