OECD Productivity Working Papers

The OECD Productivity Papers are associated with the Global Forum on Productivity that provides a forum for mutual exchange of information and fosters international co-operation between public bodies with responsibility for promoting productivity-enhancing policies, including in undertaking joint policy analysis. It offers a platform for exchanging views, experiences and information, institutional and governance arrangements and government structures, with a view towards developing better policies. The Forum extends existing work in the OECD through a well-prioritised and coherent stream of analytical work serving the policy research needs of participants on the drivers of productivity growth.


Product markets’ deregulation: a more productive, more efficient and more resilient economy?

This paper assesses the impact of product market deregulation in upstream sectors on the productivity

growth of firms in downstream sectors (i.e. those firms using the output of the reformed sectors as inputs in

their production process). Relying on a firm level database for the period 2004-2014 covering all

Portuguese firms, we show that reforms bring productivity gains already in the short-run and that are

sustained in the long-run. The effects are more positive for those further away from the technological

frontier and are also heterogeneous across sectors. In addition, reforms potentiate the exit of the least

productive firms, improving the resource allocation in the economy by a process of selection – for the least

productive, only those that have scope to catch-up with the frontier are able to remain. Finally, we show

that the adoption of product market reforms in upstream sectors leads to a more resilient economy, better

equipped to face adverse shocks.


Keywords: Total Factor Productivity, Resilience, Exit Rates, Growth, Resource Allocation, Product Markets, Structural Reforms
JEL: D22: Microeconomics / Production and Organizations / Firm Behavior: Empirical Analysis; L43: Industrial Organization / Antitrust Issues and Policies / Legal Monopolies and Regulation or Deregulation; D04: Microeconomics / General / Microeconomic Policy: Formulation, Implementation, and Evaluation; L51: Industrial Organization / Regulation and Industrial Policy / Economics of Regulation
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