Turbulence underneath the big calm? The micro-evidence behind Italian productivity dynamics

Abstract

Italy ranked last in terms of manufacturing productivity growth according to OECD estimates over the last decade, with a flat, if not declining, trend. In this work we investigate the underlying firm-level dynamics of enterprises on the basis of a database developed by the Italian Statistical Office (ISTAT) covering the period 1989–2004 and containing information on more than 100,000 firms. Over this period not only have the indicators of the central tendency of the distribution of labor productivity not significantly changed, but also the whole sectoral distributions have remained relatively stable over time, with their support at least not shrinking, or even possibly widening, over time. This is even more surprising if one takes into consideration the “Euro” shock that occurred during the period investigated. On the contrary, we observe that inter-decile differences in productivity have been increasing. Further, heterogeneous firms’ characteristics (i.e. export activity and innovation) seem to have contributed to boosting such intra-industry differences. Given such wide heterogeneities we resort to quantile regressions to identify the impact of a set of regressors at different levels of the conditional distribution of labor productivity. One phenomenon that we observe is what we call a tendency toward “neo-dualism” involving the co-existence of a small group of dynamic firms with a bigger ensemble of much less technologically progressive ones

Dynamics of investment and firm performance: comparative evidence from manufacturing industries

“…Quite interestingly the effect on profitability of starting a new plant is negative and significant, both for the same and one year lag. This first set of results already emphasizes a relevant difference between the two countries as it underlies a great deal of the difficulties encountered by the Italian manufacturing system over the last fifteen years or so: large investment projects had no appreciable returns to shareholders in the period 1997-2006 (for a complementary analysis refer to Dosi et al, 2012). Results for France show instead a positive effect of investments on return on sales, although the setting-up of a new plant represents a negative shock.…”

“…Such a pattern is apparent both at the aggregate (OECD, 2008) and, although to a lesser extent, also at the firm level (Dosi et al, 2012). In addition, the low variability of the dependent variable, labor productivity, for Italy over the period makes it more difficult to clearly identify factors that, even if marginally, did contribute to productivity growth in the Italian manufacturing sector over the last twenty years.…”

Technology and costs in international competitiveness: From countries and sectors to firms

“…In Table 6 we report the results obtained from the maximum likelihood estimation of a Heckman model in which the equation describing the selected sample is our market share 16 Refer to Dosi et al (2012) for an exercise on the same dataset that takes into account the Euro introduction. Note.…”

Outsourcing and Firm Performance: Evidence from the Italian Manufacturing Industry

“…In the same period, the Italian economy registered a slowdown of the average annual growth, and the average annual growth rate of value added per employee in manufacturing was negative (Dosi et al, 2012). This process took place with almost unchanged capital deepening, therefore it was caused by a fall in total factor productivity (Van Ark et al, 2008;Daveri & Jona-Lasinio, 2005;Brandolini & Bugamelli, 2009), which was particularly striking in manufacturing.…”

“…International comparisons show that Italy ranked last in growth of GDP per hour worked over the period 1995-2006(OECD, 2008Dosi et al, 2012). In the same period, the Italian economy registered a slowdown of the average annual growth, and the average annual growth rate of value added per employee in manufacturing was negative (Dosi et al, 2012).…”