Using micro-data of the Kogyo Tokei Chosa (Census of Manufactures), which is conducted annually by the Ministry of Economy, Trade and Industry (METI), we examine the relationship between entry and exit patterns, and labor productivity growth in Japanese manufacturing industries. The major findings are the following. We found that the slowdown in Japan's productivity growth was primarily due to the decline of the within effect, but the decline of the entry effect also made a great contribution to the slowdown of labor productivity growth. We also found that the drop of entry rates in 1990s made a contribution to not only the decline of entry effect but also the decline of within effect. Furthermore, we found that the competitive pressures by the entry of new plants have significantly positive effect on productivity growth of incumbents, whereas learning effects show a negative effect on growth of incumbents.
