OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Insolvency Regimes And Productivity Growth
A Framework For Analysis
This paper develops an analytical framework to identify the policies relevant for firm exit and the channels through which they shape aggregate productivity growth. A range of potentially relevant policies are identified, spanning insolvency regimes, regulations affecting product, labour and financial markets, macroeconomic policies, subsidies, taxation and environment regulations. These policies can directly shape aggregate productivity along the exit margin through a variety of channels, including the strength of market selection and the scope and speed at which scarce resources consumed by failing firms can be reallocated to more productive uses. However, since market imperfections often generate obstacles to the orderly exit of failing firms, the efficiency of insolvency regimes emerges as particularly crucial. Thus, the paper analyses corporate and personal insolvency regimes in terms of their goals, optimal design (including trade-offs) and key features relevant for explaining cross-country differences in productivity. Finally, the paper proposes a strategy to obtain policy indicators that better capture cross-country differences in the key design features of corporate and personal insolvency regimes, with a view to facilitate further research on exit policies and productivity growth.
Keywords: layoffs, bankruptcy, institutions and growth
JEL:
K35: Law and Economics / Other Substantive Areas of Law / Personal Bankruptcy Law;
J63: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Labor Turnover; Vacancies; Layoffs;
O40: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Economic Growth and Aggregate Productivity: General;
O47: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence;
O43: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Institutions and Growth
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