Firm turnover and productivity growth in Italian manufacturing

In this paper labor productivity (LP) growth in Italian mechanical and textile sectors since 1998 to 2004 has been analyzed. The results put in evidence different aspects of these sectors. 1) In both industries turnover caused the considerable loss of LP: entrants are based on more capital saving processes probably exploiting the lower cost of labor in Italian economy in the last years, given to new labor market laws. Survivor evidenced a different behavior in the two industry. Their productivity decreased in the textile industry and increased in the mechanical industry. 2) Transition matrices reveal a considerable persistence in the level of LP. A percentage of firms which goes from 15% to 42% maintains the same level of productivity in 2004 with respect to 1998. Furthermore, low productivity companies are more likely to exit and entrants are concentrated in the lowest productivity classes. The comparison between lower and upper triangular part of the matrices confirm the difference between survivors of the two industries.