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"This paper proposes a simple theory of a system of cities that decomposes the determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiency and better amenities lead to larger cities, but also to greater frictions through...
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Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing … establishments to quantify the extent of this misallocation in China and India compared to the U.S. in recent years. Compared to the … in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent …
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