Growing by Learning: Firm-Level Evidence on the Size-Productivity Nexus

37 Pages Posted: 1 Jul 2016

See all articles by Enrique Moral-Benito

Enrique Moral-Benito

Banco de España; Universidad Carlos III de Madrid

Date Written: July 1, 2016

Abstract

It is a well-known empirical regularity that small firms are less productive than large firms. However, does size cause productivity or vice versa? Using matching methods, I find that productivity shocks are followed by significant increases in size defined by employment. In contrast, size shocks are not followed by productivity gains at the firm level. This finding casts doubt on the conventional wisdom that aggregate productivity in Spain is driven by a firm size distribution biased towards small firms in comparison with other developed countries. According to my findings, low firm-level productivity might play a crucial role in shaping the Spanish firm size distribution.

Keywords: firm-level data, productivity, size distribution

JEL Classification: L11, L25, D24

Suggested Citation

Moral-Benito, Enrique, Growing by Learning: Firm-Level Evidence on the Size-Productivity Nexus (July 1, 2016). Banco de Espana Working Paper No. 1613. Available at SSRN: https://ssrn.com/abstract=2803100 or http://dx.doi.org/10.2139/ssrn.2803100

Enrique Moral-Benito (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

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