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Firm Lifecycles and External Restructuring

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  • Hyytinen, Ari
  • Maliranta, Mika

Abstract

This paper studies how firms contribute to the productivity growth of an industry over their lifecycle. We present a decomposition method that allows us to condition the components of productivity growth on the age of production units. We find evidence for a prolonged positive exit effect that mirrors market selection during the early stages of firms lifecycle. This effect is tightly related to the negative initial productivity effect of entry. We also find some evidence that productivity-enhancing reallocation of resources between firms is concentrated on the middle aged firms.

Suggested Citation

  • Hyytinen, Ari & Maliranta, Mika, 2011. "Firm Lifecycles and External Restructuring," Discussion Papers 1253, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:dpaper:1253
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    Cited by:

    1. Sauramo, Pekka & Maliranta, Mika, 2011. "Structural change in Finnish manufacturing: The theory of the aggregation of production functions and an empirical analysis with a plant-level panel," Structural Change and Economic Dynamics, Elsevier, vol. 22(2), pages 116-134, June.

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    More about this item

    Keywords

    productivity; decomposition; lifecycle; entry; exit;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • 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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