Sources of Labor Productivity Growth in the German Brewing Industry

We decompose aggregate industry labor productivity growth into seven distinct components: input deepening, technical change, technical efficiency, scale effect, between-firm reallocation, effects from exits and entry. The first four components measure the productivity growth within a firm. The latter three components capture industry dynamics. Applied to a sample of 118 small and medium sized breweries in Germany over 13 years, we found that within-firm effects, in particular technical change and the scale effect, clearly dominated the effects from industry restructuring.