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The impact of new varieties on aggregate productivity growth

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  • Thomas von Brasch
  • Arvid Raknerud

Abstract

Although there is an extensive body of literature on aggregate productivity growth, reallocation, and firm turnover, the contribution to overall productivity growth from new firms that produce new varieties is not well understood. In this paper, we propose a framework for aggregating productivity that identifies the contribution from new firms that produce new varieties. Our framework generalizes the frameworks currently used in the literature. To illustrate the decomposition, we analyse the case of firm turnover in Norway. We find that the net creation of new varieties due to firm turnover contributes about half a percentage point to annual aggregate labour productivity growth in the manufacturing sector.

Suggested Citation

  • Thomas von Brasch & Arvid Raknerud, 2022. "The impact of new varieties on aggregate productivity growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(3), pages 646-676, July.
    • Handle: RePEc:bla:scandj:v:124:y:2022:i:3:p:646-676
    DOI: 10.1111/sjoe.12464
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    References listed on IDEAS

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