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The best versus the rest: divergence across firms during the global productivity slowdown

Criscuolo, Chiara, Andrews, Dan and Gal, Peter N. (2019) The best versus the rest: divergence across firms during the global productivity slowdown. CEP Discussion Papers. Centre for Economic Performance, LSE, London, UK.

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Abstract

We document that labor productivity of the globally most productive firms – the “frontier” – has diverged from all other firms – the “rest” – throughout the 2000s. This divergence remains after controlling for capital intensity and markups, and is strongest in ICT services, indicative of “winnertakes-all” dynamics. We also find weakening catch-up and market selection below the frontier, which can explain why this divergence at the firm level is linked to weaker aggregate productivity. The divergence is found to be stronger in industries where product market regulations are less competition friendly, highlighting the need for regulatory policy to improve the contestability of markets.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2019 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M13 - Entrepreneurship
Date Deposited: 14 Feb 2020 15:27
Last Modified: 12 Sep 2020 23:14
URI: http://eprints.lse.ac.uk/id/eprint/103405

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