## Resource Misallocation and Productivity: Evidence from Mexico

_IMF Working Papers, May 15, 2018_

## Source details

**Canonical URL:** [Resource Misallocation and Productivity: Evidence from Mexico](https://www.imf.org/en/publications/wp/issues/2018/05/15/resource-misallocation-and-productivity-evidence-from-mexico-45837)

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## Bibliographic details
- Authors: Florian Misch, Christian Saborowski
- Published: May 15, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484353578.001

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### Main contributions
- Validates the indirect measurement of misallocation (Hsieh and Klenow, 2009) by illustrating a close correlation between misallocation and per capita incomes across Mexican states.
- Exploits large variation in resource misallocation within industries and across states, using rich firm-, local-, and industry-level data to identify determinants of misallocation.
- Identifies several well-defined distortions that have a statistically and economically meaningful effect on productivity via resource misallocation.

### Key findings
- There is a close correlation between measured resource misallocation and per capita incomes across Mexican states.
- Variation in misallocation within industry-state pairs is large and can be linked to specific structural distortions.
- Several identifiable distortions (described in the paper) exert statistically and economically meaningful effects on productivity through the resource misallocation channel.

### Methodology and evidence
- Indirect measurement approach following Hsieh and Klenow (2009) is validated empirically for Mexico.
- Analysis leverages unusually rich microdata at the firm, local, and industry levels.
- Exploits cross-state and within-industry variation to link misallocation to observable distortions.

### Subjects and keywords
- Subjects: Corruption, Crime, Labor, Production, Productivity, Total factor productivity
- Keywords: Corruption, dependent variable, Distortions Author’s, Global, industry-state pair, market concentration, output wedge, Productivity, resource misallocation, TFP gain, Total factor productivity, wage bill, WP

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## Content in this bundle

- **Resource Misallocation and Productivity: Evidence from Mexico, WP/18/112, May 2018**
  - [Resource Misallocation and Productivity: Evidence from Mexico, WP/18/112, May 2018 (Markdown version)](/-/media/files/publications/wp/2018/wp18112.pdf.md){rel="alternate" type="text/markdown"}
  - [Resource Misallocation and Productivity: Evidence from Mexico, WP/18/112, May 2018 (PDF)](/-/media/files/publications/wp/2018/wp18112.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2018/05/15/resource-misallocation-and-productivity-evidence-from-mexico-45837_