Reallocation of Tangible Assets and Productivity

Iichiro Uesugi, Kaoru Hosono, Daisuke Miyakawa, Arito Ono and Hirofumi Uchida

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We study the reallocation of land and other tangible assets across firms and examine its relationship with productivity. Focusing on Japanese firms during the period 1980-2014, which includes massive asset price fluctuations, we find the following. First, there exists no obvious cyclicality in the extent of land and other tangible asset reallocation. Instead, the reallocation of land has been sluggish for more than 20 years since the burst of the asset price bubble. Second, reallocation of land and non-land tangible assets is efficiency-reducing rather than efficiency-enhancing in that firms with high total factor productivity (TFP) reduced their holdings of these assets more than low TFP firms. Third, the relationship between reallocation and productivity has changed over time. Even though the reallocation of land was efficiency-enhancing around the end of the 1980s, it turned efficiency-reducing afterward.

Pages: 37 pages
Date: 2018-07
New Economics Papers: this item is included in nep-acc, nep-eff and nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:18048

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