Firm heterogeneity in productivity across Europe. What explains what?

Francesco Aiello () and Fernanda Ricotta

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyses the TFP heterogeneity of a sample of manufacturing firms operating in seven EU countries (Austria, France, Germany, Hungary, Italy, Spain and UK). TFP data refer to 2008. The empirical setting is based on the multilevel modelling which provides two main results. Firstly, we show that TFP heterogeneity is largely due to firm-specific features (85% of TFP variability in the empty-model). Interestingly, we find that some key-drivers of TFP (size, family-management, group membership, innovations and human capital) influence heterogeneity in productivity with the expect sign, but do not, on the whole, absorb much of firm-TFP variance, implying that differences in productivity are due to sizable yet unobservable firm characteristics. Secondly, as far the role of localization is concerned, we demonstrate that country-effect is more influential than region-effect in explaining individual productivity. Net of the country-effect, the localisation in different European regions explains about 5% of TFP firm heterogeneity. When considering the case of three individual countries (France, Italy and Spain), location in different regions explains 5.3% of TFP heterogeneity in Italy, while this proportion is lower (3.6%) in France and higher (9.9%) in Spain.

Keywords: TFP heterogeneity; firm-behavior; localization; European countries; multilevel model (search for similar items in EconPapers)
JEL-codes: C30 D22 D24 L60 R11 R15 (search for similar items in EconPapers)
Date: 2014-05-26, Revised 2015-03-25
New Economics Papers: this item is included in nep-bec, nep-eff, nep-eur and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/63234/8/MPRA_paper_63234.pdf original version (application/pdf)

Related works:
Working Paper: FIRM HETEROGENEITY IN PRODUCTIVITY ACROSS EUROPE. WHAT EXPLAINS WHAT? (2014)
Working Paper: Firm heterogeneity in productivity across Europe. What explains what? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:63234

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