European Firm Concentration and Aggregate Productivity

Abstract

This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from an increasing allocative efficiency of the European market accounted for 50% of European productivity growth while markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.

Skill demand and labour market concentration: evidence from Italian vacancies

“…The first is the analysis of labour market concentration and its effects on firms' training decisions. There is strong evidence of increasing concentration in USA labour market (Hershbein et al, 2021;Azar et al, 2020a;Berger et al, 2022), and there is also growing evidence of the same effect in Europe (in addition to our paper and Marcato (2021) for Italy, see Marinescu et al (2021) for France and Bighelli et al (2021) for Europe). The literature shows that stronger monopsony power allows firms to extract large rents from workers' productivity [1].…”

“…There is strong evidence of increasing concentration in USA labour market (Hershbein et al ., 2021; Azar et al ., 2020a; Berger et al ., 2022), and there is also growing evidence of the same effect in Europe (in addition to our paper and Marcato (2021) for Italy, see Marinescu et al . (2021) for France and Bighelli et al . (2021) for Europe).…”

Cross-country evidence on the allocation of COVID-19 government subsidies and consequences for productivity

“… 4 We rely on the CompNet routine developed for the construction of the CompNet database (but we do not utilize the micro-aggregated CompNet database itself). The CompNet dataset has been extensively used by researchers, see, among the others Autor et al (2020) , Bighelli et al (2022) and Mertens (2021) . …”

Productivity dispersion, wage dispersion and superstar firms

“…2019; Bighelli et al . 2023). In the same spirit, Gutiérrez and Philippon (2019a) show that while superstar firms in the USA did not necessarily become larger or more productive over time, they have become more profitable.…”