Exit and Entry Dynamics of UK Firms in the Wake of the Global Financial Crisis

Florian Gerth, Chad M. Briggs and John Francis T. Diaz

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the dynamics of entering and exiting firms in determining the long-lasting drop in aggregate Total Factor Productivity (TFP) following the Great Recession in the UK. We decompose the growth rate of UK industry productivity over the 2006-2014 period into four components; the within, the between, the entry, and the exit effect employing the Diewert and Fox (2010) method using the FAME micro-level dataset. The main factor driving the aggregate TFP decline is the within effect, which is the productivity decline within surviving firms. However, the entry and exit effects also significantly contribute to the long-lasting drop in aggregate TFP. First, exiting firms tend to have higher than average TFP. Second, newly entering firms tend to have lower than average TFP. And third, newly entering firms fail to increase their TFP levels over time, thereby depressing the within effect.

Keywords: Great Recession; Firm Dynamics; United Kingdom; Total Factor Productivity; Credit Rationing (search for similar items in EconPapers)
JEL-codes: D24 E13 E32 (search for similar items in EconPapers)
Date: 2024-12, Revised 2025-01
New Economics Papers: this item is included in nep-eec, nep-eff, nep-ent and nep-sbm
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/123325/1/MPRA_paper_123325.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:123325

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().