Entry and productivity growth: Evidence from microlevel panel data

  • Aghion P
  • Blundell R
  • Howitt P
 et al. 
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How does entry affect productivity growth of incumbents? In this paper we exploit policy reforms in the UK that changed entry conditions by opening up the UK 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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