Cyclical and Stuctural Variation in Resource Reallocation: Evidence for Europe

Tinbergen Institute Discussion Paper 2018-057/VI

30 Pages Posted: 27 Jun 2018

See all articles by Eric J. Bartelsman

Eric J. Bartelsman

Vrije Universiteit Amsterdam; Tinbergen Institute; IZA Institute of Labor Economics

Paloma Lopez-Garcia

European Central Bank (ECB)

Giorgio Presidente

World Bank

Date Written: June 17, 2018

Abstract

This paper uses cross-country micro-aggregated data on firm dynamics and productivity from the ECB CompNet database to provide empirical evidence on factor reallocation in the EU. The analysis finds that reallocation is towards more productive firms although the magnitude varies across countries and over time. Variation in reallocation is related to structural differences in firm size distribution across countries as well as to variation in labor and product market institutions. Productivity enhancing reallocation generally rises in downturns but, similar to findings for the US, it did not pick up in the great recession. The sharp drop in exports and tightness in credit markets are seen to provide a partial explanation for this lack of a silver lining.

Keywords: Great Recession, Factor Reallocation

JEL Classification: C8, D24, E32, F4

Suggested Citation

Bartelsman, Eric J. and Lopez-Garcia, Paloma and Presidente, Giorgio, Cyclical and Stuctural Variation in Resource Reallocation: Evidence for Europe (June 17, 2018). Tinbergen Institute Discussion Paper 2018-057/VI. Available at SSRN: https://ssrn.com/abstract=3200367 or http://dx.doi.org/10.2139/ssrn.3200367

Eric J. Bartelsman (Contact Author)

Vrije Universiteit Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands
+31 (0)20 44 46044 (Phone)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Paloma Lopez-Garcia

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Giorgio Presidente

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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