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Entry, Exit and Productivity: Empirical Results for German Manufacturing Industries

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Listed author(s):
  • Wagner, Joachim

    ()

    (Leuphana University Lüneburg)

Abstract

Using panel data from Spain Farinas and Ruano (IJIO 2005) test three hypotheses from a model by Hopenhayn (Econometrica 1992): (H1) Firms that exit in year t were in t-1 less productive than firms that continue to produce in t. (H2) Firms that enter in year t are less productive than incumbent firms in year t. (H3) Surviving firms from an entry cohort were more productive than non-surviving firms from this cohort in the start year. Results for Spain support all three hypotheses. This paper replicates the study using unique newly available panel data sets for all manufacturing plants from Germany (1995-2002). Again, all three hypotheses are supported empirically.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2667.

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Length: 17 pages
Date of creation: Mar 2007
Publication status: published in: German Economic Review 2010, 11(1), 78-85
Handle: RePEc:iza:izadps:dp2667
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Keywords: entry; productivity; exit;

Other versions of this item:

Find related papers by JEL classification:
  • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
  • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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  1. Wagner Joachim & Schank Thorsten & Schnabel Claus & Addison John T., 2006. "Works Councils, Labor Productivity and Plant Heterogeneity: First Evidence from Quantile Regressions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(5), pages 505-518, October.
  2. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
  3. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
  4. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  5. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
  6. Wagner, Joachim, 2006. "International Firm Activities and Innovation: Evidence from Knowledge Production Functions for German Firms," HWWA Discussion Papers 344, Hamburg Institute of International Economics (HWWA).
  7. Fariñas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 505-534, September.
  8. Daniel S. Hamermesh, 2000. "The Craft of Labormetrics," ILR Review, Cornell University, ILR School, vol. 53(3), pages 363-380, April.
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Cited by:

  1. Peters, Jörg & Vance, Colin & Harsdorff, Marek, 2011. "Grid Extension in Rural Benin: Micro-Manufacturers and the Electrification Trap," World Development, Elsevier, vol. 39(5), pages 773-783, May.
  2. Joachim Wagner, 2008. "Export Entry, Export Exit and Productivity in German Manufacturing Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(2), pages 169-180.
  3. Dirk Engel & Christoph M. Schmidt & Vivien Procher, 2010. "The Asymmetries of a Small World: Entry Into and Withdrawal From International Markets by French Firms," Ruhr Economic Papers 0192, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2013. "Establishment exits in Germany: the role of size and age," Small Business Economics, Springer, vol. 41(3), pages 683-700, October.
  5. Petrick Sebastian & Rehdanz Katrin & Wagner Ulrich J., 2011. "Energy Use Patterns in German Industry: Evidence from Plant-level Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(3), pages 379-414, June.
  6. Weber, Henning, 2011. "Optimal inflation and firms' productivity dynamics," Kiel Working Papers 1685, Kiel Institute for the World Economy (IfW).
  7. Chiara Franco & John P. Weche Gelübcke, 2015. "The Death of German Firms: What Role for Foreign Direct Investment?," The World Economy, Wiley Blackwell, vol. 38(4), pages 677-703, 04.
  8. repec:spr:astaws:v:11:y:2017:i:1:d:10.1007_s11943-017-0200-1 is not listed on IDEAS
  9. Ulf Lewrick & Lukas Mohler & Rolf Weder, 2014. "When firms and industries matter: understanding the sources of productivity growth," BIS Working Papers 469, Bank for International Settlements.
  10. Henning Weber, 2011. "Optimal inflation and firms' productivity dynamics," Kiel Working Papers 1685, Kiel Institute for the World Economy.
  11. repec:zbw:rwirep:0192 is not listed on IDEAS
  12. Engel, Dirk & Procher, Vivien & Schmidt, Christoph M., 2010. "The Asymmetries of a Small World: Entry Into and Withdrawal From International Markets by French Firms," Ruhr Economic Papers 192, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  13. Movahedi, Mohammad, 2013. "Le commerce international, l’adoption de l’innovation et le choix de l’entrée-sortie à l’exportation des firmes
    [International trade, innovation adoption and export entry-exit choice of the firms]    ," MPRA Paper 44268, University Library of Munich, Germany, revised 01 Jan 2014.

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