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Frontier and Superstar Firms in Italy

Author

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  • Francesca Lotti

    (Bank of Italy)

  • Enrico Sette

    (Bank of Italy)

Abstract

We study the dynamics of firms in the top decile of the TFP distribution in Italy (frontier firms). Using granular microdata from the census of corporations, we show their main characteristics, their weight in terms of revenues and employment, and measure their persistency in the top deciles of the TFP distribution. Frontier firms are more profitable, less likely to go bankrupt and younger; they invest more and use less long-term bank debt to finance their assets; and they are larger in terms of revenues, but not in terms of employees. Finally, we gauge their contribution to aggregate TFP growth, finding that TFP growth of frontier firms has intensified over time, as did the divide between firms at the top and the bottom of the TFP distribution. However, the market share of frontier firms only increased over time in the business services and transportation sectors; there is no increase, and in some cases, there is actually a decrease in other industries, notably in manufacturing. Hence, we do not find strong evidence of superstar firm effects, except in business services.

Suggested Citation

  • Francesca Lotti & Enrico Sette, 2019. "Frontier and Superstar Firms in Italy," Questioni di Economia e Finanza (Occasional Papers) 537, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_537_19
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2019-0537/QEF_537_19.pdf
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    References listed on IDEAS

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    3. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    4. Dan Andrews & Chiara Criscuolo & Peter N. Gal, 2015. "Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries," OECD Productivity Working Papers 2, OECD Publishing.
    5. Shapiro, Carl, 2018. "Antitrust in a time of populism," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 714-748.
    6. Matteo Bugamelli & Francesca Lotti & Monica Amici & Emanuela Ciapanna & Fabrizio Colonna & Francesco D�Amuri & Silvia Giacomelli & Andrea Linarello & Francesco Manaresi & Giuliana Palumbo & Filippo , 2018. "Productivity growth in Italy: a tale of a slow-motion change," Questioni di Economia e Finanza (Occasional Papers) 422, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:

    1. Ignazio Visco, 2020. "Economic growth and productivity: Italy and the role of knowledge," PSL Quarterly Review, Economia civile, vol. 73(294), pages 205-224.

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    More about this item

    Keywords

    productivity; firm dynamics; reallocation; market power.;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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