Author
Francisco J. Buera
Other affiliations: University of Chicago, National Bureau of Economic Research, Federal Reserve Bank of Minneapolis ...read more
Bio: Francisco J. Buera is an academic researcher from Washington University in St. Louis. The author has contributed to research in topics: Total factor productivity & Credit crunch. The author has an hindex of 31, co-authored 85 publications receiving 4435 citations. Previous affiliations of Francisco J. Buera include University of Chicago & National Bureau of Economic Research.
Papers published on a yearly basis
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TL;DR: This article developed a model co-determining aggregate total factor productivity (TFP), sectoral TFP, and scales across industrial sectors and found that financial frictions disproportionately affect TFP in tradable sectors where production requires larger costs.
Abstract: Explaining levels of economic development hinges on explaining TFP dierences across coun- tries. In poor countries, total factor productivity (TFP) is particularly low in sectors producing tradable goods. We document that an important dierence between tradable and non-tradable sectors is their average establishment size: Tradable establishments operate at much larger scales. We develop a model co-determining aggregate TFP, sectoral TFP, and scales across industrial sectors. In our model, …nancial frictions disproportionately aect TFP in tradable sectors where production requires larger …xed costs. Our quantitative exercises show that …- nancial frictions explain a substantial part of the observed cross-country relationship between aggregate TFP, sectoral TFP, and output per worker.
884 citations
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TL;DR: The authors analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy and finds that the growth has been driven by the consumption of services rather than being driven by low-skill jobs.
Abstract: This paper analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy. Empirically, we emphasize that the growth has been driven by the consumption of services. Rather than being driven by low-skill jobs, the importance of skill-intensive services has risen, and this has coincided with a period of rising relative wages and quantities of high-skilled labor. We develop a theory where demand shifts toward ever more skill-intensive output as income rises, and because skills are highly specialized this lowers the importance of home production relative to market services. The theory is also consistent with a rising level of skill and skill premium, a rising relative price of services that is linked to this skill premium, and rich product cycles between home and market, all of which are observed in the data.
419 citations
TL;DR: In this paper, the authors quantitatively analyze the role of financial frictions and resource misallocation in explaining development dynamics, and show that the model economy with financial Frictions converges to the new steady state slowly after a reform triggers efficient reallocation of resources; the transition speed is half that of the conventional neoclassical model.
Abstract: We quantitatively analyze the role of financial frictions and resource misallocation in explaining development dynamics. Our model economy with financial frictions converges to the new steady state slowly after a reform triggers efficient reallocation of resources; the transition speed is half that of the conventional neoclassical model. Furthermore, in the model economy, investment rates and total factor productivity are initially low and increase over time. We present data from the so-called miracle economies on the evolution of macro aggregates, factor reallocation, and establishment size distribution that support the aggregate and micro-level implications of our theory.
383 citations
TL;DR: The authors analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy and finds that the growth has been driven by the consumption of services rather than being driven by low-skill jobs.
Abstract: This paper analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy. Empirically, we emphasize that the growth has been driven by the consumption of services. Rather than being driven by low-skill jobs, the importance of skill-intensive services has risen, and this has coincided with a period of rising relative wages and quantities of high-skilled labor. We develop a theory where demand shifts toward ever more skill-intensive output as income rises, and because skills are highly specialized this lowers the importance of home production relative to market services. The theory is also consistent with a rising level of skill and skill premium, a rising relative price of services that is linked to this skill premium, and rich product cycles between home and market, all of which are observed in the data.
295 citations
TL;DR: In this article, two traditional explanations for structural changes are sector-biased technological progress and non-homothetic preferences and they are integrated into an otherwise standard growth model and quantitatively evaluated them vis-a-vis time series.
Abstract: Two traditional explanations for structural changes are sector-biased technological progress and non-homothetic preferences. This paper integrates both into an otherwise standard growth model and quantitatively evaluates them vis-a-vis time series. The exercise identifies a set of puzzles for standard theories: (i) the model cannot account for the steep decline in manufacturing and rise in services in the later data; (ii) the standard model requires implausibly low elasticity of substitution across goods to match the consumption and output data; and (iii) the behavior of consumption and output shares differs significantly from that of employment shares. We argue that models that incorporate home production, sector-specific factor distortions, and differences across sectors in the accumulation of human capital are promising avenues to amend the standard models. (JEL: O11, O14, O41)
236 citations
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TL;DR: In this paper, the authors investigated conditions sufficient for identification of average treatment effects using instrumental variables and showed that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect.
Abstract: We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.
3,154 citations
TL;DR: This article developed an extension of the theory that connects bias explicitly to coefficient stability and showed that it is necessary to take into account coefficient and R-squared movements, and showed two validation exercises and discuss application to the economics literature.
Abstract: A common approach to evaluating robustness to omitted variable bias is to observe coefficient movements after inclusion of controls. This is informative only if selection on observables is informative about selection on unobservables. Although this link is known in theory in existing literature, very few empirical articles approach this formally. I develop an extension of the theory that connects bias explicitly to coefficient stability. I show that it is necessary to take into account coefficient and R-squared movements. I develop a formal bounding argument. I show two validation exercises and discuss application to the economics literature. Supplementary materials for this article are available online.
2,115 citations
TL;DR: This paper measured sizable gaps in marginal products of labor and capital across plants within narrowly defined industries in China and India compared with the United States, and calculated manufacturing TFP gains of 30%-50% in China, and 40%-60% in India.
Abstract: Resource misallocation can lower aggregate total factor productivity (TFP).We
use microdata on manufacturing establishments to quantify the potential extent
of misallocation in China and India versus the United States. We measure sizable
gaps in marginal products of labor and capital across plants within narrowly
defined industries in China and India compared with the United States. When
capital and labor are hypothetically reallocated to equalize marginal products to
the extent observed in the United States, we calculate manufacturing TFP gains
of 30%–50% in China and 40%–60% in India.
1,995 citations
1,702 citations
TL;DR: An important implication from the theory is that analytical skills will become less important, as AI takes over more analytical tasks, giving the “softer” intuitive and empathetic skills even more importance for service employees.
Abstract: Artificial intelligence (AI) is increasingly reshaping service by performing various tasks, constituting a major source of innovation, yet threatening human jobs We develop a theory of AI job repl
1,176 citations