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The Role of Nonemployers in Business Dynamism and Aggregate Productivity

Pedro Bento and Diego Restuccia

No 25998, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The well-documented decline in business dynamism, measured by the net entry rate of employer firms, has been proposed as an explanation for the productivity growth slowdown in the United States. We assess the role of nonemployers, firms without paid employees, in business dynamism and aggregate productivity. Including nonemployers, the total number of firms has instead increased since the early 1980s, which in the context of a standard model of firm dynamics implies an annualized growth of measured aggregate productivity of 0.22%, one-quarter of the productivity growth in the data. Further accounting for time changes in the share of nonemployer firms and in the distribution of employment across firms, we find that productivity growth is even higher (0.47% per year). The productivity growth slowdown is not due to changes in net firm entry.

JEL-codes: E02 E1 O1 O4 O51 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ent, nep-mac and nep-sbm
Note: DEV EFG PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: The Role of Nonemployers in Business Dynamism and Aggregate Productivity (2022) Downloads
Working Paper: The Role of Nonemployers in Business Dynamism and Aggregate Productivity (2021) Downloads
Working Paper: The Role of Nonemployers in Business Dynamism and Aggregate Productivity (2020) Downloads
Working Paper: The Role of Nonemployers in Business Dynamism and Aggregate Productivity (2019) Downloads
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