In this paper different formulae for the decomposition of aggregate productivity levels and changes are applied to a sample of German manufacturing firms that pertain to 11 different industries at a roughly two-digit level observed over the period 1981-1998. Productivity is measured by a nonparametric frontier function approach. The decompositions of productivity allow for an explanation of the aggregate outcomes by the quantification of the effect of structural change as well as the contributions from entering and exiting firms. Our results show that these forces drive aggregate productivity dynamics to a considerable extent. Especially the period after the German reunification is characterized by large productivity improvements, mostly driven by structural change.
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Find related papers by JEL classification: D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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