The Effects of Product Dropping on Firm's Productivity and Employment Composition

Sergio de Nardis and Marco Ventura

No 127, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: Recent literature on heterogeneous multi-product firms predicts that elimination of marginal (less productive) products, due to fiercer competition, leads to an increase of firm efficiency. We test this prediction in the case of a sample of Italian firms during a period (2000-05) of rising competitive pressures. Adopting a propensity score matching estimator, we find evidence of a causal relationship between product dropping and higher firm productivity. We also find evidence that product dropping activity causes a fall of the share of blue collars versus white collars. We draw some policy implications regarding labour market adjustment and support to internal product switching when competition shocks take place.

Keywords: product dropping; matching estimator; white collar (search for similar items in EconPapers)
JEL-codes: D20 L23 L60 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2010-03
New Economics Papers: this item is included in nep-bec, nep-eff and nep-int
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:isa:wpaper:127

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