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Insolvency Regimes And Productivity Growth: A Framework For Analysis

Author

Listed:
  • Müge Adalet McGowan

    (OECD)

  • Dan Andrews

    (OECD)

Abstract
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. Régimes d'insolvabilité et croissance de la productivité : Un cadre d'analyse Ce document établit un cadre d'analyse devant permettre de répertorier les politiques publiques qui interviennent dans les sorties d'entreprises, ainsi que les voies par lesquelles ces politiques influent sur la croissance de la productivité globale. On y recense un éventail de dispositifs publics susceptibles de jouer un rôle à cet égard : régimes d'insolvabilité, réglementations relatives aux marchés de produits, aux marchés du travail et aux marchés de capitaux, mesures macroéconomiques, subventions, fiscalité et réglementation environnementale. Ces instruments de politique publique peuvent avoir un impact direct sur la productivité globale au seuil de sortie, par différents biais tels que la puissance de la sélection par le marché ou encore la rapidité avec lesquels des ressources rares utilisées par des entreprises en difficulté peuvent être réaffectées à des emplois plus productifs, et l’ampleur de ces réaffectations. Cependant, étant donné que les imperfections du marché produisent souvent des obstacles à une sortie en bon ordre des entreprises en difficulté, l'efficacité des régimes d'insolvabilité apparaît comme particulièrement cruciale. Dans ce document, les régimes d'insolvabilité des entreprises et des particuliers sont donc analysés sous trois angles : les objectifs qui leur sont assignés, leur conception optimale (arbitrages compris) et les principales caractéristiques permettant d’expliquer les disparités de productivité entre les pays. Enfin, le document propose une stratégie pour construire des indicateurs permettant de mieux rendre compte des différences nationales dans les éléments clés de la conception des régimes d'insolvabilité des entreprises et des particuliers, afin de faciliter de futures recherches sur les politiques publiques intéressant les sorties d'entreprises et la croissance de la productivité.

Suggested Citation

  • Müge Adalet McGowan & Dan Andrews, 2016. "Insolvency Regimes And Productivity Growth: A Framework For Analysis," OECD Economics Department Working Papers 1309, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1309-en
    DOI: 10.1787/5jlv2jqhxgq6-en
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    Citations

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    Cited by:

    1. Rauf Gönenç & Béatrice Guérard, 2017. "Austria’s digital transition: The diffusion challenge," OECD Economics Department Working Papers 1430, OECD Publishing.
    2. Dan Andrews & Filippos Petroulakis, 2017. "Breaking the Shackles: Zombie Firms, Weak Banks and Depressed Restructuring in Europe," OECD Economics Department Working Papers 1433, OECD Publishing.
    3. Bottasso, Anna & Conti, Maurizio & Sulis, Giovanni, 2017. "Firm dynamics and employment protection: Evidence from sectoral data," Labour Economics, Elsevier, vol. 48(C), pages 35-53.
    4. Balázs Égert, 2021. "Investment in OECD Countries: a Primer," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(2), pages 200-223, June.
    5. Chiara Criscuolo & Alexander Hijzen & Cyrille Schwellnus & Erling Barth & Wen-Hao Chen & Richard Fabling & Priscilla Fialho & Balazs Stadler & Richard Upward & Wouter Zwysen & Katarzyna Grabska-Romago, 2020. "Workforce composition, productivity and pay: the role of firms in wage inequality," OECD Economics Department Working Papers 1603, OECD Publishing.
    6. Igor Fedotenkov & Virmantas Kvedaras & Miguel Sanchez-Martinez, 2024. "Employment protection and labour productivity growth in the EU: skill-specific effects during and after the Great Recession," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 51(1), pages 209-262, February.
    7. Dan Andrews & Müge Adalet McGowan & Valentine Millot, 2017. "Confronting the zombies: Policies for productivity revival," OECD Economic Policy Papers 21, OECD Publishing.
    8. Panagiotis Barkas & Mauro Pisu, 2018. "Boosting investment in Greece," OECD Economics Department Working Papers 1506, OECD Publishing.
    9. Chao, Chi-Chur & Ee, Mong Shan, 2024. "Does unionization reduce wage inequality? New evidence from business dynamism," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 690-703.
    10. Müge Adalet McGowan & Dan Andrews & Valentine Millot, 2017. "Insolvency Regimes, Technology Diffusion and Productivity Growth: Evidence from Firms in OECD Countries," OECD Economics Department Working Papers 1425, OECD Publishing.
    11. Müge Adalet McGowan & Dan Andrews & Valentine Millot, 2017. "Insolvency regimes, zombie firms and capital reallocation," OECD Economics Department Working Papers 1399, OECD Publishing.
    12. Matteo Bugamelli & Francesca Lotti & Monica Amici & Emanuela Ciapanna & Fabrizio Colonna & Francesco D�Amuri & Silvia Giacomelli & Andrea Linarello & Francesco Manaresi & Giuliana Palumbo & Filippo , 2018. "Productivity growth in Italy: a tale of a slow-motion change," Questioni di Economia e Finanza (Occasional Papers) 422, Bank of Italy, Economic Research and International Relations Area.
    13. Randall Jones & Yosuke Jin, 2017. "Boosting productivity for inclusive growth in Japan," OECD Economics Department Working Papers 1414, OECD Publishing.
    14. Felicia Anikpe NAIMO & Sunday Oseiweh OGBEIDE, 2022. "Evidences and Determinants of Zombie Firms: Implication on Economic Growth," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 7(2), pages 141-158, June.
    15. Moritz Schularick, 2021. "Corporate indebtedness and macroeconomic stabilisation from a long-term perspective," ECONtribute Policy Brief Series 024, University of Bonn and University of Cologne, Germany.

    More about this item

    Keywords

    bankruptcy; faillite; institutions and growth; institutions et croissance; layoffs; licenciements;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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