{
  "title": "The Size Distribution of Manufacturing Plants and Development",
  "publication": "IMF Working Papers, December 22, 2014",
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  "summary": "The typical size distribution of manufacturing plants in developing countries has a thick left tail compared to developed countries. The same holds across Indian states, with richer states having a much smaller share of their manufacturing employment in small plants.",
  "sections": [
    {
      "heading": "Summary / Main finding",
      "content": "- The typical size distribution of manufacturing plants in developing countries has a thick left tail compared to developed countries.\n- The same pattern holds across Indian states: richer states have a much smaller share of their manufacturing employment in small plants.\n- Hypothesis: the income–size relation arises because low income countries and states have high demand for low quality products which can be produced efficiently in small plants.\n- The model developed can explain about forty percent of the cross-state variation in the left tail of manufacturing plants in India."
    },
    {
      "heading": "Empirical evidence (consumer and producer sides)",
      "content": "- Consumer-side evidence: richer households buy higher price goods.\n- Producer-side evidence: larger plants produce higher price products and use higher price inputs.\n- Cross-sectional facts: a positive association between household income and purchased goods prices; a positive association between plant size and product price/input price."
    },
    {
      "heading": "Theoretical model and mechanisms",
      "content": "- Preferences: the model features non-homothetic preferences with respect to quality on the consumer side.\n- Production: high quality production has higher marginal costs and requires higher fixed costs on the producer side.\n- Implication: high quality producers are larger on average and charge higher prices.\n- Mechanism linking income and plant-size distribution: higher income increases demand for higher quality (higher price) goods; producing higher quality requires larger plants = richer economies/states exhibit thinner left tails in plant-size distributions."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subjects: Agroindustries, Economic sectors, Employment, Income, Labor, National accounts, Skilled labor, Wages\n- Keywords: Agroindustries, elasticity in the model, Employment, goods price, Income, income level, India, informal sector, larger plant, manufacturing, material input, minimization problem, non-homothetic preferences, North America, plant regression, price goods, price index, price-income relation, production function, quality, quality goods, share of employment, size distribution, Skilled labor, utility function, Wages, WP\n\nSource: \"The Size Distribution of Manufacturing Plants and Development\", Siddharth Kothari, IMF Working Paper No. 2014/236 (December 22, 2014).\n\n---\n\n Content in this bundle\n\n- wp14236\n  - wp14236 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp14236 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-size-distribution-of-manufacturing-plants-and-development-42556"
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    "Authors: Siddharth Kothari",
    "Published: December 22, 2014",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781498334396.001",
    "The typical size distribution of manufacturing plants in developing countries has a thick left tail compared to developed countries.",
    "The same pattern holds across Indian states: richer states have a much smaller share of their manufacturing employment in small plants.",
    "Hypothesis: the income–size relation arises because low income countries and states have high demand for low quality products which can be produced efficiently in small plants.",
    "The model developed can explain about forty percent of the cross-state variation in the left tail of manufacturing plants in India.",
    "Consumer-side evidence: richer households buy higher price goods.",
    "Producer-side evidence: larger plants produce higher price products and use higher price inputs.",
    "Cross-sectional facts: a positive association between household income and purchased goods prices; a positive association between plant size and product price/input price.",
    "Preferences: the model features non-homothetic preferences with respect to quality on the consumer side.",
    "Production: high quality production has higher marginal costs and requires higher fixed costs on the producer side.",
    "Implication: high quality producers are larger on average and charge higher prices.",
    "Mechanism linking income and plant-size distribution: higher income increases demand for higher quality (higher price) goods; producing higher quality requires larger plants => richer economies/states exhibit thinner left tails in plant-size distributions.",
    "Subjects: Agroindustries, Economic sectors, Employment, Income, Labor, National accounts, Skilled labor, Wages",
    "Keywords: Agroindustries, elasticity in the model, Employment, goods price, Income, income level, India, informal sector, larger plant, manufacturing, material input, minimization problem, non-homothetic preferences, North America, plant regression, price goods, price index, price-income relation, production function, quality, quality goods, share of employment, size distribution, Skilled labor, utility function, Wages, WP",
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