Distant but Close in Sight: Firm‐level Evidence on French–German Productivity Gaps in Manufacturing

Abstract

W e study the productivity level distributions of manufacturing firms in France and Germany, and how these distributions evolved across the Great Recession. W e show the presence of a systematic productivity advantage of German firms over French ones in the decade 2003-2013, but the gap has narrowed down after the Great Recession. Convergence is explained by the better growth performance of French firms in the post-recession period, especially of those located in the top percentiles of the productivity distribution. W e also highlight the role of sectoral growth, firm size and export intensity in explaining the above convergence. In contrast, the contribution of allocative efficiency was small.