A longstanding question in economics is why some countries are so much richer than others. Today, for example, income per capita in the world's richest countries is roughly thirty-five times greater than it is in the world's poorest countries. Recent work argues that the proximate cause of the...

Structural transformation refers to the reallocation of economic activity across the broad sectors agriculture, manufacturing and services. This review article synthesizes and evaluates recent advances in the research on structural transformation. We begin by presenting the stylized facts of...

A large portion of differences in output per capita across countries is explained by differences in total factor productivity (TFP). In this article, we summarize a recent literature - and the articles in this special issue on misallocation and productivity - that focus on the reallocation of...

This paper analyzes a business cycle model with labor market frictions as well as an extensive labor supply margin. There are exogenous aggregate shocks to productivity, the job finding rate, and the separation rate. Workers also face idiosyncratic productivity (wage) shocks that they cannot...

This paper examines the role of the market for high-skilled labor in explaining variation in the levels and dynamics of the service share, home production time, and market labor across countries. We establish and extend key facts for a cross-section of countries. First, growth in the total share...

Although government spending provides citizens with many important benefits, such benefits must be weighed against the disincentivizing effects of increased labor taxes.

Standard models of public education provision predict an implicit transfer of resources from higher-income individuals toward lower-income individuals. Many studies have documented that public higher education involves a transfer in the reverse direction. We show that this pattern of...

This paper examines the effect of different education financing systems on the level and distribution of resources devoted to public education. We focus on California, which in the 1970's moved from a system of mixed local and state financing to one of effectively pure state finance and...

Dynamic general equilibrium models that include explicit household production sectors provide a useful framework within which to analyze a variety of macroeconomic issues. However, some implications of these models depend critically on parameters, including the elasticity of substitution between...