Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/270484 
Year of Publication: 
2022
Series/Report no.: 
ETLA Report No. 126
Publisher: 
The Research Institute of the Finnish Economy (ETLA), Helsinki
Abstract: 
The contributions of entry and exit of firms to aggregate productivity growth are well-established in the literature. However, the impact of industry switching of firms on productivity remains overlooked. The purpose of this report is to shed new light on the role of industry switching as a form of structural change. The results show that industry switching is very common and occurs in all industries in Finland, especially during the times of recession. Industry switching has had both positive and negative contributions to aggregate productivity in different periods. Intra-industry switching had mainly negative impact on productivity growth suggesting that switching was taken as a strategy to survive. On the other hand, inter-industry switching had mainly positive impact on productivity growth, suggesting that switching was associated with new products and technologies. The study also looked at the structural developments of industries relevant for combating climate change. As emission reduction targets require companies to renew their product and service offerings, climate policy can help guide companies to switch industries. However, in the industries examined in the study, restructuring has so far taken place mainly through entry and exit.
Subjects: 
Industrial structure
Industry switching
Labor productivity
Productivity decompositions
JEL: 
C81
D22
L16
Document Type: 
Research Report

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