removed from the database after at least five years of non-reporting.<sup>22</sup> It is therefore impossible to distinguish between firms that exit the dataset due to failure or for some other reason, such as employment reduction or merger. The analysis is therefore focused on a balanced sample of surviving firms—firms present for the entire date range. We note that this precludes productivity growth due to firm entry and exit and could imply that the sample firms are likely to be more productive than the population average because firms too unproductive to survive drop out.

Table 1 shows the final samples’ compositions and compares their derived aggregate labor productivity growth rates with those derived from Eurostat for 2003–2007, the years for which Eurostat and Amadeus overlap. Evidence suggests that the samples mirror productivity trends at the macro level, lending credence to the use of micro data to explain macroeconomic growth.<sup>23</sup>

**Table 1 Aggregate Annual Productivity Growth, 2002–2007: Amadeus and Eurostat**

|||**Sample**|**1(10+ empl**|**oyees)**<br>**Serv**|**ices**||**Sample**|**2(50+ empl**|**oyees)**<br>**Serv**|**ices**|
|---|---|---|---|---|---|---|---|---|---|---|
||**Obs**|**Manufa**|**cturing**|**(w/o cons**|**truction)**|**Obs**|**Manufa**|**cturing**|**(w/o cons**|**truction)**|
|**EU12**||**Amadeus**|**Eurostat**|**Amadeus**|**Eurostat**||**Amadeus**|**Eurostat**|**Amadeus**|**Eurostat**|
|Bulgaria<br>|-|-|12.81%|-|9.75%|256|9.20%|13.66%|8.10%|8.18%|
|Czech|||||||||||
|Rep.|2,410|6.00%|8.22%|6.20%|5.65%|532|6.80%|8.42%|7.30%|5.71%|
|Estonia|561|9.10%|10.76%|8.70%|6.41%|85|6.80%|10.47%|6.50%|3.70%|
|Poland|3,811|3.20%|1.14%|7.20%|4.28%|1,267|1.20%|0.37%|2.10%|3.75%|
|Romania<br>Slovak|4,249|5.90%|7.47%|2.80%|4.84%|853|5.30%|8.44%|5.50%|5.03%|
|Rep.|-|-|9.60%|-|1.66%|196|8.40%|9.87%|15.30%|1.28%|
|Slovenia|526|5.70%|10.49%|2.80%|6.34%|104|6.40%|10.04%|5.60%|1.26%|
|**EU15**|||||||||||
|Belgium|2,485|1.60%|2.89%|0.80%|0.54%|366|2.70%|3.46%|1.50%|0.40%|
|Finland|1,036|11.10%|7.03%|4.80%|2.92%|147|4.30%|7.02%|9.80%|2.78%|
|France|15,029|4.40%|3.89%|2.60%|1.10%|2,322|3.70%|3.77%|4.80%|0.41%|
|Germany|-|-|3.38%|-|0.99%|2,733|2.50%|3.67%|2.20%|1.58%|
|Great|||||||||||
|Britain|-|-|3.61%|-|3.21%|2,408|3.00%|3.76%|1.20%|3.68%|
|Italy|17,143|2.40%|1.92%|1.90%|0.73%|1,788|1.10%|1.99%|-0.70%|-0.12%|
|Norway|1,523|-6.60%|-3.90%|5.60%|7.10%|189|2.20%|4.70%|-4.40%|-3.80%|
|Portugal|-|-|2.85%|-|-0.80%|493|2.70%|3.53%|-2.20%|-2.54%|
|Spain|16,850|1.50%|1.48%|0.90%|0.14%|1,884|1.10%|1.15%|-1.30%|-0.08%|
|Sweden|2,436|4.30%|6.03%|2.10%|1.72%|383|4.40%|6.48%|2.50%|1.74%|
|**Total**|68,059|||||16,006|||||

World Bank staff calculations based on Eurostat _and Amadeus_ _Note_ : Aggregate figures from Amadeus for each country are computed defining labor productivity as total valueadded divided by total number of employees.

22 Firms that stop reporting their financial statements are represented as "not available/missing" for four years following the last available filing.

23 Appendix II shows the kernel density estimations of annualized growth of labor productivity (2003–2008) for each sample for two regional cuts: EU15 and EU12. Both estimations use the Epanechnikov kernel function with a bandwidth of 0.5. Appendix III presents the corresponding firm-level summary statistics. For both samples, the distribution for EU12 firms is higher than for EU15, suggesting that EU12 firms realized greater productivity growth. A Kolmogorov-Smirnov test for equality of distribution functions rejects the null hypothesis at the 1 percent.

7