Italian Manufacturing Productivity, 1976–2016: Sectoral Reallocation Versus Firms’ Heterogeneity

Abstract Based on new datasets collecting financial statements and off-balance sheet data on a wide number of medium and large Italian enterprises between the 1970s and the 2010s, the work aims at contributing to the debate about the productivity growth gap that affected the Italian industry, as compared to other advanced economies, at the end of the last century. It also aims at understanding whether productivity gaps were mainly determined by differences among firms ( within-effect ) or by resources’ reallocation across industries ( between-effect ). What emerges from the long term analysis is a contraction of most productive sectors and a productivity slowdown affecting almost all industries. In the long run, the reallocation of resources across sectors has had a negative impact on productivity trends, preceding and somehow offsetting any positive contributions from the within-effect.