International trade, non-trading firms and their impact on labour productivity

Millard, S; Nicolae, A.; Nower, M.

Abstract

In this paper we examine the impact of non-trading firms on labour productivity and its persistence in response to macroeconomic shocks, through their entry and exit into the domestic market, in a model with monopolistic competition and heterogeneous firms. We quantify the effects of various macroeconomic shocks on labour productivity and we demonstrate that non-trading domestic firms’ entry and exit into the domestic market explains the persistence of labour productivity in response to transitory shocks. We also show that the model successfully replicates the sluggish recovery of labour productivity in the United Kingdom since the Great Recession.

Citation

Millard, S., Nicolae, A., & Nower, M. International trade, non-trading firms and their impact on labour productivity

• Working Paper Type: Working Paper
• Acceptance Date: Apr 15, 2019
• Online Publication Date: Apr 15, 2019
• Publication Date: Apr 15, 2019
• Deposit Date: May 1, 2019
• Publicly Available Date: May 7, 2019
• Series Title: Bank of England working paper
• Public URL: https://durham-repository.worktribe.com/output/1168808
• Publisher URL: https://www.bankofengland.co.uk/working-paper/2019/international-trade-non-trading-firms-and-their-impact-on-labour-productivity