Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?

This paper identifies and estimates the impact of firm entry and exit on plant-level productivity in Ethiopia as part of a selection mechanism that might be driving aggregate productivity growth in cities. Specifically, the paper investigates how f...

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Main Authors:	Jones, Patricia, Mengistae, Taye, Zeufack, Albert
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	PRODUCTIVITY MARKET STRUCTURE URBANIZATION GEOSPATIAL ECONOMICS
Online Access:	http://documents.worldbank.org/curated/en/613111514905269837/Selection-firm-turnover-and-productivity-growth-do-emerging-cities-speed-up-the-process http://hdl.handle.net/10986/29126

id	okr-10986-29126
recordtype	oai_dc
spelling	okr-10986-291262021-06-08T14:42:48Z Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process? Jones, Patricia Mengistae, Taye Zeufack, Albert PRODUCTIVITY MARKET STRUCTURE URBANIZATION GEOSPATIAL ECONOMICS This paper identifies and estimates the impact of firm entry and exit on plant-level productivity in Ethiopia as part of a selection mechanism that might be driving aggregate productivity growth in cities. Specifically, the paper investigates how firms’ entry and exit contribute to the pace of factor reallocation and total factor productivity growth within industries—and whether these processes occur in higher numbers and rates in larger cities. The analysis is carried out using establishment census data from Ethiopia that cover the period from year 2000 to 2010. Importantly, these data include information on plants’ physical outputs and their prices, which allows distinguishing between revenue-based measures of total factor productivity (TFPR) and those based on physical productivity (TFPQ). The analysis reveals that these two measures generate very different results under imperfect competition, suggesting that physical productivity measures (TFPQ) are better suited to examining firm dynamics when local producers have some degree of market power. In addition, the findings show that less productive (higher cost) firms are more likely to exit than their more productive (lower cost) rivals—but the analysis controls for producers’ transport costs. This is consistent with the probability of firm exit being higher when transport costs are lower. 2018-01-05T16:36:07Z 2018-01-05T16:36:07Z 2018-01 Working Paper http://documents.worldbank.org/curated/en/613111514905269837/Selection-firm-turnover-and-productivity-growth-do-emerging-cities-speed-up-the-process http://hdl.handle.net/10986/29126 English Policy Research Working Paper;No. 8291 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa Ethiopia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	PRODUCTIVITY MARKET STRUCTURE URBANIZATION GEOSPATIAL ECONOMICS
spellingShingle	PRODUCTIVITY MARKET STRUCTURE URBANIZATION GEOSPATIAL ECONOMICS Jones, Patricia Mengistae, Taye Zeufack, Albert Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?
geographic_facet	Africa Ethiopia
relation	Policy Research Working Paper;No. 8291
description	This paper identifies and estimates the impact of firm entry and exit on plant-level productivity in Ethiopia as part of a selection mechanism that might be driving aggregate productivity growth in cities. Specifically, the paper investigates how firms’ entry and exit contribute to the pace of factor reallocation and total factor productivity growth within industries—and whether these processes occur in higher numbers and rates in larger cities. The analysis is carried out using establishment census data from Ethiopia that cover the period from year 2000 to 2010. Importantly, these data include information on plants’ physical outputs and their prices, which allows distinguishing between revenue-based measures of total factor productivity (TFPR) and those based on physical productivity (TFPQ). The analysis reveals that these two measures generate very different results under imperfect competition, suggesting that physical productivity measures (TFPQ) are better suited to examining firm dynamics when local producers have some degree of market power. In addition, the findings show that less productive (higher cost) firms are more likely to exit than their more productive (lower cost) rivals—but the analysis controls for producers’ transport costs. This is consistent with the probability of firm exit being higher when transport costs are lower.
format	Working Paper
author	Jones, Patricia Mengistae, Taye Zeufack, Albert
author_facet	Jones, Patricia Mengistae, Taye Zeufack, Albert
author_sort	Jones, Patricia
title	Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?
title_short	Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?
title_full	Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?
title_fullStr	Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?
title_full_unstemmed	Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?
title_sort	selection, firm turnover, and productivity growth : do emerging cities speed up the process?
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/613111514905269837/Selection-firm-turnover-and-productivity-growth-do-emerging-cities-speed-up-the-process http://hdl.handle.net/10986/29126
_version_	1764468559804628992

Selection, Firm Turnover, and Productivity Growth : Do Emerging Cities Speed Up the Process?

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