A substantial share of firm entries and exits observed in administrative data occur through mergers, acquisitions, and other forms of corporate restructuring rather than genuine market entry or exit. This report examines the association of labor productivity and corporate restructuring. We utilize register-based data of worker flows to develop a more granular distinction of genuine entries and exits from restructuring-related events. Our results demonstrate that the average labor productivity of acquiring firms drops on average 23 percent immediately after the acquisition, or even 30 percent in the manufacturing industries. In addition, we find that restructuring entry and exit of firms does not follow the conventional pattern of creative destruction. To support productivity enhancing structural change, it is essential to distinguish between genuinely new economic activity and the reorganization of existing activity.
