From micro to macro: a note on the analysis of aggregate productivity dynamics using firm-level data (original) (raw)

Firm-level Productivity Differences: Insights from the OECD’s MultiProd Project

International Productivity Monitor, 2017

Productivity plays a central role in shaping the welfare of societies and the competitiveness of countries. Productivity differences, for instance, explain a large share of the differences in income per capita across countries. This paper investigates the role of productivity heterogeneity across 18 countries over the period 2001-2012. In particular, it analyses the evidence that emerges from the distributed micro-data approach carried out in the OECD MultiProd project. The main outcome of the project is a unique dataset of harmonised crosscountry moments that are representative for the population of firms and comparable across countries even at a detailed industry level. We look at the 90-10 percentile ratio of LP and MFP and show that: i) productivity dispersion is high in both manufacturing and nonfinancial market services; ii) it has increased over time, especially in services; iii) a substantial part of this dispersion comes from differences among firms within the same sector o...

The Fallacy in Productivity Decomposition

2021

This paper argues that the typical practice of performing growth decompositions based on log-transformed productivity values induces fallacious conclusions: using logs may lead to an inaccurate aggregate growth rate, an inaccurate description of the microsources of aggregate growth, or both. We identify the mathematical sources of this log-induced fallacy in decomposition and analytically demonstrate the questionable reliability of log results. Using firm-level data from the French manufacturing sector during the 2009-2018 period, we empirically show that the magnitude of the log-induced distortions is substantial. Depending on the definition of accurate log measures, we find that around 60-80% of four-digit industry results are prone to mismeasurement. We further find significant correlations of this mismeasurement with commonly deployed industry characteristics, indicating, among other things, that less competitive industries are more prone to log distortions. Evidently, these cor...

Productivity and Organization in Portuguese Firms

The productivity of …rms is, at least partly, determined by a …rm's actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the …rm decides to employ. Using detailed employer-employee matched data and …rm production quantity and input data for Portuguese …rms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a …rm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the …rm reorganize and add a management layer, quantity-based productivity increases by about 8%, while revenue-based productivity drops by around 7%. Such a reorganization makes the …rm more productive, but also increases the quantity produced to an extent that lowers the price charged by the …rm and, as a result, its revenue-based productivity. We thank Serguey Braguinsky, Jan De Loecker, Jakub Kastl, Steve Redding, Ananth Seshadri, and seminar participants at various institutions and conferences for useful comments and discussions. Caliendo: