Department Seminar: Pavel Sevcik (Université du Québec à Montréal)
Joint work with Rui Castro
We study the aggregate productivity effects of firm-level financial frictions.
Credit constraints affect production and household-level schooling decisions.
In turn, entrepreneurial schooling decisions impact firm-level productivities,
whose cross-sectional distribution becomes endogenous. In anticipation of
future constraints, entrepreneurs under-invest in schooling. Frictions lower
aggregate productivity because talent is misallocated across occupations, and
capital misallocated across firms. Firm-level productivities are also lower due
to schooling distortions. These effects combined account for between 22 and
44 percent of the U.S.-India aggregate productivity difference, depending on
the calibration. Schooling distortions are the major source of aggregate productivity
Keywords: Aggregate Productivity, Financial Frictions, Entrepreneurship, Human
JEL Codes: E24, I25, J24, O11, O15, O16, 047
Visit the speaker's website.