Firm Behavior, Market Deregulation and Productivity in Spain

46 Pages Posted: 26 Nov 2010

See all articles by Cesar Alonso-Borrego

Cesar Alonso-Borrego

Charles III University of Madrid - Department of Economics

Date Written: November 26, 2010

Abstract

The aim of this paper is to analyze the evolution of productivity and how firm behavior and institutional conditions affects productivity. For that purpose, we use a longitudinal sample of Spanish manufacturing and services companies between 1983 and 2006, as well as OECD indicators on product market regulations. The productivity measurement is based on the control function approach, to overcome the endogeneity bias. Both for manufacturing and services firms, we have found that the share of temporary employment tends to reduce productivity, the effect being stronger for services firms, which make a more intensive use of this employment type. Our results also show that increases in competition lead to productivity improvements. Besides, those manufacturing firms who keep undertaking in-house production of services tend to be more productive. The lack of competition in the services sector may be preventing firms to increase specialization while outsourcing non-manufacturing activities.

Keywords: TFP, Competition, Employment composition, Endogeneity

JEL Classification: L10, L11, L22, L23, C23

Suggested Citation

Alonso-Borrego, Cesar, Firm Behavior, Market Deregulation and Productivity in Spain (November 26, 2010). Banco de Espana Working Paper No. 1035, Available at SSRN: https://ssrn.com/abstract=1715433 or http://dx.doi.org/10.2139/ssrn.1715433

Cesar Alonso-Borrego (Contact Author)

Charles III University of Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34 91 6249749 (Phone)
+34 91 6249849 (Fax)

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