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Rethinking Deindustrialization

Author

Listed:
  • Andrew B. Bernard

    (Tuck School of Business at Dartmouth, CEPR & NBER)

  • Valerie Smeets

    (Department of Economics and Business, Aarhus University, Denmark)

  • Frederic Warzynski

    (Department of Economics and Business, Aarhus University, Denmark)

Abstract

This paper examines the decline in manufacturing in Denmark from 1994 to 2007. As in almost every other high-income country, manufacturing employment and the number of manufacturing firms in Denmark have been shrinking as a share of the total and in absolute levels. Most of the decline of manufacturing is due to firm exit and reduced employment at surviving manufacturers. However, a portion of the recorded decline is due to firms switching industries, from manufacturing to service sectors. We focus on this last group of firms, asking what they looked like before switched and how they fared after the switch. Overall this is a group of small high productivity firms that grow more rapidly after they switch. By 2007, employment at these former manufacturers equals 10 percent of manufacturing employment, reducing the apparent decline in manufacturing employment by about one half.

Suggested Citation

  • Andrew B. Bernard & Valerie Smeets & Frederic Warzynski, 2014. "Rethinking Deindustrialization," Economics Working Papers 2014-14, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2014-14
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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