Patterns of firm level productivity in Ireland

Productivity is the ultimate driver of sustainable increases in living standards. While Ireland is a high productivity country, it has not been immune from the global productivity slowdown, with the pace of growth on a downward trend throughout the 2000s. Little research has been carried out as to the determinants behind the productivity slowdown in Ireland, and even less so with microdata. To fill the gap, we use a firm-level panel dataset based on production surveys from Ireland’s national statistics office, together with the OECD MultiProd model, in order to identify productivity patterns and trends distributed by percentile, sector, ownership, as well as measures of the efficiency of resource allocation. Our results show a widening of the productivity gap between the most and least productive firms, with the majority of firms experiencing a decline in productivity since the mid-2000s, and also confirm that aggregate results are driven by the impact of foreign dominated sectors, with foreign firms typically larger and more productive. These results are significant in terms of enterprise policy and featured prominently in the OECD’s 2018 Economic Survey of Ireland.