Advanced Search
MyIDEAS: Login to save this paper or follow this series

Public Policy and Resource Allocation: Evidence from Firms in OECD Countries


Author Info

  • Dan Andrews
  • Federico Cingano


The correlation between a firm’s size and its productivity level varies considerably across OECD countries, suggesting that some countries are more successful at channelling resources to high productivity firms than others. Accordingly, we examine the extent to which regulations affecting product, labour and credit markets influence productivity, via their effect on the efficiency of resource allocation. Our results suggest that there is an economically and statistically robust negative relationship between policy-induced frictions and productivity, though the specific channel depends on the policy considered. In the case of employment protection legislation, product market regulations (including barriers to entry and bankruptcy legislation) and restrictions on foreign direct investment, this is largely traceable to the worsening of allocative efficiency (i.e. a lower correspondence between a firm’s size and its productivity level). By contrast, financial market under-development tends to be associated with a higher fraction of low productivity relative to high productivity firms. Furthermore, stringent regulations are more disruptive to resource allocation in more innovative sectors, though the nature of innovation turns out to be important. Politiques publiques et allocation des ressources : Des preuves provenant des entreprises dans les pays de l'OCDE La corrélation entre la taille d’une entreprise et son niveau de productivité varie considérablement selon les pays de l’OCDE, ce qui suggère que certains pays réussissent mieux à affecter les ressources à des entreprises à forte productivité que d’autres. Par conséquent, nous examinons dans quelle mesure les réglementations affectant les marchés des produits, du travail et du crédit influent sur la productivité, grâce à leur effet sur l’efficacité de l’affectation des ressources. Nos résultats suggèrent qu’il existe une relation économiquement et statistiquement négative robuste entre les frictions induites par la politique et la productivité, même si le canal spécifique dépend de la politique considérée. Dans le cas de la législation sur la protection de l’emploi, de la réglementation des marchés de produits (y compris les barrières à l’entrée et à la législation sur les faillites) et des restrictions à l’investissement direct à l’étranger, c’est en grande partie attribuable à la détérioration de l’efficacité allocative (i.e. une faible correspondance entre la taille de l’entreprise et son niveau de productivité). En revanche, le sous-développement du marché financier tend à être associe à une proportion plus élevée des entreprises à faible productivité par rapport aux entreprises à forte productivité. En outre, les réglementations strictes perturbent plus l’allocation des ressources dans des secteurs plus innovants, bien que la nature de l’innovation s’avère être importante.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Download Restriction: no

Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 996.

as in new window
Date of creation: 24 Oct 2012
Date of revision:
Handle: RePEc:oec:ecoaaa:996-en

Contact details of provider:
Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
Phone: 33-(0)-1-45 24 82 00
Fax: 33-(0)-1-45 24 85 00
Web page:
More information through EDIRC

Related research

Keywords: productivity; allocative efficiency; regulations; firm level data; effectifs de migrants; données sur les entreprises; productivité; régulation;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:


No references listed on IDEAS
You can help add them by filling out this form.


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Sander Wennekers & al et, 2014. "Entrepreneurship in the Netherlands - The Top sectors," Scales Research Reports A201417, EIM Business and Policy Research.
  2. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series 6534, The World Bank.


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:996-en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.