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on Efficiency and Productivity |
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Issue of 2006‒03‒18
three papers chosen by |
| By: | Nicholas Fawcett; Gavin Cameron |
| Abstract: | What are the sources of productivity growth? Economic theory offers a panoply of explanations, considering the effects on productivity of organisational factors, research and development activity and factor accumulation, amongst other influences. Translating these theoretical models into workable empirical vehicles is the focus of a large literature. This paper evaluates the empirical literature on productivity performance using the productivity framework conceived by HM Treasury, emphasising Five Drivers - physical capital skills, innovation, competition and enterprise. The paper emphasises the two factors are frequently overlooked: first, the effect of international openness on productivity catch-up, and secondly, the policy importance of divergences between private and social rates of return. Further, whilst evidence relating to the first four drivers is relatively abundant, evidence on the effect of enterprise is scarce. |
| Keywords: | Productivity, Growth, Technological Change, Five Drivers |
| JEL: | O30 O40 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:252&r=eff |
| By: | Mark Rogers |
| Abstract: | The UK`s business R&D (BERD) to GDP ratio is low compared to other leading economies, and the ratio has slowly declined over the 1990s. This paper uses data on large UK firms to analyse the link between R&D and productivity over the 1989-2000 period. Using a production function approach, and a sample of up to 719 firms, various different samples and estimators are used to assess the elasticity of, and rate of return to, R&D. The results indicate that UK returns to R&D are similar to returns in other leading economies. Furthermore, the returns to R&D have been relatively stable over the 1990s. There is no evidence to suggest that stock market listed firms, or firms with higher past profitability, have significantly different returns. Overall, the results suggest that the low BERD to GDP ratio in the UK is unlikely to be due to direct financial or human capital constraints (as these imply finding relatively high rates of return). Instead, the low BERD to GDP ratio appears to reflect low (perceived) opportunities by firms and the inability of firms to manage R&D to generate value. The paper provides some, tentative evidence, that high rates of competition in the science-based sector are associated with low returns to R&D. |
| Keywords: | R&D, Productivity |
| JEL: | L10 O31 O34 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:255&r=eff |
| By: | Thomas Dohmen (IZA Bonn); Armin Falk (IZA Bonn and University of Bonn) |
| Abstract: | This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. In a first step we elicit subjects’ productivity levels. Subjects then face the choice between a fixed or a variable payment scheme. Depending on the treatment, the variable payment is either a piece rate, a tournament or a revenue-sharing scheme. We elicit additional individual characteristics such as subjects’ risk attitudes, measures of selfassessment and overconfidence, social preferences, gender and personality. We also elicit self-reported measures of work effort, stress and exhaustion. Our main findings are as follows. First, output is much higher in the variable pay schemes (piece rate, tournament, and revenue sharing) compared to the fixed payment scheme. Second, this difference is largely driven by productivity sorting. On average, the more productive a worker is, the more likely he self-selects into the variable pay scheme. Third, relative self-assessment and overconfidence affect worker self-selection, in particular into tournaments. Fourth, risk averse workers prefer fixed payments and are less likely to sort into variable pay schemes. Fifth, people endowed with social preferences are less likely to sort into tournaments. Sixth, variable pay schemes attract men more than women, a difference that is partly explained by gender-specific risk attitudes. Seventh, self-selection is also affected by personality differences. Finally, reported effort is significantly higher in all variable pay conditions than in the fixed wage condition. In sum, our findings underline the importance of multi-dimensional sorting, i.e., the tendency for different incentive schemes to systematically attract people with different abilities, preferences, self-assessments, gender and personalities. |
| Keywords: | personnel economics, sorting, incentives, productivity, ability, piece rates, tournament, revenue sharing, risk preferences, overconfidence, gender, experiment |
| JEL: | M52 M55 J00 J3 J33 J31 J16 J22 J24 C91 D81 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2001&r=eff |