According to the `cleansing hypothesis', recessions are periods in which productivity-enhancing reallocation intensifies, shifting resources away from less efficient to more efficient firms at a greater pace. Does the Great Recession of 2008-2010 fit this view? We address this question, studying the case of the French manufacturing sector. Based on a panel of firms, built by matching data from several sources, we investigate the contribution of productivity to firm growth and survival over the period 2002-2013. Our results show that, during the recent global crisis, more productive firms decreased their advantage with respect to less productive firms, in terms of both employment growth and probability to survive, in disagreement with the cleansing hypothesis.

Additional Metadata
Keywords firm productivity, selection, employment growth, global crisis
JEL Firm Behavior: Empirical Analysis (jel D22), Production; Capital and Total Factor Productivity; Capacity (jel D24), Firm Objectives, Organization, and Behavior: General (jel L20), Firm Performance: Size, Age, Profit, and Sales (jel L25)
ISBN 2284-0400
Persistent URL hdl.handle.net/1765/117521
Series LEM Working Paper Series
Citation
Domini, G., & Moschella, D. (2018). Reallocation and productivity during the Great Recession: evidence from French manufacturing firms. LEM Working Paper Series. Retrieved from http://hdl.handle.net/1765/117521