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Growth of the Korean economy has been sluggish, and this situation is more pronounced in the service sector. We argue that capital misallocation, especially in the service sector, could contribute to this slowdown. Utilizing firm and sectoral level data, first we assess the rising dispersion of...
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government incentives affect the allocation (or misallocation) of capital and labour across firms, and we quantify the extent to …
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. We establish that, in the presence of spillovers, efficient resource allocation requires that more productive firms face …
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