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Entry, Exit and Productivity: Empirical Results for German Manufacturing Industries

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  • Wagner, Joachim

    ()
    (Leuphana University Lüneburg)

Abstract

Using panel data from Spain Farinas and Ruano (IJIO 2005) test three hypotheses from a model by Hopenhayn (Econometrica 1992): (H1) Firms that exit in year t were in t-1 less productive than firms that continue to produce in t. (H2) Firms that enter in year t are less productive than incumbent firms in year t. (H3) Surviving firms from an entry cohort were more productive than non-surviving firms from this cohort in the start year. Results for Spain support all three hypotheses. This paper replicates the study using unique newly available panel data sets for all manufacturing plants from Germany (1995-2002). Again, all three hypotheses are supported empirically.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2667.

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Length: 17 pages
Date of creation: Mar 2007
Date of revision:
Publication status: published in: German Economic Review 2010, 11(1), 78-85
Handle: RePEc:iza:izadps:dp2667

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Keywords: entry; productivity; exit;

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References

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  1. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
  2. Joachim Wagner, 2006. "International Firm Activities and Innovation: Evidence from Knowledge Production Functions for German Firms," Papers on Entrepreneurship, Growth and Public Policy 2006-15, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  3. Joachim Wagner & Thorsten Schank & Claus Schnabel & John T. Addison, 2006. "Works Councils, Labor Productivity and Plant Heterogeneity: First Evidence from Quantile Regressions," GEMF Working Papers 2006-03, GEMF - Faculdade de Economia, Universidade de Coimbra.
  4. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  5. Daniel S. Hamermesh, 2000. "The Craft of labormetrics," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 363-380, April.
  6. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 53-82, January.
  7. Fariñas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 505-534, September.
  8. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
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Citations

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Cited by:
  1. Sebastian Petrick & Katrin Rehdanz & Ulrich J. Wagner, 2011. "Energy Use Patterns in German Industry: Evidence from Plant-level Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 231(3), pages 379-414, June.
  2. Fackler, Daniel & Schnabel, Claus & Wagner, Joachim, 2012. "Establishment Exits in Germany: The Role of Size and Age," IZA Discussion Papers 6349, Institute for the Study of Labor (IZA).
  3. Joachim Wagner, 2007. "Export Entry, Export Exit, and Productivity in German Manufacturing Industries," Working Paper Series in Economics 54, University of Lüneburg, Institute of Economics.
  4. Henning Weber, 2011. "Optimal inflation and firms' productivity dynamics," Kiel Working Papers 1685, Kiel Institute for the World Economy.
  5. Peters, Jörg & Vance, Colin & Harsdorff, Marek, 2011. "Grid Extension in Rural Benin: Micro-Manufacturers and the Electrification Trap," World Development, Elsevier, vol. 39(5), pages 773-783, May.

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