Declining business dynamism in Europe : the role of shocks, market power, and technology / Filippo Biondi, Sergio Inferrera, Matthias Mertens, Javier Miranda ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
VerfasserBiondi, Filippo ; Inferrera, Sergio ; Mertens, Matthias ; Miranda, Javier
KörperschaftLeibniz-Institut für Wirtschaftsforschung Halle
ErschienenHalle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, September 2023
Umfang1 Online-Ressource (III, 92 Seiten, 1,16 MB) : Diagramme
SerieIWH-CompNet discussion papers ; 2023, no. 2 (September 2023)
Schlagwörterbusiness dynamism / European cross-country data / market power / productivity / responsiveness of labor demand
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We study the changing patterns of business dynamism in Europe after 2000 using novel micro-aggregated data that we collect for 19 European countries. In all of them we document a decline in job reallocation rates that concerns most economic sectors. This is mainly driven by dynamics within sectors size classes and age classes rather than by compositional changes. Large and mature firms show the strongest decline in job reallocation rates. Simultaneously the shares of employment and sales of young firms decline. Consistent with US evidence firms’ employment changes have become less responsive to productivity. However the dispersion of firms’ productivity shocks has decreased too. To enhance our understanding of these patterns we derive a firm-level framework that relates changes in firms’ productivity market power and technology to job reallocation and firms’ responsiveness.