Turbulence and Productivity; an analysis of 40 Dutch regions in the period 1988-1996
From an empirical perspective there is growing evidence on the relation between size class distributions and economic performance. However, the question whether this change of the size class structure of industries has influenced economic performance is still underresearched. The purpose of this study is to assess the effect of entry and exit of firms on productivity in a regional approach. A model for total factor productivity is estimated using data of 40 Dutch regions for the years 1988 through 1996. The regions can be des-aggregated into two separate sectors: manufacturing and services. The findings indicate some positive effects of turbulence on total factor productivity of regions and thereby on productivity and growth at macro-level. In the service sector it was found that turbulence has an upward impact on the TFP growth in a region.
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