Policies aimed at enhancing firm productivity may greatly benefit from firm-level evidence. Unfortunately, micro-founded data, particularly of cross-country nature, remain largely unavailable. This column presents a new firm-level database built by a research network of the EU system of central banks (CompNet). This data base allows investigating how firm size and labour costs interact at different levels of productivity. This new cross-country data base, and its potential to expand, could be of great policy value.
Growth in Russia comes from few natural-resource-linked sectors and to a few firms; the economy is currently less diversified than it was during the Soviet times. This column presents evidence that the emergence of new firms is not the binding constraint on diversification: it is the poor survival odds of new firms, created by long, deep Russian economic slumps. More competition would help to drive out less efficient, older firms, and create space for young and efficient ones to survive and thrive.
Switching costs impede competition by making it costly for consumers to switch among products. This column studies the Chilean retirement investment market in order to identify the different causes of switching costs. The results indicate that most of consumer inertia is explained by the cost of analysing product information. This suggests that policymakers concerned about switching costs should focus their efforts on improving consumers’ access to information in order to minimise price distortions and increase consumer welfare.
The presumed success of Japanese post-war industrial policy has been used to advocate similar policies in other countries. Key to such arguments then is the empirical demonstration of the policies’ effects. This column presents research making use of a novel dataset that allows controlling for industry heterogeneity across many disaggregated industries. The effects of the quota removal on productivity were significantly positive, while the effects of tariffs on labour productivity were insignificant.
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