Jacob Edenhofer (@jacobedenhofer.bsky.social)

Declining business dynamism in Europe: The role of shocks, market power, and responsiveness Analysis of business dynamism outside the US has been limited by the availability of comparable cross-country data. This column presents new insights on the trends and drivers of business dynamism using a novel dataset for 19 European countries. Across all 19 countries, the authors document structural declines in job reallocation rates and employment shares in young firms. The decline in job reallocation can be rationalised by both declines in the responsiveness of labour demand to productivity shocks and lower dispersion of productivity innovations. A new decomposition suggests that the decline in responsiveness can be attributed mainly to lower sales growth and stronger markup increases. https://cepr.org/voxeu/columns/declining-business-dynamism-europe-role-shocks-market-power-and-responsiveness