Abstract: This paper examines the impact of land market liberalization on the productivity and growth of manufacturing firms in India, using the staggered repeal of India's Urban Land Ceiling and Regulation Act (ULCRA) as a natural experiment. The ULCRA imposed ceilings on landholdings and restricted land transfers, potentially leading to land misallocation and hindering creative destruction. We find that the repeal of the ULCRA allowed more productive firms to increase their land use by 17%. As a result, treated firms expanded their production capacity and experienced a 13% increase in physical productivity. Using a dynamic innovation model with land market frictions, we find a 2.7% increase in aggregate productivity due to reduced land misallocation and a 14-basis-point rise in the growth rate, resulting in a 5% improvement in consumption-equivalent welfare. These findings underscore the importance of considering both the static and dynamic impacts of land market regulations.

Abstract: Assumptions about demand influence the positive and normative implications of growth models. In light of the growing evidence of variable markups and positive yet incomplete pass-throughs, we develop an endogenous growth model with a Kimball (1995) demand system. It features differentiated firms engaging in monopolistic competition and making forward-looking investments in R&D to improve their process efficiency. The model succeeds in matching the evidence on markups and pass-throughs by featuring a lower elasticity of demand at lower prices. A novel implication of our model is that market power does not only distort the overall level of innovation, but also the cross-firm allocation of R&D resources. Using firm-level administrative data from France to discipline our model, we find that this R&D misallocation slows down aggregate growth by 0.92 percentage points.

Abstract: We develop a growth model where even though ideas eventually become harder to find on any particular product line and long-run economic growth is constant despite sustained population growth, long-run innovation and growth are responsive to changes in market incentives, in particular to changes in market size. In the spirit of Aghion and Howitt (1996), entrants introduce new technologies through research and incumbents incrementally improve those technologies through development. Over time, however, it becomes harder to improve upon an existing technology such that incumbent firms eventually run out of ideas and exit the market. Their departure paves the way for new entrants that discover new technologies, thereby "resetting the innovation clock." It is this innovation reset process that generates sustained long-run endogenous economic growth. Analysis of the model reveals that, in a stationary equilibrium, the rate of economic growth is constant and endogenous despite a growing population and declining innovation efficiency at the firm-level. We present macro- and microlevel evidence that supports the predictions of our model.

Abstract: In 1976, 3% of inventors in the U.S. were women, and by 2023, that fraction had only moved up to 14%. Under the natural assumption that there are no intrinsic differences in inventive potential across genders, the scarcity of women in research reveals that the U.S. is missing out on some of its brightest minds. How costly is the resulting misallocation of inventive talent for aggregate productivity and welfare? To tackle this question, I develop a model of endogenous growth in which individuals with heterogeneous inventive talent choose between a career in research or production. However, several barriers can deter or prevent women from pursuing their comparative advantage. Through the lens of this model, I find that lifting all barriers to female innovation would increase U.S. income per person by 14.2% in the long run. Accounting for transition dynamics reveals that this intervention would be equivalent to permanently raising everyone's consumption by 7.2%.

Abstract: 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.