Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s

Kiyohiko G. Nishimura, Takanobu Nakajima, Kozo Kiyota

Research output: Contribution to journal › Article

69 Citations (Scopus)

Abstract

This paper investigates whether the natural selection mechanism (NSM) of economic Darwinism works in severe recessions. Based on micro data, we constructed a comprehensive firm-level panel dataset for Japan from 1994 to 1998 to analyze a firm's entry, survival, and exit and its relationship with TFP. Empirical results show that efficient firms in terms of TFP exited while inefficient ones survived in the banking-crisis period of 1996-1997. Further, this phenomenon is observed mainly for new entrants and contributes substantially to a fall in macro TFP after 1996. These facts strongly suggest a malfunctioning of NSM in severe recessions.

Original languageEnglish
Pages (from-to)53-78
Number of pages26
JournalJournal of Economic Behavior and Organization
Volume58
Issue number1
DOIs
Publication statusPublished - 2005 Sep

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Japanese economy
Natural selection
Recession
Exit
Darwinism
Micro data
Empirical results
Economics
Firm entry
Banking crisis
Japan
New entrants

Keywords

  • Enterprise census
  • Entry and exit
  • TFP

ASJC Scopus subject areas

  • Organizational Behavior and Human Resource Management
  • Economics and Econometrics

Cite this

Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s. / Nishimura, Kiyohiko G.; Nakajima, Takanobu; Kiyota, Kozo.

In: Journal of Economic Behavior and Organization, Vol. 58, No. 1, 09.2005, p. 53-78.

Research output: Contribution to journal › Article

Nishimura, KG, Nakajima, T & Kiyota, K 2005, 'Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s', Journal of Economic Behavior and Organization, vol. 58, no. 1, pp. 53-78. https://doi.org/10.1016/j.jebo.2004.03.008
Nishimura KG, Nakajima T, Kiyota K. Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s. Journal of Economic Behavior and Organization. 2005 Sep;58(1):53-78. https://doi.org/10.1016/j.jebo.2004.03.008
Nishimura, Kiyohiko G. ; Nakajima, Takanobu ; Kiyota, Kozo. / Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s. In: Journal of Economic Behavior and Organization. 2005 ; Vol. 58, No. 1. pp. 53-78.
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