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The euro and firm restructuring

Author Info

Listed author(s):
  • Matteo Bugamelli
  • Fabiano Schivardi
  • Roberta Zizza

Abstract

We test whether and how the adoption of the euro, narrowly defined as the end of competitive devaluations, has affected member states� productive structures, distinguishing between within and across sector reallocation. We find evidence that the euro has been accompanied by a reallocation of activity within rather than across sectors. Shit its adoption. productivity growth has been relatively stronger in country-sectors that once relied more on competitive devaluations to regain price competitiveness. This effect is robust to potential omitted-variable bias and correlated effects. Firm-level ev�idence from Italian manifacturing confirms that low-tech businesses, which arguably benefitted most from devaluations, have been restructuring more since the adoption of the euro. Restructuring has entailed a shift of business focus from production to up�stream and downstream activities, such as product design, advertising, marketing and distribution, and a corresponding reduction in the share of blue collar workers.

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File URL: http://www.dt.tesoro.it/export/sites/sitodt/modules/documenti_it/analisi_progammazione/working_papers/WP_The_Euro_and_Firm_Restructuring.pdf
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Paper provided by Department of the Treasury, Ministry of the Economy and of Finance in its series Working Papers with number 10.

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Length: 53
Date of creation:
Handle: RePEc:itt:wpaper:wp2009-10
Contact details of provider: Web page: http://www.dt.tesoro.it
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Keywords: euro; devaluations; productivity growth; firm restructuring; skill intensity;

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Find related papers by JEL classification:
  • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
  • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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