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Micro-Heterogeneity and Aggregate Productivity Development in the German Manufacturing Sector - Results from a Decomposition Exercise

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  • Uwe Cantner

    () (University of Jena, Faculty of Economics)

  • Jens J. Krüger

    () (University of Jena, Faculty of Economics)

Abstract

In this paper different formulae for the decomposition of aggregate productivity levels and changes are applied to a sample of German manufacturing firms that pertain to 11 different industries at a roughly two-digit level observed over the period 1981-1998. Productivity is measured by a nonparametric frontier function approach. The decompositions of productivity allow for an explanation of the aggregate outcomes by the quantification of the effect of structural change as well as the contributions from entering and exiting firms. Our results show that these forces drive aggregate productivity dynamics to a considerable extent. Especially the period after the German reunification is characterized by large productivity improvements, mostly driven by structural change.

Suggested Citation

  • Uwe Cantner & Jens J. Krüger, 2006. "Micro-Heterogeneity and Aggregate Productivity Development in the German Manufacturing Sector - Results from a Decomposition Exercise," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 02/2006, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    • Handle: RePEc:jen:jenasw:2006-02
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    1. Uwe Cantner & Jens Kruger & Kristina von Rhein, 2011. "Knowledge compensation in the German automobile industry," Applied Economics, Taylor & Francis Journals, vol. 43(22), pages 2941-2951.
    2. Uwe Cantner & Jens J. Krüger & Kristina Von Rhein, 2009. "Knowledge and Creative Destruction over the Industry Life Cycle: The Case of the German Automobile Industry," Economica, London School of Economics and Political Science, vol. 76(301), pages 132-148, February.
    3. Roland Helm & Reinhard Meckl & Nicole Sodeik, 2005. "Wissensmanagement - Ein Überblick zum Stand der empirischen Forschung," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 04/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    4. Andreas Freytag & Dirk Schiereck & Thomas W. Thomas, 2005. "Consolidation and Market Power of Energy Utilities - The case of US-American and German Utility Takeovers," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 07/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
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    Cited by:

    1. Carreira, Carlos & Teixeira, Paulino, 2011. "Entry and exit as a source of aggregate productivity growth in two alternative technological regimes," Structural Change and Economic Dynamics, Elsevier, vol. 22(2), pages 135-150, June.
    2. Jens Krüger, 2014. "Intrasectoral structural change and aggregate productivity development: robust stochastic nonparametric frontier function estimates," Empirical Economics, Springer, vol. 46(4), pages 1545-1572, June.
    3. Andrés Maroto-Sánchez, 2010. "Productivity in the services sector: conventional and current explanations," The Service Industries Journal, Taylor & Francis Journals, vol. 32(5), pages 719-746, October.
    4. Luna, Ivette & Hiratuka, Celio & Haddad Netto, Elias Youssef, 2016. "Survival of the fittest or does size matter: What are the main drivers of Productivity in Brazil?," MPRA Paper 78208, University Library of Munich, Germany, revised 2016.
    5. Uwe Cantner & Ivan Savin & Simone Vannuccini, 2019. "Replicator dynamics in value chains: explaining some puzzles of market selection," Industrial and Corporate Change, Oxford University Press, vol. 28(3), pages 589-611.
    6. Uwe Cantner, 2016. "Foundations of economic change—an extended Schumpeterian approach," Journal of Evolutionary Economics, Springer, vol. 26(4), pages 701-736, October.
    7. Yi-Chen Lin & Tai-Hsin Huang, 2012. "Creative destruction over the business cycle: a stochastic frontier analysis," Journal of Productivity Analysis, Springer, vol. 38(3), pages 285-302, December.
    8. Aradhna Aggarwal & Takahiro Sato, 2011. "Firm Dynamics and Productivity Growth in Indian Manufacturing: Evidence from Plant Level Panel Dataset," Discussion Paper Series DP2011-07, Research Institute for Economics & Business Administration, Kobe University.
    9. Bo Carlsson & Gunnar Eliasson & Karolin Sjöö, 2018. "The Swedish industrial support program of the 1970s revisited," Journal of Evolutionary Economics, Springer, vol. 28(4), pages 805-835, September.
    10. Carlos Carreira & Paulino Teixeira, 2016. "Entry and exit in severe recessions: lessons from the 2008–2013 Portuguese economic crisis," Small Business Economics, Springer, vol. 46(4), pages 591-617, April.
    11. Thomas Grebel & Mauro Napoletano & Lionel Nesta, 2020. "Distant but close in sight. Firm-level evidence on French-German productivity gaps in manufacturing," LEM Papers Series 2020/36, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    12. Carlos Carreira & Paulino Teixeira, 2010. "Does Schumpeterian Creative Destruction Lead to Higher Productivity? The effects of firms’ entry," GEMF Working Papers 2010-20, GEMF, Faculty of Economics, University of Coimbra.
    13. Kurt Dopfer, 2011. "Economics in a Cultural Key: Complexity and Evolution Revisited," Chapters, in: John B. Davis & D. Wade Hands (ed.), The Elgar Companion to Recent Economic Methodology, chapter 14, Edward Elgar Publishing.
    14. Jens J. Krüger, 2008. "The Sources Of Aggregate Productivity Growth: Us Manufacturing Industries, 1958–1996," Bulletin of Economic Research, Wiley Blackwell, vol. 60(4), pages 405-427, October.

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    More about this item

    Keywords

    productivity; structural change; manufacturin;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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