We develop a theory and an empirical strategy to estimate the welfare gains of economic integration in economies with frictional local labor markets. The model yields a welfare formula that nests previous results in the literature and features an additional adjustment margin, via the employment...

Wage inequality has risen in many countries over recent decades. At the same time, production has become increasingly concentrated in "superstar" firms. In this paper, we show that these two phenomena are linked. Theoretically, we show that shocks that increase concentration, such as an increase...

In this paper we provide a new identification strategy to test for the presence of putty-clay capital, i.e. capital that once installed cannot be re-invested. Using a panel of Indian manufacturing firms between 1995 and 2006, we quantify the response of firm sales within and across industries to...