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The middle productivity trap: Dynamics of productivity dispersion

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  • Bahar, Dany

Abstract

Using a worldwide firm-level panel dataset I document a “U-shaped” relationship between productivity growth and baseline levels within each country and industry. That is, fast productivity growth is concentrated at both ends of the productivity distribution. This result serves as a potential explanation to two stylized facts documented in the economic literature: the rising productivity dispersion within narrowly defined sectors, and the increasing market share of few yet highly productive firms. I further provide evidence suggesting that such pattern is driven by knowledge-intensive industries, for which cross-firm diffusion of knowledge is presumably more costly.

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  • Bahar, Dany, 2018. "The middle productivity trap: Dynamics of productivity dispersion," Economics Letters, Elsevier, vol. 167(C), pages 60-66.
    • Handle: RePEc:eee:ecolet:v:167:y:2018:i:c:p:60-66
    DOI: 10.1016/j.econlet.2018.02.028
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    1. Criscuolo, Chiara & Andrews, Dan & Gal, Peter N., 2019. "The best versus the rest: divergence across firms during the global productivity slowdown," LSE Research Online Documents on Economics 103405, London School of Economics and Political Science, LSE Library.
    2. Evguenia Bessonova & Anna Tsvetkova, 2019. "Productivity convergence trends within Russian industries: firm-level evidence," Bank of Russia Working Paper Series wps51, Bank of Russia.
    3. Stiebale, Joel & Südekum, Jens & Woessner, Nicole, 2020. "Robots and the rise of European superstar firms," DICE Discussion Papers 347, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. Marie Le Mouel & Alexander Schiersch, 2020. "Knowledge-Based Capital and Productivity Divergence," Discussion Papers of DIW Berlin 1868, DIW Berlin, German Institute for Economic Research.
    5. Jens Suedekum & Nicole Woessner, 2019. "Robots & the Rise of European Superstar Firms," European Economy - Discussion Papers 118, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Nils Grashof & Alexander Kopka, 2023. "Artificial intelligence and radical innovation: an opportunity for all companies?," Small Business Economics, Springer, vol. 61(2), pages 771-797, August.
    7. Figal Garone, Lucas & López Villalba, Paula A. & Maffioli, Alessandro & Ruzzier, Christian A., 2020. "Firm-level productivity in Latin America and the Caribbean," Research in Economics, Elsevier, vol. 74(2), pages 186-192.
    8. Nils Grashof & Alexander Kopka, 2023. "Widening or closing the gap? The relationship between artificial intelligence, firm-level productivity and regional clusters," Bremen Papers on Economics & Innovation 2304, University of Bremen, Faculty of Business Studies and Economics.
    9. Alexander Kopka & Dirk Fornahl, 2024. "Artificial intelligence and firm growth — catch-up processes of SMEs through integrating AI into their knowledge bases," Small Business Economics, Springer, vol. 62(1), pages 63-85, January.
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    11. Alistair Dieppe, 2021. "Global Productivity," World Bank Publications - Books, The World Bank Group, number 34015, December.

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    More about this item

    Keywords

    Productivity; Convergence; Divergence; Dispersion;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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