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

17 Pages Posted: 1 Apr 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: March 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 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 (March 2007). IZA Discussion Paper No. 2667, Available at SSRN: https://ssrn.com/abstract=977515

Joachim Wagner (Contact Author)

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