Firm Size Distortions and the Productivity Distribution: Evidence from France

Garicano, Luis; Lelarge, Claire; Reenen, John Van

doi:10.3386/w18841

Cited by 214 publications

(292 citation statements)

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“…Garicano, Lelarge, and Van Reenen (2012) find that steep nonlinearities in French labor costs for firms above 50 employees have major effects on firm size and productivity.…”

Section: Labor-and Product-market Rigidities In Europementioning

confidence: 99%

“…14 Haltiwanger, Scarpetta, and Schweiger (2014) find that strict hiring and firing regulations tend to reduce the pace of job reallocation. Garicano, Lelarge, and Van Reenen (2012) find that steep nonlinearities in French labor costs for firms above 50 employees have major effects on firm size and productivity.Still, while the pattern for core Europe looks different from that of the United States, TFP growth was, by and large, positive prior to the crisis. In contrast, the bottom row of Figure 5 shows Spain and Italy.…”

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The Pre-Great Recession Slowdown in Productivity

Cette¹,

Fernald²,

Mojon³

2015

ERWP

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In the years since the Great Recession, many observers have highlighted the slow pace of productivity growth around the world. For the United States and Europe, we highlight that this slow pace began prior to the Great Recession. The timing thus suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. For the United States, at the frontier of knowledge, there was a burst of innovation and reallocation related to the production and use of information technology in the second half of the 1990s and the early 2000s. That burst ran its course prior to the Great Recession. Continental European economies were falling back relative to that frontier at varying rates since the mid-1990s. We provide VAR and panel-data evidence that changes in real interest rates have influenced productivity dynamics in this period. In particular, the sharp decline in real interest rates that took place in Italy and Spain seem to have triggered unfavorable resource reallocations that were large enough to reduce the level of total factor productivity, consistent with recent theories and firm-level evidence.Keywords: Productivity Growth; Great Recession; Misallocation; Convergence JEL Codes: D24, E23, E44, F45, O47Please address correspondence to fernaldjg@gmail.com. We thank Fabio Canova, Robert Inklaar, Robert Kolmann, Eric Leeper, Werner Roeger, and seminar participants at several institutions for helpful comments. We also thank Genevieve Denoeux, Andrew Tai and Bing Wang for helpful research assistance. John Fernald thanks the Einaudi Institute for Economics and Finance for hosting him while writing much of the paper. The views in this paper are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of San Francisco, the Banque de France, or anyone else associated with those institutions.Since the Great Recession began in 2007, productivity growth in advanced economies has continually surprised to the downside. 1 A severe downturn and slow recovery could affect productivity through various channels, both cyclical and structural. But, as we emphasize, the slowdown in advanced-economy total factor productivity (TFP) growth was broadly underway prior to the crisis. 2 The pre-Great Recession timing suggests the importance of factors other than just the deep crisis (or ensuing policy changes) itself.To understand the evolution of advanced-economy TFP growth prior to the crisis, we highlight three broad factors that have shaped the global economy in recent decades: Technical change, structural rigidities, and declining real interest rates and abundant credit. Each factor has attracted analysis and attention but they have not, typically, been considered together. For expositional clarity as well as data availability, we focus on a small number of major advanced economies: the U.S. and the four main Euro Area countries (Germany, France, Italy, and Spain).For the United States, which we assume is at the frontier of knowledge, we highligh...

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“…Garicano, Lelarge, and Van Reenen (2012) find that steep nonlinearities in French labor costs for firms above 50 employees have major effects on firm size and productivity.…”

Section: Labor-and Product-market Rigidities In Europementioning

confidence: 99%

mentioning

confidence: 99%

See 1 more Smart Citation

The Pre-Great Recession Slowdown in Productivity

Cette¹,

Fernald²,

Mojon³

2015

ERWP

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“…For instance, when French firms reach 50 employees they must form work councils, give more union representation and face higher firing costs. As shown by Garicano, Lelarge and Van Reenen (2013) this created reluctance among many firms to move beyond that limit. Portugal and Italy have important regulatory limits at 15 employees, which have been shown to have similar growth-impeding effects (Braguinsky, Branstetter and Regateiro 2011;Schivardi and Torrini 2008).…”

Section: Labor Market Institutionsmentioning

confidence: 99%

Local Competitiveness Fostered through Local Institutions for Entrepreneurship

Andersson

Henrekson

2015

The Oxford Handbook of Local Competitiveness

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe review and assess the role local institutional framework conditions play in fostering local entrepreneurship. The basic premise is that entrepreneurship is a central driver of economic renewal and change, and that institutions affect both the supply and direction of entrepreneurship. While local institutions always develop and operate against the backdrop of national institutional frameworks, in particular in non-federal states, our review shows that there is plenty of room for local initiatives and policies to influence the entrepreneurial climate locally. This pertains to both formal (e.g., taxes, regulations and stringency of enforcement) and informal (e.g., attitudes and social legitimacy) institutions. We further argue that the local institutional environment is essential in any local policy aimed to foster productive (high-impact) entrepreneurship. Favorable local institutions not only increase the odds that a region develops or manage to attract entrepreneurial incumbents, but also the odds that a region reaps the full potential of hosting entrepreneurial and knowledge-intensive activities.

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“…The paper is also related to recent empirical work that calibrates the parameters of production technologies and distribution of skills in economies where individuals make occupational choices: Gollin (2008) for Japan; Poschke (2011) for the USA; Garicano et al (2013) for France, and Braguinsky et al (2011) for Portugal. 1 We add Spain to the list of countries, but our interest is in explaining occupational structure and its evolution over time.…”

Section: Introductionmentioning

confidence: 99%

Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data

Salas‐Fumás

Sánchez-Asín

Storey

2013

SERIEs

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This paper extends the (Lucas, Bell J Econ 9: [508][509][510][511][512][513][514][515][516][517][518][519][520][521][522][523]1978) model of occupational choices by individuals with different skills, beyond the simple options of self-employment or wage-employment, by including a second choice for the selfemployed. That is, an option to hire employees and so become self-employed with employees (SEWEs), or to be self-employed without employees (SEWNEs). We solve for the market equilibrium and examine the sensitivity of relative sizes of occupational groups, and of the level of productivity, to changes in the exogenous parameters. The results show that the positive (negative) association between number of SEWEs (SEWNEs) and productivity, observed in the Spanish data, can be explained, under certain conditions, as the result of cross-region and time differences in average skills. These findings point to the importance of distinguishing between SEWEs and SEWNEs in drawing valid conclusions concerning any link between entrepreneurship and economic development.

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Firm Size Distortions and the Productivity Distribution: Evidence from France

Cited by 214 publications

References 56 publications

The Pre-Great Recession Slowdown in Productivity

The Pre-Great Recession Slowdown in Productivity

Local Competitiveness Fostered through Local Institutions for Entrepreneurship

Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data

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