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Type: Journal Articles ISSN: 1542-4766
Published in: Journal of the European Economic Association
Volume, issue, pages: Vol. 2, No. 2-3, pp. 265-276
How does entry affect productivity growth of incumbents? In this paper we exploit policy reforms in the United Kingdom that changed entry conditions by opening up the U.K. economy during the 1980s and panel data on British establishments to shed light on this question. We show that more entry, measured by a higher share of industry employment in foreign firms, has led to faster total factor productivity growth of domestic incumbent firms and thus to faster aggregate productivity growth.
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