Sadun, Raffaella
(2008)
Productivity dynamics of the UK economy: a micro data perspective.
PhD thesis, London School of Economics and Political Science.
Abstract
This dissertation analyzes two factors which may lie behind the recent productivity surge in the US, the lack of productivity growth in Europe and, ultimately, the persistence of significative differences in the levels of productivity across the two macro areas. First, we analyse the role played by Information Technologies (IT). Second, we study the impact of specific regulatory policies, focusing on the consequences of regulations which constrain the entry of large and peripheral retail stores ("big-boxes"). These issues are explored in the context of the UK economy, whose recent economic performance is consistent with the overall European picture of sluggish productivity growth (Basu et al., 2003). Furthermore, the questions are approached from a micro data perspective, using a series of novel establishment and firm-level datasets drawn from Census data sources. In the first two essays I focus on the role played by Information Technologies (IT), which appear to have played a substantial role in driving the recent productivity surge of the US economy. Chapter I sets out a theoretical and empirical context in which to study the impact of IT on productivity. Chapter II discusses the effects of IT on a large panel of firms active in the UK economy, observed between 1995 and 2003. A key finding of the study is the apparent ability of US multinationals to obtain higher productivity than non-US multinationals (and domestic UK establishments) from their IT capital. Chapter III, IV and V are dedicated to the study of the retail industry, which accounts for a large part of the European productivity gap vis a vis the US over the past decade. In particular, we study the effect of entry regulations against large retail stores ("big-boxes"). In Chapter III, it is shown that the recent introduction of entry regulations against large stores in the UK has paradoxically increased the competition faced by mom and pops retailers. Chapter IV show evidence that entry regulations have also significantly lowered the productivity of UK retail chains, forcing them to operate at a lower scale of retail activity. This result is set in an international context in Chapter V, where the market structure and the productivity dynamics of the UK retail industry with that of the US and Japan are compared using novel Census data sources.
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