Evolution and sources of manufacturing productivity growth: evidence from a panel of European countries
AbstractThe study aims at describing productivity growth in the manufacturing sector for a selected panel of five European countries using firm-level data. The paper explores the empirical regularities of firm productivity distribution across countries. In particular, we assess the degree of persistence of firm relative productivity and consider its effect on aggregate productivity improvements. Moreover, the paper analyses the impact of the competitive forces on aggregate productivity growth by disentangling the role of firm learning and market selection. Finally, we estimate the relationship between labour productivity growth and firm-specific factors such as size, age and capital intensity across countries. The paper uses annual account data over the period 1993-2003 from Amadeus dataset (Bureau van Dijk) for a balanced panel of manufacturing firms. In line with previous evidence, our analysis shows that firm relative productivity levels are both highly heterogeneous across firms and very persistent over time in all the countries in the sample. With reference to aggregate productivity growth, we find that both labour productivity and total factor productivity changes are mostly driven by firm learning, i.e. within-firm productivity improvements, in most European countries. Conversely, the reallocation of resources spurred by the competitive selection process is found to play a minor role in fostering aggregate productivity growth. Finally, in line with macroeconomic trends, gains in productivity seem to be associated with capital deepening, but also with employment losses. JEL Classification: D24, L11, L60
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Bibliographic InfoPaper provided by European Central Bank in its series Working Paper Series with number 0914.
Date of creation: Jun 2008
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Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-20 (All new papers)
- NEP-BEC-2008-07-20 (Business Economics)
- NEP-EEC-2008-07-20 (European Economics)
- NEP-EFF-2008-07-20 (Efficiency & Productivity)
- NEP-TID-2008-07-20 (Technology & Industrial Dynamics)
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- Federico Cingano & Marco Leonardi & Julián Messina & Giovanni Pica, 2010.
"The effects of employment protection legislation and financial market imperfections on investment: evidence from a firm-level panel of EU countries,"
CEPR & CES & MSH, vol. 25, pages 117-163, 01.
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- Cingano, Federico & Leonardi, Marco & Messina, Julián & Pica, Giovanni, 2009. "The Effect of Employment Protection Legislation and Financial Market Imperfections on Investment: Evidence from a Firm-Level Panel of EU Countries," IZA Discussion Papers 4158, Institute for the Study of Labor (IZA).
- Federico Cingano & Marco Leonardi & Julian Messina & Giovanni Pica, 2009. "The Effect of Employment Protection Legislation and Financial Market Imperfections on Investment: Evidence from a Firm-Level Panel of EU countries," CSEF Working Papers 227, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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