Productivity growth and job reallocation: Evidence from the garment industry in Vietnam

The paper investigates the aggregate productivity decomposition in the garment industry of Vietnam between 2000 and 2016. According to the Olley-Pack decomposition, there is an improvement in aggregate productivity because garment firms become more productive and there is some job reallocation from less to more productive firms. Meanwhile, the dynamic decomposition indicates that aggregate productivity growth is mainly driven by the dynamic entry-exit flow of firms. When firm ownership is considered, the productivity growth of private firms is principally conducted by their dynamic entry-exit flow, and to a lesser extent, by the productivity improvement of survivor firms. Differently, the dynamic entry-exit flow is the sole factor leading to the productivity growth of stateown-enterprises and foreign firms.