This paper builds upon Bartelsman, Lopez-Garcia, and Presidente (2018) and provides empirical evidence on the cyclical features of labour reallocation in a sample of European Union (EU) countries over the Great Recession and the slow recovery. The analysis makes use of cross-country micro-aggregated data on firm dynamics and productivity from release 6 of the ECB CompNet database. While productivity-enhancing reallocation generally is counter-cyclical, with a stronger effect providing a silver lining in downturns, it was weaker during the Great Recession in the EU, but reverted back to more normal patters in the most recent years.
AglioD., ChristophoriM., van de KerkeJ.P., MarderF., SartoriM., SchrammV., TrofimenkovD. and Zona MattioliA., commented on by BräuerR., MertensM., di MauroF. and López-GarciaP., revised and approved by HaugP. (2018), User Guide for the 6th Vintage of the CompNet Dataset, The Competitiveness Research Network: available at www.comp-net.org.
2.
AltomonteC., BartelsmanE., van de KerkeJ.P., López-GarciaP., di MauroF., MelitzM., PolderM. and RouxS. (2018), Assessing the reliability of the CompNet micro-aggregated dataset for policy analysis and research: coverage, representativeness and cross-EU countries comparability, The Competitiveness Research Network: available at www.comp-net.org.
3.
BartelsmanE.J., GautierP.A. and De WindJ. (2016), ‘Employment protection, technology choice, and worker allocation’, International Economic Review, 57(3), pp. 787–826, https://doi.org/10.1111/iere.12176.
4.
BartelsmanE.J., HagstenE. and PolderM. (2018), ‘Micro moments database for cross-country analysis of ICT, innovation, and economic outcomes’, Journal of Economics and Management Strategy, http://dx.doi.org/10.1111/jems.12256.
5.
BartelsmanE.J., HaltiwangerJ.C. and ScarpettaS. (2013), ‘Cross-country differences in productivity: the role of allocation and selection’, American Economic Review, 103(1), pp. 305–34, http://dx.doi.org/10.1257/aer.103.1.305.
6.
BartelsmanE.J., Lopez-GarciaP. and PresidenteG. (2018), ‘Cyclical and structural variation in resource allocation: evidence for Europe’, ECB Working Paper No. 2210.
7.
BoeriT. and BrueckerH. (2011), ‘Short-time work benefits revisited: some lessons from the Great Recession’, Economic Policy, 26(68), pp. 697–765, https://doi.org/10.1111/j.1468-0327.2011.271.x.
8.
CaballeroR.J. and HammourM.L. (1994), ‘The cleansing effect of recessions’, The American Economic Review, 84(5), pp. 1350–68.
DeckerR., HaltiwangerJ., JarminR. and MirandaJ. (2014), ‘The role of entrepreneurship in US job creation and economic dynamism’, The Journal of Economic Perspectives, 28(3), pp. 3–24., https://doi.org/10.1257/jep.28.3.3.
12.
FernandezC. (2016), ‘Firm growth in Europe: an overview based on the CompNet labour module’, ECB Working Paper Series 2048.
13.
FosterL., GrimC. and HaltiwangerJ. (2016), ‘Reallocation in the Great Recession: cleansing or not?’, Journal of Labor Economics, 34(S1), S293–S331, https://doi.org/10.1086/682397.
14.
GopinathG., Kalemli-OzcanS., KarabarbounisL. and Villegas-SanchezC. (2017), ‘Capital allocation and productivity in South Europe, National Bureau of Economic Research, Working Paper No. 21453, retrieved from http://www.nber.org/papers/w21453.
15.
HopenhaynH.A. (1992), ‘Entry, exit, and firm dynamics in long run equilibrium’, Econometrica, 60(5), pp. 1127–50, https://doi.org/10.2307/2951541.
16.
HsiehC.-T. and KlenowP.J. (2009), ‘Misallocation and manufacturing TFP in China and India, The Quarterly Journal of Economics, 124(4), pp. 1403–48, https://doi.org/10.1162/qjec.2009.124.4.1403.
17.
HyattH.R. and SpletzerJ.R. (2013), ‘The recent decline in employment dynamics’, IZA Journal of Labor Economics, 2(1), pp. 1–21. https://doi.org/10.1186/2193-8997-2-5.
18.
JovanovicB. (1982), ‘Selection and the evolution of industry’, Econometrica, 50(3), pp. 649–70.
19.
KrusellP., MukoyamaT., RogersonR. and ŞahinA. (2017), ‘Gross worker flows over the business cycle’, American Economic Review, 107(11), pp. 3447–76, https://doi.org/10.1257/aer.20121662.
20.
Lopez-GarciaP. and di MauroF. (2015), ‘Assessing European competitiveness: the new CompNet micro-based database’, ECB Working Paper Series 1764.
21.
Lopez-GarciaP. (2018), ‘CompNet's 6th vintage of data: novelties and main stylised facts’, available at www.comp-net.org.
22.
MelitzM.J. (2003), ‘The impact of trade on intra-industry reallocations and aggregate industry productivity’, Econometrica, 71(6), pp. 1695–725, https://doi.org/10.1111/1468-0262.00467.
MortensenD.T. and PissaridesC. (1994), ‘Job creation and job destruction in the theory of unemployment’, Review of Economic Studies, 61(3(208)), pp. 397–416.
25.
RestucciaD. and RogersonR. (2008), ‘Policy distortions and aggregate productivity with heterogeneous establishments’, Review of Economic Dynamics, 11(4), pp. 707–20, https://doi.org/10.1016/j.red.2008.05.002.
26.
WooldridgeJ.M. (2009), ‘On estimating firm-level production functions using proxy variables to control for unobservables’, Economics Letters, 104(3), pp. 112–4, https://doi.org/10.1016/j.econlet.2009.04.026.
