IDEAS home Printed from https://ideas.repec.org/p/isa/wpaper/127.html
   My bibliography  Save this paper

The Effects of Product Dropping on Firm's Productivity and Employment Composition

Author

Listed:
  • Sergio De Nardis

    (ISAE - Institute for Studies and Economic Analyses)

  • Marco Ventura

    () (ISAE - Institute for Studies and Economic Analyses)

Abstract

Recent literature on heterogeneous multi-product firms predicts that elimination of marginal (less productive) products, due to fiercer competition, leads to an increase of firm efficiency. We test this prediction in the case of a sample of Italian firms during a period (2000-05) of rising competitive pressures. Adopting a propensity score matching estimator, we find evidence of a causal relationship between product dropping and higher firm productivity. We also find evidence that product dropping activity causes a fall of the share of blue collars versus white collars. We draw some policy implications regarding labour market adjustment and support to internal product switching when competition shocks take place.

Suggested Citation

  • Sergio De Nardis & Marco Ventura, 2010. "The Effects of Product Dropping on Firm's Productivity and Employment Composition," ISAE Working Papers 127, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  • Handle: RePEc:isa:wpaper:127
    as

    Download full text from publisher

    File URL: http://lipari.istat.it/digibib/Working_Papers/WP_127_2010_Ventura_deNardis.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2014. "Market Size, Competition, and the Product Mix of Exporters," American Economic Review, American Economic Association, vol. 104(2), pages 495-536, February.
    2. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 489-530.
    3. Bernard, Andrew B. & Redding, Stephen & Schott, Peter.K, 2006. "Multi-product firms and product switching," LSE Research Online Documents on Economics 3687, London School of Economics and Political Science, LSE Library.
    4. Matteo Bugamelli & Fabiano Schivardi & Roberta Zizza, 2010. "The Euro and Firm Restructuring," NBER Chapters,in: Europe and the Euro, pages 99-138 National Bureau of Economic Research, Inc.
    5. Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2012. "Endogenous Entry, Product Variety, and Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 304-345.
    6. Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," CESifo Working Paper Series 3309, CESifo Group Munich.
    7. Sergio de Nardis & Carmine Pappalardo, 2009. "Export, Productivity and Product Switching: The Case of Italian Manufacturing Firms," ISAE Working Papers 110, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    8. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-336, June.
    9. Christian Broda & David E. Weinstein, 2010. "Product Creation and Destruction: Evidence and Price Implications," American Economic Review, American Economic Association, vol. 100(3), pages 691-723, June.
    10. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    11. Carsten Eckel & J. Peter Neary, 2010. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 188-217.
    12. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2014. "Market Size, Competition, and the Product Mix of Exporters," American Economic Review, American Economic Association, vol. 104(2), pages 495-536, February.
    13. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(3), pages 135-148, May.
    14. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2009. "Importers, Exporters and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," NBER Chapters,in: Producer Dynamics: New Evidence from Micro Data, pages 513-552 National Bureau of Economic Research, Inc.
    15. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1271-1318.
    16. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valeria Gattai, 2015. "Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014)," Working Papers 300, University of Milano-Bicocca, Department of Economics, revised Apr 2015.
    2. Calcagnini, Giorgio & Travaglini, Giuseppe, 2014. "A time series analysis of labor productivity. Italy versus the European countries and the U.S," Economic Modelling, Elsevier, vol. 36(C), pages 622-628.
    3. Sergio De Nardis & Marco Ventura, 2012. "Effect Of Firm Innovation On Labour Force Composition: The Case Of Italian Manufacturing," Economics Bulletin, AccessEcon, vol. 32(1), pages 338-353.
    4. Giorgio Calcagnini & Germana Giombini & Giuseppe Travaglini, 2015. "The productivity gap among European countries," Working Papers 1510, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    5. Valeria Gattai, 2015. "Internationalisation and performance at the firm-level: what we learn from Italy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 475-509, December.

    More about this item

    Keywords

    product dropping; matching estimator; white collar;

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isa:wpaper:127. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stefania Rossetti). General contact details of provider: http://edirc.repec.org/data/istgvit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.