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Internal and External Restructuring over the Cycle: A Firm-Based Analysis of Gross Flows and Productivity Growth in Portugal

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  • Carlos Carreira

    ()
    (GEMF and Faculdade de Economia, Universidade de Coimbra)

  • Paulino Teixeira

    ()
    (GEMF and Faculdade de Economia, Universidade de Coimbra)

Abstract

This paper discusses the role played by internal restructuring vis-à-vis external restructuring in industry productivity growth, arguing that the contribution of these two components is expected to be sensitive to the economic cycle. The study describes gross flows (job and output) over a period of one decade, and analyses the productivity differential among continuing, entering and exiting firms in the Portuguese manufacturing sector. The results of the decomposition of industry productivity growth suggest that the share of external restructuring is stronger in recession, while internal restructuring seems to be predominant in expansion. The strong and positive contribution of the cleansing effect, in 1991-1994, was not followed by any passive learning effect of equivalent magnitude in the 1994-1997 sub-period. The active learning effect, measured by the within effect, is, as expected, stronger when output growth is at its peak, but in no case large enough to turn productivity growth procyclical.

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Bibliographic Info

Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2007-01.

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Length: 34 pages
Date of creation: 2007
Date of revision:
Publication status: Published in Journal of Productivity Analysis, 29(3), 211-220, 2008
Handle: RePEc:gmf:wpaper:2007-01

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Keywords: Cleansing; Active and passive learning; Internal restructuring; External restructuring; Productivity growth;

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References

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Citations

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Cited by:
  1. Carreira, Carlos & Teixeira, Paulino, 2011. "Entry and exit as a source of aggregate productivity growth in two alternative technological regimes," Structural Change and Economic Dynamics, Elsevier, vol. 22(2), pages 135-150, June.
  2. Carlos Carreira & Paulino Teixeira, 2010. "Does Schumpeterian Creative Destruction Lead to Higher Productivity? The effects of firms’ entry," GEMF Working Papers 2010-20, GEMF - Faculdade de Economia, Universidade de Coimbra.
  3. Carlos Carreira & Paulino Teixeira, 2011. "The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms," Small Business Economics, Springer, vol. 36(3), pages 337-351, April.
  4. Hyytinen, Ari & Maliranta, Mika, 2011. "Firm Lifecycles and External Restructuring," Discussion Papers 1253, The Research Institute of the Finnish Economy.
  5. Carlos Carreira, 2013. "Learning, Exporting and Firm Productivity: Evidence from Portuguese Manufacturing and Services Firms," GEMF Working Papers 2013-23, GEMF - Faculdade de Economia, Universidade de Coimbra.
  6. António B. Moniz, 2008. "The transformation of work? A quantitative evaluation of changes in work in Portugal," IET Working Papers Series 07/2008, Universidade Nova de Lisboa, IET/CESNOVA-Research on Enterprise and Work Innovation, Faculty of Science and Technology.

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