TY - JOUR
T1 - Does the natural selection mechanism still work in severe recessions?
T2 - Examination of the Japanese economy in the 1990s
AU - Nishimura, Kiyohiko G.
AU - Nakajima, Takanobu
AU - Kiyota, Kozo
PY - 2005/9/1
Y1 - 2005/9/1
N2 - 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.
AB - 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.
KW - Enterprise census
KW - Entry and exit
KW - TFP
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U2 - 10.1016/j.jebo.2004.03.008
DO - 10.1016/j.jebo.2004.03.008
M3 - Article
AN - SCOPUS:26044466753
VL - 58
SP - 53
EP - 78
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
SN - 0167-2681
IS - 1
ER -