Sectorial productivity in Peru: A firm-level analysis

In this paper we estimate the production function by economic sectors in Peru, we also characterize the productivity of firms by using two indicators: the total factor productivity and the labor productivity. The data correspond to the total formal firms observed between 2002 and 2011, information that allows to correct the traditional econometric problems behind the current studies that estimate the production function in Peru (endogeneity and selection bias). We find that the capital income share is about 0.64, a parameter that is widely heterogeneous across the main economic sectors. Also, productivity is higher in the secondary and tertiary sectors, in large companies and among forms located in the metropolitan area of Lima.