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The middle productivity trap: Dynamics of productivity dispersion

Dany Bahar

Economics Letters, 2018, vol. 167, issue C, 60-66

Abstract: Using a worldwide firm-level panel dataset I document a “U-shaped” relationship between productivity growth and baseline levels within each country and industry. That is, fast productivity growth is concentrated at both ends of the productivity distribution. This result serves as a potential explanation to two stylized facts documented in the economic literature: the rising productivity dispersion within narrowly defined sectors, and the increasing market share of few yet highly productive firms. I further provide evidence suggesting that such pattern is driven by knowledge-intensive industries, for which cross-firm diffusion of knowledge is presumably more costly.

Keywords: Productivity; Convergence; Divergence; Dispersion (search for similar items in EconPapers)
JEL-codes: D2 O3 O4 (search for similar items in EconPapers)
Date: 2018
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