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Frontier and Superstar Firms in Italy

Francesca Lotti () and Enrico Sette
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Francesca Lotti: Bank of Italy

No 537, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We study the dynamics of firms in the top decile of the TFP distribution in Italy (frontier firms). Using granular microdata from the census of corporations, we show their main characteristics, their weight in terms of revenues and employment, and measure their persistency in the top deciles of the TFP distribution. Frontier firms are more profitable, less likely to go bankrupt and younger; they invest more and use less long-term bank debt to finance their assets; and they are larger in terms of revenues, but not in terms of employees. Finally, we gauge their contribution to aggregate TFP growth, finding that TFP growth of frontier firms has intensified over time, as did the divide between firms at the top and the bottom of the TFP distribution. However, the market share of frontier firms only increased over time in the business services and transportation sectors; there is no increase, and in some cases, there is actually a decrease in other industries, notably in manufacturing. Hence, we do not find strong evidence of superstar firm effects, except in business services.

Keywords: productivity; firm dynamics; reallocation; market power. (search for similar items in EconPapers)
JEL-codes: D24 O47 L16 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff and nep-tid
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