The Contributions from Firm Entry, Exit and Continuation to Labour Productivity Growth in New Zealand

David Robert Colin Law () and Nathan McLellan ()

No 05/01, Treasury Working Paper Series from New Zealand Treasury

Abstract: This paper evaluates the contributions from firm entry, exit and continuation to labour productivity growth in New Zealand over the period 1995 to 2003. Decomposition techniques developed by Griliches and Regev (1995) and by Foster, Haltiwanger and Krizan (1998) are employed. Results suggest significant heterogeneity across both industries and firms. Most entering firms’ initial level of labour productivity is below the industry average but grows rapidly thereafter. Continuing firms generally add to industry labour productivity growth. On average exiting firms experience stagnant or declining labour productivity in the years leading up to their death, and when they eventually die most have below average labour productivity compared to their industry. This pattern persists even at a highly disaggregated industry level and indicates that firm turnover has positively contributed to labour productivity growth in New Zealand.

Keywords: Firm Performance; Entry; Exit; Turnover; Mobility; Labour Productivity; New Zealand (search for similar items in EconPapers)
JEL-codes: D21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-mic and nep-tid
Date: 2005-04
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