Productivity Dynamics during Major Crises in Japan: A Quantile Approach

This paper presents a new approach to estimating changes in firm productivity. Particular focus is placed on how productivity changed before, during, and after recessions accompanied by crises, using micro data on Japanese manufacturing firms. We depart from the traditional method of comparing (weighted) average productivity before and after a crisis and apply the quantile approach, which estimates the changes in the productivity distribution of surviving firms. The main results indicate that crises have different impacts on firms with different initial productivity levels. First, when productivity improves the industry as a whole, productivity growth is relatively high for firms with lower productivity. Second, in the event of major crises, the productivity decline is more pronounced for firms with lower productivity, whereas the impact on firms with higher productivity is relatively small. Finally, the productivity level required to survive in the market did not rise at the times of crisis and therefore we did not find that firms with low productivity were particularly forced to withdraw from the market.

Published: Adachi, Yusuke, Hikaru Ogawa, and Masafumi Tsubuku, 2022. "Measuring productivity dynamics in Japan: A quantile approach," Empirical Economics, Volume 63, Issue 1 (2022), 201-242.
https://doi.org/10.1007/s00181-021-02136-x