Total factor productivity heterogeneity: channelling the impact of institutions

Mariarosaria Agostino, Annamaria Nifo (), Francesco Trivieri and Gaetano Vecchione ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper aims to contribute to the debate on the determinants of differentials in firms’ productivity. We test the hypothesis that macro factors, especially the quality of local institutions, play a role in explaining firm productivity in Italy. To this end, following Fӓre et al. (1994), we decompose the Malmquist index of total factor productivity (TFP) change for approximately 7,500 manufacturing small and medium-sized firms, and we proxy province-level institutional quality using the IQI index (Nifo and Vecchione, 2014). The results of our stimations suggest that better local institutions might help firms better combine inputs, approach the optimal size, and ultimately be more productive.

Keywords: TFP; Malmquist index; Institutional quality; Italian manufacturing SMEs (search for similar items in EconPapers)
JEL-codes: C31 C33 D24 L60 O43 O47 O50 R11 (search for similar items in EconPapers)
Date: 2016-05-01
New Economics Papers: this item is included in nep-cse, nep-eff and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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