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Internal and External Restructuring over the Cycle: A Firm-Based Analysis of Gross Flows and Productivity Growth in Portugal

  • Carlos Carreira

    ()

    (GEMF and Faculdade de Economia, Universidade de Coimbra)

  • Paulino Teixeira

    ()

    (GEMF and Faculdade de Economia, Universidade de Coimbra)

This paper discusses the role played by internal restructuring vis-à-vis external restructuring in industry productivity growth, arguing that the contribution of these two components is expected to be sensitive to the economic cycle. The study describes gross flows (job and output) over a period of one decade, and analyses the productivity differential among continuing, entering and exiting firms in the Portuguese manufacturing sector. The results of the decomposition of industry productivity growth suggest that the share of external restructuring is stronger in recession, while internal restructuring seems to be predominant in expansion. The strong and positive contribution of the cleansing effect, in 1991-1994, was not followed by any passive learning effect of equivalent magnitude in the 1994-1997 sub-period. The active learning effect, measured by the within effect, is, as expected, stronger when output growth is at its peak, but in no case large enough to turn productivity growth procyclical.

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File URL: http://gemf.fe.uc.pt/workingpapers/pdf/2007/gemf_2007-01.pdf
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Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2007-01.

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Length: 34 pages
Date of creation: 2007
Date of revision:
Publication status: Published in Journal of Productivity Analysis, 29(3), 211-220, 2008
Handle: RePEc:gmf:wpaper:2007-01
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