Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228210
Authors: 
Anderton, Bob
Di Lupidio, Benedetta
Jarmulska, Barbara
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper No. 2332
Abstract: 
Productivity performance in European countries has been a policy concern for some time. This paper shows that productivity can be enhanced by product market policies which, by increasing competition and efficiency, facilitate higher rates of firms' entry and exit (i.e., firm churning). Drawing on annual country-sector data for the period 2000-2014 across the EU countries, we find that: (i) competition-enhancing regulation is associated with a higher rate of firm churning; (ii) business churning, in turn, appears to be positively related to higher total factor productivity at the sector level by facilitating the entry of new competitive firms and the exit of less productive ones. Overall, we conclude that stringent product market regulation can be indirectly associated, via its impact on business dynamism, with the somewhat weak productivity performance in a number of EU countries. Thus, our results point towards significant productivity gains that could follow from the introduction of further competition-enhancing measures in product markets.
Subjects: 
Regulation
Product Market
Creative Destruction
Total Factor Productivity
Growth
JEL: 
L51
P23
D21
D24
O40
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3901-0
Document Type: 
Working Paper

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