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 language | English |
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Pages (from-to) | 53-78 |
Number of pages | 26 |
Journal | Journal of Economic Behavior and Organization |
Volume | 58 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2005 Sep 1 |
Keywords
- Enterprise census
- Entry and exit
- TFP
ASJC Scopus subject areas
- Economics and Econometrics
- Organizational Behavior and Human Resource Management