Policy Seminar: Business churn, sectoral performance, and economic policy

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Erik Canton (ECFIN)

Discussant: Henk Kox (CPB)

Language: Dutch

Registration: Please register by sending an email to polinars@cpb.nl.

Abstract subject:
In this introductory chapter to the Product Market Review we analyse the extent to which productive resources are efficiently allocated within EU industries. We focus on the role of business dynamics ‒ capturing the extent to which workers move from low- to high-productive jobs ‒ in this process. The indicator for allocative efficiency computed in this chapter measures the extent to which the most productive firms capture the largest share of the market. In general we find higher allocative efficiency in tradeables compared with non-tradeables, though cross-country and time variation remains substantial. The empirical findings suggest that part of the variation is explained by differences in firm size at birth and death. Sectors in which new-born firms are operating closer to their most efficient scale tend to exhibit higher allocative efficiency.

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