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

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...

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Bibliographic Details
Published in:Small business economics 2012-11, Vol.39 (4), p.1043-1067
Main Authors: Dosi, Giovanni, Grazzi, Marco, Tomasi, Chiara, Zeli, Alessandro
Format: Article
Language:English
Subjects:
Business and Management
Business structures
Empirical evidence
Entrepreneurship
Euro
Exporters
Exports
Industrial Organization
Industrial productivity
Italy
Labor productivity
Labour productivity
Management
Manufacturing
Microeconomics
OECD
Product development
Productivity
Productivity growth
Serenity
Trade
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Summary: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.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-011-9326-7