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.

In 1976, 4% of inventors in the U.S. were women, and by 2020, that fraction had only moved up to 12%. Under the natural assumption that there are no intrinsic differences in inventive potential across genders, the scarcity of women in innovation reveals that the U.S. is missing out on some of its brightest minds. This raises two questions: (1) What are the barriers faced by those “lost” Jennifer Doudnas? and (2) How costly is the resulting misallocation of inventive talent for aggregate productivity and welfare? To tackle those questions, I develop a theory of semi-endogenous growth in which individuals with heterogeneous talent choose between a career in research or production. However, three gendered barriers can deter or prevent women from pursuing their comparative advantage. They may face different forms of discrimination in the labor market, be confronted with higher obstacles to human capital formation or lack the opportunities and role models to become innovators. Interpreting micro-level data on the universe of U.S. inventors through the lens of this framework, I find that the underrepresentation of women in innovation is virtually all due to a lack of exposure to innovation. Women and men inventors are just too similarly productive and educated for distortions operating through selection or human capital to play a prominent role. Taking advantage of the structure of this theory, I find that lifting all barriers to female innovation would increase U.S. income per person by 8.6% in the long-run. Accounting for transition dynamics reveals that this policy would be equivalent to permanently raising everyone’s consumption by 2.7%.

We construct a measure of consumption-equivalent welfare for Black and White Americans. Our statistic incorporates life expectancy, consumption, leisure, and inequality. Based on this incomplete list of factors, welfare for Black Americans was 43% of that for White Americans in 1984 and rose to 59% by 2019. Going back further in time (albeit with more limited data), the gap was even larger, with Black welfare equal to just 29% of White welfare in 1940. On the one hand, there has been remarkable progress for Black Americans: the level of their consumption-equivalent welfare increased by a factor of 26 between 1940 and 2019, when aggregate consumption per person rose a more modest 5-fold. On the other hand, despite this remarkable progress, the welfare gap in 2019 remains disconcertingly large. The gap appears even larger when we make rough attempts to incorporate omitted factors such as morbidity, incarceration, and unemployment.

This paper examines the impacts of land market frictions on resource allocation and productivity growth in manufacturing firms, leveraging the staggered repeal of the Urban Land Ceiling and Regulation Act (ULCRA) in India as a natural experiment. The ULCRA set limits on the amount of land that could be held by a firm, and prohibited the transfer of land and buildings. Our study finds that the repeal of the ULCRA significantly reduced land market frictions, leading to increased landholdings and transactions among affected firms, thereby enhancing their productivity through product innovation. We develop a model of creative destruction with heterogeneous firms subject to land constraints to quantify their impacts on the level and growth of productivity.