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The Effects of Product Dropping on Firm's Productivity and Employment Composition

Author

Listed:
  • Sergio De Nardis

    (ISAE - Institute for Studies and Economic Analyses)

  • Marco Ventura

    (ISAE - Institute for Studies and Economic Analyses)

Abstract

Recent literature on heterogeneous multi-product firms predicts that elimination of marginal (less productive) products, due to fiercer competition, leads to an increase of firm efficiency. We test this prediction in the case of a sample of Italian firms during a period (2000-05) of rising competitive pressures. Adopting a propensity score matching estimator, we find evidence of a causal relationship between product dropping and higher firm productivity. We also find evidence that product dropping activity causes a fall of the share of blue collars versus white collars. We draw some policy implications regarding labour market adjustment and support to internal product switching when competition shocks take place.

Suggested Citation

  • Sergio De Nardis & Marco Ventura, 2010. "The Effects of Product Dropping on Firm's Productivity and Employment Composition," ISAE Working Papers 120, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    • Handle: RePEc:isa:wpaper:127
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    References listed on IDEAS

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    Cited by:

    1. Giorgio Calcagnini & Germana Giombini & Giuseppe Travaglini, 2015. "The productivity gap among European countries," Working Papers 1510, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    2. Valeria Gattai, 2015. "Internationalisation and performance at the firm-level: what we learn from Italy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 475-509, December.
    3. Valeria Gattai, 2015. "Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014)," Working Papers 300, University of Milano-Bicocca, Department of Economics, revised Apr 2015.
    4. Calcagnini, Giorgio & Travaglini, Giuseppe, 2014. "A time series analysis of labor productivity. Italy versus the European countries and the U.S," Economic Modelling, Elsevier, vol. 36(C), pages 622-628.
    5. Sergio De Nardis & Marco Ventura, 2012. "Effect Of Firm Innovation On Labour Force Composition: The Case Of Italian Manufacturing," Economics Bulletin, AccessEcon, vol. 32(1), pages 338-353.

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    More about this item

    Keywords

    product dropping; matching estimator; white collar;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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