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on Efficiency and Productivity |
| By: | G. Jacob Blackwood; John Haltiwanger; Zoltan Wolf |
| Abstract: | We explore sources of measured misallocation using establishment data from U.S. manufacturing industries. We decompose standard revenue productivity dispersion statistics into contributions by dispersion in revenue margins over costs and dispersion in input cost shares across plants. We establish a formal link between these components and measured allocative efficiency. The results indicate the components contribute similarly to apparent rising misallocation in US manufacturing. We use the mapping between distortions that influence these distinct components to explore the relationship between inferred distortions and mechanisms that influence one or both sources of revenue productivity dispersion. Finally, we show rising misallocation in the US manufacturing sector in the last several decades is pervasive, and yet a few industries account for over half of the aggregate decline. |
| Keywords: | Misallocation, Productivity Dispersion, Allocative Efficiency |
| JEL: | D24 E23 L16 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-26 |
| By: | Teresa Fort; Nathan Goldschlag; Jack Liang; Peter K. Schott; Nikolas Zolas |
| Abstract: | Relatively flat US productivity growth versus rising R&D expenditures is often interpreted as evidence that ideas are getting harder to find. We build a new 45-year panel tracking the universe of US firms' patenting to investigate the micro underpinnings of this conclusion, separately examining the relationships between research inputs and ideas (patents) versus ideas and growth. We find that average patents per R&D input are increasing, the elasticity of patents to R&D inputs is flat or rising, and there is not systematic evidence of a secular decline in patenting after controlling for research inputs. We then document a positive, significant, and fairly steady relationship between firms' patent and labor productivity growth rates. Average firm growth after controlling for patent growth, however, declines. Together, these results suggest that firms' innovative efforts play a key role in sustaining growth that has not diminished over the last four decades. |
| Keywords: | innovation, productivity, R&D, patents, firm growth |
| JEL: | O31 O32 O33 O47 D24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12652 |
| By: | Kristian S. Hansen; Juan D. Moreno-Ternero; Lars P. {\O}sterdal |
| Abstract: | This paper develops a unified framework for evaluating health outcomes that jointly incorporates equity and productivity. Extending beyond traditional QALYs, PALYs, and the more recent PQALYs, we introduce a broader class of evaluation functions that integrate equity- and productivity-sensitive conditions. By imposing several normative criteria, including independence from measurement scales and Pigou-Dalton transfer principles, we obtain tractable power-form representations. In balancing equity and efficiency, the framework provides a coherent foundation for assessing interventions in contexts where both health and productive capacity are at stake. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.01763 |
| By: | Lillian Derr; Mark A. Wynne |
| Abstract: | Artificial intelligence offers the potential to improve people’s living standards. Such advances can be approximated by changes in GDP per capita over time. Using that common measure, AI could enhance longstanding productivity gains or, alternatively, drastically alter the economy in relatively short order. |
| Keywords: | artificial intelligence (AI); innovation; productivity; technology |
| Date: | 2025–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:101231 |
| By: | Gábor Kátay; Pálma Mosberger; Francesco Tucci |
| Abstract: | The paper evaluates the impact of the European Commission’s Seventh Framework Pro-gramme (FP7) grants on profit-oriented firms’ post-treatment performance. Using a robust quasi-experimental design and a dataset covering applicants from 46 countries, we find that FP7 grants increase firms’ sales and labour productivity by about 18%. However, there is no significant impact on employment levels, pointing to potential growth barriers that prevent firms from scaling production despite improved productivity. The effectiveness of these grants varies significantly based on factors such as financial constraints, project risk profiles, market structure, and the innovation environment. Smaller, less productive firms with tighter financial constraints in technology-intensive sectors operating in concentrated markets and favourable innovation environments, particularly those undertaking longer and riskier projects, tend to benefit more. |
| JEL: | C31 G28 H57 O31 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:238 |
| By: | Elia Benveniste |
| Abstract: | This paper studies the effect of labor management - majority employee ownership of a firm - on firm-level wage distributions and performance. Using matched employer-employee data from Italy, I exploit worker buyouts (WBOs) as sharp transitions from conventional ownership to labor management. I compare WBO firms to observationally similar restructuring firms that remain conventionally owned. Labor management reduces base wages by 9 percent, but (insignificantly) increases total compensation when accounting for profit-based labor dividends. Within-firm wage inequality decreases markedly, and firms become significantly less hierarchical. I find no evidence of lower productivity or reduced investment. Overall, labor management generates substantial within-firm wage compression without reduced operational efficiency. |
| Keywords: | labor management, worker buyouts, wage compression |
| JEL: | G34 J31 J54 M54 P13 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26117 |
| By: | Filip Abraham; Yannick Bormans; Jozef Konings (Nazarbayev University, Graduate School of Business); Werner Roeger |
| Abstract: | This paper provides a new method to estimate price-cost margins in the presence of fixed costs of production. By exploiting properties of the primal and dual sales-based and cost-based Solow residuals, we are able to simultaneously estimate price-cost margins and the share of fixed costs in total costs for each input. Ignoring fixed costs in production underestimates price-cost margins and overestimates excess profit shares. Using a 30 year panel of Belgian firms we estimate price-cost margins, as a fraction of sales, of 25.4% on average, which can be decomposed between fixed costs of 22.9% and excess profits of 2.5%. Belgian price-cost margins have declined (-5.9%) in the past three decades due to a combination of falling fixed costs (-4.0%) and decreasing excess profits (-1.9%), suggesting output markets have become even more competitive over time. While large firms have higher profit shares than small firms, they have lower fixed cost shares as well as lower price-cost margins. |
| Keywords: | Price-cost margins, fixed costs, excess profits, market power, firm level data |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2024-10 |
| By: | Victoria Gregory; Guido Menzio; Giovanni M. Topa |
| Abstract: | We propose a novel empirical strategy to infer the extent to which firm-worker matches are inspection or experience goods. We argue that the informative content of the signals that firms and workers receive about the productivity of their match before entering an employment relationship can be inferred from the gaps between the separation rates of workers hired from unemployment, employment at low-tenure jobs, and employment at high-tenure jobs. We implement the strategy using German administrative data. We find that, before entering an employment relationship, a firm and a worker receive a signal that reduces the variance of their beliefs about the productivity of the match by 67%. The informative content of the signal varies according to the gender and the education of the worker, and it has increased over time. If matches were pure inspection goods, labor productivity would be 1:5% higher, and output 2% higher. If matches were pure experience goods, labor productivity would be 2% lower, and output 4% lower. |
| Keywords: | labor markets; search frictions; information frictions; worker turnover |
| JEL: | D83 E24 J63 J64 |
| Date: | 2026–05–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:103248 |
| By: | Arpita Ghosh (University of Exeter); Brendon McConnell (Institute for Fiscal Studies); Jaime Millán-Quijano (Universitat de Barcelona) |
| Date: | 2026–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:26/32 |
| By: | Arteaga Vallejo, Julian Gabriel; De Roux, Nicolas; Gáfaro, Margarita; Ibáñez, Ana María; Pellegrina, Heitor S. |
| Abstract: | We study how weather shocks affect the farm-size distribution and agricultural productivity. Using survey data from several developing countries, we document new empirical patterns in farm-size dynamics and the effect of weather shocks. Drawing on unique administrative data from Colombia with land-transaction records, census-based farm sizes, and household surveys on consumption and investment, we show that shocks intensify land market activity and increase the number of small farms, reducing average farm size within regions. We calibrate a heterogeneous-agent model that endogenizes the farm-size distribution and use it to study mechanisms and the dynamic effects of weather shocks and climate change. |
| JEL: | O13 Q15 Q12 Q54 D24 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14583 |