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Productivity, Exit, and Crisis in the Manufacturing and Service Sectors
Author(s) -
Casacuberta Carlos,
Gandelman Néstor
Publication year - 2015
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/deve.12064
Subject(s) - recession , productivity , manufacturing sector , financial crisis , tertiary sector of the economy , business , service (business) , labour economics , economics , monetary economics , international economics , macroeconomics , marketing
Using micro data from the manufacturing and service sectors in U ruguay, we analyze the relationship between firm exit and firm productivity. We find that even during profound crisis years, when the financial sector collapsed, exit of firms is associated with lower productivity. This suggests that even in the presence of severe financial friction, cleansing effects dominate the scarring or sullying effect of recessions.