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Working Papers 

Population and Welfare: The Greatest Good for the Greatest Number, February 2024   
with Mark Bils, Chad Jones, and Pete Klenow [Slides] [Paper] [NBER WP][Online Appendix]   
Economic growth is typically measured in per capita terms. But social welfare should arguably include the number of people as well as their standard of living. We decompose social welfare growth — measured in consumption equivalent (CE) units — into contributions from rising population and rising per capita consumption. Because of the diminishing marginal utility of consumption, population growth is scaled up by a value-of-life factor that substantially exceeds one and empirically averages around 3 across countries since 1960. Population increases are therefore a major contributor, and CE welfare growth around the world averages more than 6% per year since 1960 as opposed to 2% per year for consumption growth. Countries such as Mexico and South Africa rise sharply in the growth rankings whereas China, Germany, and Japan plummet. We show the robustness of these results to incorporating time use and fertility decisions using data from the U.S., Mexico, the Netherlands, Japan, South Africa, and South Korea. The effects of falling parental utility from having fewer kids are roughly offset by increases in the “quality” of kids associated with rising time investment per child.

Markups, Firm Scale, and Distorted Economic Growth, January 2024    
with Jean-Felix Brouillette and Emma Rockall [Paper 
We study the consequences of markups for long-run economic growth in a model of firm-driven endogenous technological change. In this framework, differentiated firms engage in monopolistic competition, charge heterogeneous markups, and make forward-looking investments in R&D to improve their process efficiency. Markups distort the scale at which these firms operate and, therefore, affect their incentives to invest in R&D. With dispersion in markups, both the aggregate and cross-firm allocations of such investments are distorted. Using firm-level administrative data from France to discipline our model, we find that correcting the product market distortions induced by markups increases the long-run growth rate of productivity by 1.2 percentage points per year. Nearly 75% of this faster productivity growth can be achieved by simply reallocating R&D resources across firms, revealing that the dispersion in markups, rather than their average level, is more detrimental to economic growth.

Work in Progress

Revisiting the Role of Human Capital in Growth Accounting

The Duration of Rents and R&D Misallocation