Aggregate Productivity Growth: Lessons from Microeconomic Evidence
TLDR
The authors examined the relationship between microeconomic productivity dynamics and aggregate productivity growth using establishment-level data for U.S. manufacturing establishments as well for selected service industries and found that the contribution of reallocation of outputs and inputs from less productive to more productive establishments plays a significant role in accounting for aggregate productivity.Abstract:
In this paper, we exploit establishment-level data to examine the relationship between microeconomic productivity dynamics and aggregate productivity growth. After synthesizing the evidence from recent studies, we conduct our own analysis using establishment-level data for U.S. manufacturing establishments as well for selected service industries. The use of longitudinal micro data on service sector establishments is one of the novel features of our analysis. Our main findings are summarized as follows: (i) the contribution of reallocation of outputs and inputs from less productive to more productive establishments plays a significant role in accounting for aggregate productivity growth; (ii) for the selected service industries considered, the contribution of net entry (more productive entering establishments displacing less productive exiting establishments) is dominant; (iii) the contribution of net entry to aggregate productivity growth is disproportionate and is increasing in the horizon over which the changes are measured since longer horizon yields greater differentials from selection and learning effects; (iv) the contribution of reallocation to aggregate productivity growth varies over time (e.g. is cyclically sensitive) and industries and is somewhat sensitive to subtle differences in measurement and decomposition methodologies.read more
Citations
More filters
Posted Content
Labour reallocation, relative prices and productivity
Shutao Cao,Danny Leung +1 more
TL;DR: In this article, the authors examined the determinants of labour flows and their relationship with the productivity growth and found that labour flows between industries and between firms within industries are correlated with productivity growth.
Posted Content
Institutional Change and Productivity Growth in China's Manufacturing 1998-2007: the Microeconomics of Creative Restructuring
TL;DR: The authors investigates the firm-level dynamics of labour productivity in China's manufacturing sector over the period 1998-2007 and highlights the importance of the transformation of domestic firms as drivers of technical learning.
Journal ArticleDOI
Productivity Dynamics in Japan and the Negative Exit Effect
TL;DR: In this article, the authors conducted an analysis of productivity dynamics using the microdata of the Credit Risk Database (CRD), the Establishment and Enterprise Census and the Economic Census, and found that the negative exit effect in Japan is driven by the exit of some highly productive firms.
Posted Content
Enterprise Productivity: A Three-Speed Europe
TL;DR: In this article, the authors analyzed which factors contributed more to the emergence of a three-speed Europe by combining firm-level data with country-level inputs, including the stock of inward foreign direct investment, the availability of credit, and the quality of the business environment and the skills of the workforce.
Misallocation, Aggregate Productivity and Policy Constraints: Cross-country Evidence in Manufacturing
TL;DR: This article used a unique, international, firm-level dataset to measure the effect of misallocation on aggregate TFP, and to explain the role of policy constraints therein, showing that theoretically removing misallocations leads to considerably higher TFP.
References
More filters
Book
Capitalism, Socialism and Democracy
TL;DR: In this paper, the authors present a history of the first half of the 20th century, from 1875 to 1914, of the First World War and the Second World War.
Journal ArticleDOI
An Evolutionary Theory of Economic Change.by Richard R. Nelson; Sidney G. Winter
ReportDOI
A Model of Growth Through Creative Destruction
Philippe Aghion,Peter Howitt +1 more
TL;DR: In this paper, a model of endogenous growth is developed in which vertical innovations, generated by a competitive research sector, constitute the underlying source of growth and equilibrium is determined by a forward-looking difference equation, according to which the amount of research in any period depends upon the expected amount of the research next period.
Posted Content
The Dynamics Of Productivity In The Telecommunications Equipment Industry
George S Olley,Ariel Pakes +1 more
TL;DR: In this article, the authors developed an estimation algorithm that takes into account the relationship between productivity on the one hand, and both input demand and survival on the other, guided by a dynamic equilibrium model that generates the exit and input demand equations needed to correct for the simultaneity and selection problems.
ReportDOI
The Dynamics of Productivity in the Telecommunications Equipment Industry
G. Steven Olley,Ariel Pakes +1 more
TL;DR: In this paper, an empirical focus is on estimating the parameters of a production function for the equipment industry, and then using those estimates to analyze the evolution of plant-level productivity.