Cyclical and Structural Variation in Resource Allocation: Evidence for Europe

29 Pages Posted: 5 Dec 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: November 29, 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 European Union (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: E24, E32, J63, O4

Suggested Citation

Bartelsman, Eric J. and Lopez-Garcia, Paloma and Presidente, Giorgio, Cyclical and Structural Variation in Resource Allocation: Evidence for Europe (November 29, 2018). ECB Working Paper No. 2210. Available at SSRN: https://ssrn.com/abstract=3294893

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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