Globalisation, ICT and the Nitty Gritty of Plant Level Datasets

The net entry contribution to aggregate productivity growth has increased dramatically in the UK over 1990saccording to calculations based on data from the Annual Respondents Database (ARD). Some recent studieshave tried to link this to other structural changes over the same period such as increased globalisation and usageof ICT. I argue that the increase might equally have been caused by a systematic bias that is introduced togrowth decompositions through random survey sampling of the underlying plant or firm panel datasets. Thisbias - despite being a general problem of growth decompositions does not seem to have been noticed in theliterature yet. In the 1990s the Office for National Statistics (ONS) has successively increased the share of plantsin the population of the ARD that are subject to random sampling. I show that this could cause the bias tospuriously increase the net entry contribution. My results show that correcting for the bias makes a substantialdifference: the net entry contribution is about 10 percentage points lower on the corrected series in the 1990s.Surprisingly however, the positive correlation between ICT and net entry share - a main result of earlier studies- becomes more significant.