@article {197236,
	title = {Dynamic Olley-Pakes Productivity Decomposition with Entry and Exit},
	journal = {RAND Journal of Economics},
	volume = {46},
	number = {2},
	year = {2015},
	pages = {362-375},
	abstract = {In this paper, we propose an extension of the productivity decomposition method developed by Olley \&amp; Pakes (1996). This extension provides an accounting for the contributions of\&nbsp;both firm entry and exit to aggregate productivity changes. It breaks down the contribution of\&nbsp;surviving firms into a component accounting for changes in the firm-level distribution of productivity and another accounting for market share reallocations among those firms following the\&nbsp;same methodology as the one proposed by Olley \&amp; Pakes (1996). We argue that the other decompositions that break-down aggregate productivity changes into these same four components\&nbsp;introduce some biases in the measurement of the contributions of entry and exit.\&nbsp;We apply our proposed decomposition to the large measured increases of productivity in\&nbsp;Slovenian manufacturing during the 1995-2000 period and contrast our results with those of\&nbsp;other decompositions. We find that, over a 5-year period, the measurement bias associated with\&nbsp;entry and exit is substantial, accounting for up to 10 percentage points of aggregate productivity\&nbsp;growth. We also find that market share reallocations among surviving firms played a much more\&nbsp;important role in driving aggregate productivity changes.Keywords: Productivity Decomposition, Industry ProductivityJEL Classication Numbers: C10, O47
},
	url = {http://dx.doi.org/10.1111/1756-2171.12088},
	author = {Marc Melitz and Saso Polanec}
}
