Date/Time/Venue: Friday 21 September 2018, 3:15pm, @MB1.62 (Mary Burton Building)

Speaker: Radoslaw Stefanski, University of St. Andrews and University of Oxford

Title: "What’s in a wedge? Misallocation and Taxation in the Oil Industry" (joint with Gerhard Toews, New Economic School Moscow)


Resource misallocation explains a large part of cross-country productivity differences. Measuring differences in marginal products of labor and capital across countries and firms allows for a quantification of the extent of this misallocation, but is typically not informative on its source. We address this problem by using novel data from the oil industry to pin down both, the extent and the source of misallocation in the rest-of-the-world versus the United States. We confirm the existence of sizeable gaps in marginal products across production units relative to the US, but show that these disappear once we account for direct revenue taxation. This provides strong evidence that cross-country gaps in marginal products - and hence productivity - are largely driven by differences in tax policies rather than more indirect distortions.

Seminar paper