disaggregated sectors for each country. The classification into about 40 sectors (roughly the 2- digit level detail of ISIC Rev3) coincides with the OECD Structural Analysis (STAN) database.<sup>6</sup> The other set of indicators in the dataset concerns productivity and its components. The data sources used for the analysis of productivity differ from those used for firm demographics in many countries. For productivity measures, data are needed on output, employment and possibly other productive inputs such as intermediate materials and capital services. Using these source data, indicators are calculated on labor productivity by industry and year, and on the decomposition of productivity growth into within-firm and reallocation components (see below).

# **Box 1 Main indicators available in the firm-level database**

The use of annual data on firm dynamics implies a significant volatility in the resulting indicators. In order to limit the possible impact of measurement problems, it was decided to use definitions of continuing, entering and exiting firms on the basis of three (rather than the usual two) time periods. Thus, the tabulations of firm demographics contained the following variables:

**Entry** : The number of firms entering a given industry in a given year. Also tabulated, where available, was the number of employees in entering firms. Entrant firms (and their employees) were those observed as (out, in, in) the register in time (t – 1, t, t +1).

**Exit** : The number of firms that leave the register and the number of people employed in these firms. Exiting firms were those observed as (in, in, out) the register in time (t – 1, t, t +1).

**One-year firms** : The number of firms and employees in those firms that were present in the register for only one year. These firms were those observed as (out, in, out) the register in time (t – 1, t, t +1).

**Continuing firms** : The number of firms and employees that were in the register in a given year, as well as in the previous and subsequent year. These firms were observed as (in, in, in) the register in time (t – 1, t, t +1).

The above indicators were split into 8 firm-size classes including the class of firms without employees.<sup>7</sup> The data thus allow detailed comparisons of firm-size distributions between industries and countries.

**Firm survival:** available data allow to track entering firms over time, This allows to calculate survival probabilities over the initial life of firms and to assess their changes in employment over time.

**Decomposition of productivity growth:** The database includes different types of productivity decomposition for manufacturing industries and some service industries.  Depending on the availability of output and input measures, productivity data are available in the database with reference to labor productivity, multifactor productivity using either gross output or value added as the indicator of output (see Bartelsman et al. 2004 for more details).  In this paper, the analysis is limited to labor productivity, generally defined as deflated gross output per worker. Firm level nominal values of output are deflated at the industry level

6. See www.oecd.org/data/stan.htm

> 7. For the OECD countries there are only 6 groups, with the groups between 1 and 20 combined and the groups between 100 and 500 combined.

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