Innovation and Product Reallocation in the Great Recession
Munseob Lee and
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Sara Moreira: Northwestern University
Munseob Lee: University of Chicago
David Argente: University of Chicago
No 1614, 2017 Meeting Papers from Society for Economic Dynamics
We exploit detailed product- and firm-level data to study the sources of innovation and the patterns of productivity growth in the consumer goods sector over the period 2006-2014. Using a dataset that contains information on the product portfolio of each firm and the characteristics of each product, we document new facts on product reallocation. First, we find that reallocation of products happens within the boundaries of the firm, but the largest changes in product quality come from new firms launching new varieties and from small firms expanding to other product lines. Second, we document that product reallocation within and between firms are procyclical and that product reallocation within firms was more affected than product reallocation between firms during the great recession. Finally, we quantify the extent to which product reallocation affects firm-level productivity growth and and innovation as reflected by changes in their total factor productivity. Our preliminary findings suggest that within-firm product reallocation contributes substantially to the growth in innovation across all sectors.
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1614
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