Aggregate Productivity Loss and the Theil Index of Inequality

This paper suggests that the difference in the Theil indices of inequality between two economies approximately measures the relative loss of aggregate productivity caused by distortions in labor allocation. Moreover, the Theil index itself can be interpreted approximately as the possible maximum loss of aggregate productivity caused by these distortions.

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Year of publication:	2008-03-01
Authors:	Aoki, Shuhei
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	inequality \| marginal productivity theory \| misallocation \| productivity \| Theil index

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	E25 - Aggregate Factor Income Distribution ; D33 - Factor Income Distribution ; D61 - Allocative Efficiency; Cost-Benefit Analysis ; D24 - Production; Capital and Total Factor Productivity; Capacity
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005260299