Abstract #301061


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JSM 2002 Abstract #301061
Activity Number: 205
Type: Topic Contributed
Date/Time: Tuesday, August 13, 2002 : 10:30 AM to 12:20 PM
Sponsor: Business & Economics Statistics Section*
Abstract - #301061
Title: The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade.
Author(s): Lucia Foster*+ and John Haltiwanger and C.J. Krizan
Affiliation(s): U.S. Census Bureau and University of Maryland and Bank of Spain
Address: , , , ,
Keywords: productivity ; microdata
Abstract:

The literature seeking to understand the connection between microeconomic and aggregate productivity dynamics has relied heavily on evidence from the manufacturing sector; in this paper, we extend the scope of this literature by examining this connection using data from the retail trade sector. The retail trade sector is especially interesting since it has been undergoing fundamental structural changes in the last decade or so related to the information technology revolution. A key exercise in our analysis is the decomposition of aggregate productivity into within-establishment effects and reallocation effects. We find that continuing establishments exhibit virtually no productivity growth over the 1990s but that aggregate productivity growth for retail trade is robust. This apparent paradox is resolved by the finding that virtually all of the increase in productivity in retail trade is accounted for by more productive entering establishments displacing less productive exiting establishments. In exploring the dominant role of net entry, we find that both selection and learning effects play a large role in the productivity dynamics of an entering cohort of businesses.


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