What's in a wedge? Misallocation and taxation in the oil industry

Radek Stefanski, Gerhard Toews

    Research output: Working paperDiscussion paper

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    Abstract

    Resource misallocation explains a large part of cross-country productivity differences. Measuring differences in marginal revenue products of labor and capital across countries and firms allows for a quantification of the extent of this misallocation, but is typically uninformative of its source. We address this problem by using novel, firm-level data from the oil industry. We confirm the existence of sizeable gaps in marginal revenue products across countries and firms relative to the US, but show that these disappear once we account for revenue taxation. Differences in tax policies are thus sufficient to account for cross-country gaps in marginal products.
    Original languageEnglish
    Place of PublicationSt Andrews
    PublisherUniversity of St Andrews
    Pages1-16
    Number of pages16
    Publication statusPublished - 1 Oct 2018

    Publication series

    NameSchool of Economics and Finance Discussion Paper
    PublisherUniversity of St Andrews
    No.1804
    ISSN (Print)0962-4031
    ISSN (Electronic)2055-303X

    Keywords

    • Misallocation
    • Productivity differences
    • Taxation
    • Oil

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