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Economics in a picture

Economics in a picture

New firms converge to the level of productivity of the incumbents


New firms converge to the median level of productivity of the incumbents


The median of the younger firms converges to the level of labour productivity of the corresponding incumbent company. The most productive among the newcomers eventually outperform the best firms that were already in the market. The companies that did not survive over the past decade were less productive, suggesting a selection process of the best performing firms.

An analysis encompassing all firms shows that the productivity profile in the different sectors has remained approximately unchanged in the past ten years. However, there has been some inter-sectorial reallocation, with firms entering the most productive sectors.


For more details see the Special Issue: “Labour productivity in Portugal in the past decade: a firm-level approach”, published in the Economic Bulletin of Banco de Portugal, May 2019.

Prepared by Ana Fontoura Gouveia, Ana Catarina Pimenta and Manuel Coutinho Pereira. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.


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