Research Paper: What is behind aggregate productivity growth in Ireland? A granular approach

Research paper prepared by an IGEES senior economist working in the Enterprise Strategy, Competitiveness and Evaluation Division of the Department of Business, Enterprise and Innovation (DBEI). The views presented in this document are those of the author and do not necessarily represent the official views of this Department.

This research paper is aimed to test the “granular hypothesis” (Gabaix 2011) in Ireland. Empirical findings, based on ABSEI and CSO data, confirm that productivity shocks to the 5 largest firms in Ireland account for a large fraction (about one-third) of aggregate productivity growth over the 2000-2016 period. These results shed light on the origins of Irish productivity fluctuations, the consequences of economic concentration on resilience and the importance of diversification policies aimed at broadening Ireland’s enterprise base of productive firms.

Published by Enterprise Strategy, Competitiveness and Evaluation

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