Firm Entry and Exit and Aggregate GrowthJose Asturias, Sewon Hur, Timothy J. Kehoe, Kim J. Ruhl
NBER Working Paper No. 23202 Using data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to firm entry and exit during fast-growth episodes compared to slow-growth episodes. Studies of other countries confirm this empirical relationship. We develop a model of endogenous firm entry and exit based on Hopenhayn (1992). Firms enter with efficiencies drawn from a distribution whose mean grows over time. After entering, a firm’s efficiency grows with age. In the calibrated model, reducing entry costs or barriers to technology adoption generates the pattern we document in the data. Firm turnover is crucial for rapid productivity growth. You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.
Supplementary materials for this paper: Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): 10.3386/w23202 Users who downloaded this paper also downloaded* these:
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