Discussion Papers no. 819

Selection on profitability and not productivity

On measuring the contribution from firm turnover to aggregate productivity growth

Foster et al. (2001) outline a framework that is commonly used to identify the contribution from firm turnover to aggregate productivity growth.

Foster et al. (2001) outline a framework that is commonly used to identify the contribution from firm turnover to aggregate productivity growth. The framework is not derived from economic theory and it implies that productivity levels determine the contribution from reallocation and firm turnover. In this paper, I outline an index for aggregate productivity growth based on economic theory. In contrast to common beliefs, I show that the contribution from firm turnover to aggregate productivity growth should be based on the profitability, and not the productivity, of these firms.

About the publication

Title

On measuring the contribution from firm turnover to aggregate productivity growth. Selection on profitability and not productivity

Author

Thomas von Brasch

Series and number

Discussion Papers no. 819

Publisher

Statistics Norway

ISSN

1892-753X

Number of pages

14

Language

English

About Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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