December 1, 1999

Firm turnover in Dutch business services: the effect on labour productivity

Lage productiviteit nieuwe bedrijven in zakelijke dienstverlening

Press release
De groei van de arbeidsproductiviteit liep in de Nederlandse commerciële dienstensector terug van gemiddeld 1,5% per jaar in de tweede helft van de jaren tachtig tot 0,25% in de eerste helft van de jaren negentig. Bovendien bleef deze groei achter bij de stijging in andere landen.

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Using a unique firm-level data set of Dutch business services, this research memorandum analyses the effect of firm turnover for labour productivity growth. Special attention is given to the contribution of entering and exiting firms to productivity growth.

 The study shows that entering firms are less productive than incumbents. Remarkably, entering firms are equally as productive as exiting firms. Since many new firms entered the market of business services in the period investigated, aggregate productivity growth did not improve. Moreover, incumbents' productivity on average hardly changed over time, though a wide dispersion in firm productivity growth rates exists.


Henry van der Wiel

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