Revisiting Productivity Differences and Firm Turnover: Evidence from product-based TFP measures in the Japanese manufacturing industries
Following Foster, Haltiwanger, and Syverson (2008), we construct physical output based TFP (TFPQ) measures using data from the Census of Manufactures. We find that productivity differences among business establishments using TFPQ are larger than those using the traditional revenue-based TFP measures (TFPR). The negative correlation between physical output and output prices implies that establishments are facing a downward demand curve and the traditional measures of TFP are affected by idiosyncratic demand shocks. Probit estimations regarding exit behavior show that the combined effects of physical productivity improvement and higher prices through the increase in demand result in a lower probability of exit. Breaking down aggregate productivity growth using TFPQ, we find that the contribution of the net entry effects the largest factor to productivity improvement, in contrast to previous Japanese studies. Our results provide a more positive foundation for "creative destruction" policies than previous studies suggest.
|Date of creation:||Aug 2011|
|Date of revision:|
|Contact details of provider:|| Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901|
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- Kyoji Fukao & Hyeog Ug Kwon, 2005.
"Why Did Japan's TFP Growth Slow Down in the Lost Decade? An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms,"
05004, Research Institute of Economy, Trade and Industry (RIETI).
- Kyoji Fukao & Hyeog Ug Kwon, 2006. "Why Did Japan'S Tfp Growth Slow Down In The Lost Decade? An Empirical Analysis Based On Firm-Level Data Of Manufacturing Firms," The Japanese Economic Review, Japanese Economic Association, vol. 57(2), pages 195-228.
- Kyoji Fukao & Hyeog Ug Kwon, 2004. "Why Did Japan's TFP Growth Slow Down in the Lost Decade?: An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms," Hi-Stat Discussion Paper Series d04-50, Institute of Economic Research, Hitotsubashi University.
- KAWAKAMI Atsushi & MIYAGAWA Tsutomu, 2010. "Product Switching and Firm Performance in Japan," Discussion papers 10043, Research Institute of Economy, Trade and Industry (RIETI).
- Kozo Kiyota & Miho Takizawa, 2006.
"The Shadow of Death: Pre-exit Performance of Firms in Japan,"
06033, Research Institute of Economy, Trade and Industry (RIETI).
- Kozo Kiyota & Miho Takizawa, 2007. "The Shadow of Death: Pre-exit Performance of Firms in Japan," Hi-Stat Discussion Paper Series d06-204, Institute of Economic Research, Hitotsubashi University.
- TAKII Katsuya, 2011.
"Persistent Productivity Differences Between Firms,"
11048, Research Institute of Economy, Trade and Industry (RIETI).
- Nishimura, Kiyohiko G. & Nakajima, Takanobu & Kiyota, Kozo, 2005. "Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 53-78, September.
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