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

16 Pages Posted: 23 Oct 2007 Last revised: 5 Nov 2007

See all articles by Joachim Wagner

Joachim Wagner

University of Lueneburg - Institute of Economics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics; IZA Institute of Labor Economics

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Date Written: September 12, 2007

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 a unique newly available panel data sets for all manufacturing plants from Germany (1995 - 2002). Again, all three hypotheses are supported empirically.

Keywords: entry, exit, productivity

JEL Classification: L11, L60

Suggested Citation

Wagner, Joachim, Entry, Exit and Productivity - Empirical Results for German Manufacturing Industries (September 12, 2007). Jena Economic Research Paper No. 2007-064, Available at SSRN: https://ssrn.com/abstract=1023864 or http://dx.doi.org/10.2139/ssrn.1023864

Joachim Wagner (Contact Author)

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