Firm Size and Productivity
AbstractThis paper examines the relationship between firm size and productivity. In contrast to previous studies, this paper offers evidence of the relationship not only from manufacturing firms, but from non-manufacturing firms as well. Furthermore, the aggregate importance of the firm size-productivity relationship is gauged by calculating to what extent shifts in the distribution of employment over firm size categories has affected Canadian aggregate productivity, and whether differences in the employment distribution over firm size categories between Canada and the United States can account for the Canada-U.S. labour productivity gap. The importance of large and small firms to changes in productivity is also examined. A positive relationship between firm size and both labour productivity and TFP is found in both the manufacturing and non-manufacturing sectors. Given this relationship, the difference in the employment distribution over firm sizes between Canada and the United States can account for half of the Canada-U.S. labour productivity gap in manufacturing.
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Bibliographic InfoPaper provided by Bank of Canada in its series Working Papers with number 08-45.
Length: 46 pages
Date of creation: 2008
Date of revision:
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Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
- NEP-EFF-2008-11-25 (Efficiency & Productivity)
- NEP-LAB-2008-11-25 (Labour Economics)
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- Jennifer Abel-Koch, . "Who uses intermediaries in international trade? Evidence from firm-level survey data," Discussion Papers 11/25, University of Nottingham, GEP.
- Fallahi, Firouz & Sakineh, Sojoodi & Mehin Aslaninia, Nasim, 2010. "Determinants of Labor Productivity in Iran’s Manufacturing Firms: With Emphasis on Labor Education and Training," MPRA Paper 27447, University Library of Munich, Germany.
- Someshwar Rao, 2011. "Insights from Latin America for Canada: A Review Article on The Age of Productivity: Transforming Economies from the Bottom Up," International Productivity Monitor, Centre for the Study of Living Standards, vol. 21, pages 70-81, Spring.
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