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on Technology and Industrial Dynamics |
| By: | Aghion, Philippe (Birkbeck College, University of London); Bloom, Nicholas (Stanford University); Lucking, Brian (Stanford University); Sadun, Raffaella (Harvard Business School); Van Reenen, John (MIT Sloan School of Management) |
| Abstract: | What is the optimal form of firm organization during "bad times"? Using two large micro datasets on firm decentralization from US administrative data and 10 OECD countries, we find that firms that delegated more power from the Central Headquarters to local plant managers prior to the Great Recession out-performed their centralized counterparts in sectors that were hardest hit by the subsequent crisis. We present a model where higher turbulence benefits decentralized firms because the value of local information and urgent action increases. Since turbulence rises in severe downturns, decentralized firms do relatively better. We show that the data support our model over alternative explanations such as recession-induced reduction in agency costs (due to managerial fears of bankruptcy) and changing coordination costs. Countries with more decentralized firms (like the US) weathered the 2008–09 Great Recession better: these organizational differences could account for about 16% of international differences in post-crisis GDP growth. |
| Keywords: | decentralization, growth, turbulence, Great Recession |
| JEL: | O31 O32 O33 F23 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10706&r=tid |
| By: | Bruno, Brunella; D'Onofrio, Alexandra; Marino, Immacolata |
| Abstract: | We explore the differential impact of leverage and debt maturity structure on investment in European firms belonging to different countries and industries during the financial and sovereign crisis period. We find that in crisis years (i) leverage exerts a strong and negative effect on the level of investment and (ii) firms with more long-term debt invest less. We also uncover heterogeneous reactions to the crisis due to the level of debt and its maturity by sorting firms by country-specific and firm-specific characteristics. We find that firms who cut back most investment in crisis years (conditional on the level of leverage and maturity) (i) are located in Eurozone periphery countries, and (ii) are featured by a small-scale. Factors that help firms alleviate financial frictions and shield investment are being able to rely on multiple bank relationships and the ability to generate internal resources (cash flows). We find no evidence of a positive nexus between cash and investment, and only little evidence of a positive effect on investment of access to capital markets, to mitigate the negative impact of debt in crisis years. |
| Keywords: | crisis; investment; leverage; long-term debt |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12003&r=tid |
| By: | Bryson, Alex (University College London); White, Michael (Policy Studies Institute) |
| Abstract: | A long-running debate in the small firms' literature questions the value of formal 'human resource management' (HRM) practices which have been linked to high performance in larger firms. We contribute to this literature by exploiting linked employer-employee surveys for 2004 and 2011. Using employees' intrinsic job satisfaction and organizational commitment as measures of motivation we find the returns to small firm investments in HRM are u-shaped. Small firms benefit from intrinsically motivating work situations in the absence of HRM practices, find this advantage disturbed when formal HRM practices are initially introduced, but can restore positive motivation when they invest intensively in HRM practices in a way that characterizes 'high performance work systems' (HWPS) and 'strategic human resource management' (SHRM). Although the HPWS effect on employee motivation is modified somewhat by the recessionary transition, it remains rather robust and continues to have positive promise for small firms. |
| Keywords: | small firms, human resource management, high performance work system, workplace motivation, intrinsic job satisfaction, organizational commitment |
| JEL: | L23 M50 M54 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10737&r=tid |
| By: | Giuseppe Berlingieri; Patrick Blanchenay; Chiara Criscuolo |
| Abstract: | This report provides new evidence on the increasing dispersion in wages and productivity using novel micro-aggregated firm-level data from 16 countries. First, the report documents an increase in wage and productivity dispersions, for both manufacturing and market services. Second, it shows that these trends are driven by differences within rather than across sectors, and that the increase in dispersion is mainly driven by the bottom of the distribution, while divergence at the top occurs only in the service sector, and only after 2005. Third, it suggests that between-firm wage dispersion is linked to increasing differences between high and low productivity firms. Fourth, it suggests that both globalisation and digitalisation imply higher wage divergence, but strengthen the link between productivity and wage dispersion. Finally, it investigates the impact of minimum wage, employment protection legislation, trade union density, and coordination in wage setting on wage dispersion and its link to productivity dispersion. |
| Date: | 2017–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaac:39-en&r=tid |
| By: | Jacob Greenspon & Erika Rodigues |
| Abstract: | This report sheds light on trends in Canadian innovation as indicated through patenting. Central to these recent trends is an apparent paradox: the number of patents granted to Canadians, an output indicator of innovative activity, has increased substantially between 2000 and 2014 despite decreased business sector expenditures on research and development, a crucial input to innovation, in the same period. This report examines this issue an provides several potential explanations as to why this is the case, the strongest being that the divergence between trends in patenting and R&D expenditures is caused by greater efficiency of research processes and an increase in strategic filings of patents. Furthermore, this report documents recent trends in patenting activity in Canada from several sources and compares trends across different technologies. Patenting trends are also used to give a regional perspective on innovation by tracking the level of innovative activity occurring in provinces and census metropolitan areas. |
| Keywords: | Productivity, Patenting, Research and Development, Innovation, Trends, Technology, Measurement, Canada, |
| JEL: | O31 O32 Q55 D70 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:1702&r=tid |
| By: | David Autor; David Dorn; Lawrence F. Katz; Christina Patterson; John Van Reenen |
| Abstract: | The fall of labor's share of GDP in the United States and many other countries in recent decades is well documented but its causes remain uncertain. Existing empirical assessments of trends in labor's share typically have relied on industry or macro data, obscuring heterogeneity among firms. In this paper, we analyze micro panel data from the U.S. Economic Census since 1982 and international sources and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of \superstar firms." If globalization or technological changes advantage the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms with high profits and a low share of labor in firm value-added and sales. As the importance of superstar firms increases, the aggregate labor share will tend to fall. Our hypothesis offers several testable predictions: industry sales will increasingly concentrate in a small number of firms; industries where concentration rises most will have the largest declines in the labor share; the fall in the labor share will be driven largely by between-firm reallocation rather than (primarily) a fall in the unweighted mean labor share within firms; the between-firm reallocation component of the fall in the labor share will be greatest in the sectors with the largest increases in market concentration; and finally, such patterns will be observed not only in U.S. firms, but also internationally. We find support for all of these predictions. |
| Keywords: | labour share, concentration, superstar firms |
| JEL: | J3 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1482&r=tid |
| By: | Buiatti, C.; Duarte, J. B.; Saenz, L. F. |
| Abstract: | We explain labor productivity differences of the service sector between Europe and the U.S. through the labor allocation taking place within the service sector. We measure labor productivity using a multisector structural transformation model that decomposes services into 11 sub-sectors comparable across Europe and the U.S. We identify wholesale and retail trade as well as business services to be the two sectors responsible for most of the lack of catch-up in labor productivity between Europe and the U.S. We also investigate which institutional characteristics are associated with the different performances of sectoral productivity across sectors. We empirically explore our country-sector panel measures of labor productivity levels, and our results suggest that differences in taxation, pro-business attitudes, ICT diffusion and rates of innovation are disproportionally correlated with the productivity of wholesale, retail and business services relative to the rest of the sectors in the economy. |
| Keywords: | Structural Transformation, Service Sector, Nonho-mothetic CES preferences, Labor Productivity. |
| JEL: | O41 O47 O57 |
| Date: | 2017–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1708&r=tid |
| By: | Leonardo Costa Ribeiro (Inmetro-RJ); Márcia Siqueira Rapini (Cedeplar-UFMG); Leandro Alves Silva (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG) |
| Abstract: | Size matters: the total of internationally co-authored scientific articles in 2015 corresponds to the global scientific production in 1993. The steady and systematic growth in international collaboration in science provides a strong basis for an emerging GIS. Therefore, it is important to map international flows that connect different national systems of innovation. This paper tracks knowledge flows through cross-border co-authorships in scientific publications, through a database with 10 million papers published in 2000, 2003, 2006 2009, 2012 and 2015. The data show an increase in international co-authorships from 10.7% in 2000 to 21.3% in 2015. However, this growth has network properties, since the number of international flows has grown from 545,372 in 2000 to 7,083,075 in 2015. Those international co-authorships signal networks of universities and research institutes, providing international connections to firms that eventually interact only locally with those universities and research institutes. The growth in the size, dimension and quality of those scientific flows strengthens a broad and variegated mosaic of interconnections can be grasped by the size of the network of cross-border co-authorships, a network that might be supporting an emerging and rudimentary global system of innovation. |
| Keywords: | Knowledge flows, International co-authorships, Science, Innovation systems |
| JEL: | O30 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td553&r=tid |
| By: | Peter K. Kruse-Andersen (Department of Economics, University of Copenhagen) |
| Abstract: | R&D-based growth models are tested using US data for the period 1953-2014. A general growth model is developed which nests the model varieties of interest. The model implies a cointegrating relationship between multifactor productivity, research intensity, and employment. This relationship is estimated using cointegrated VAR models. The results provide evidence against the widely used fully endogenous variety and in favor of the semi-endogenous variety. Forecasts based on the empirical estimates suggest that the slowdown in US productivity growth will continue. Particularly, the annual long-run growth rate of GDP per worker converges to between zero and 1.1 pct. |
| Keywords: | Endogenous growth, semi-endogenous growth, total factor productivity (TFP), research and development (R&D), time series econometrics, cointegration |
| JEL: | C32 E24 O31 O41 O47 O51 |
| Date: | 2017–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1705&r=tid |
| By: | Marco Luca Pinchetti |
| Abstract: | In this paper I incorporate a Schumpeterian mechanism of creative destruction in a standard DSGE framework. In the model, a sector of forward-looking profit maximizing innovators determines the economy’s TFP growth rate. I estimate the model with Bayesian methods, and show that models featuring an endogenous TFP channel can empirically outperform models that exhibit standard, exogenous productivity dynamics. The paper provides a comprehensive comparative assessment of the impact of the endogenous TFP channel in an estimated fully-fledged DSGE model. The variance decomposition analysis shows that endogenous TFP is a powerful channel of transmission of adverse shocks throughout the business cycle. The estimates suggest that the 35% of the productivity growth rate fluctuations had endogenous origins during the Great Recession. |
| Keywords: | DSGE model; endogenous TFP; schumpeterian growth; post-crisis slump |
| JEL: | E50 E24 E32 O47 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/250791&r=tid |
| By: | Durufle, Gilles; Hellmann, Thomas F; Wilson, Karen |
| Abstract: | This paper examines the challenge of entrepreneurial companies to go beyond the start-up phase and grow into large successful companies. We examine the long-term financing of these so-called scale-up companies, focusing on the US, Europe and Canada. The paper first provides a conceptual framework for understanding the challenges of financing scale-ups. It then shows some data about the various aspects of financing scale-ups in the US, Europe and Canada. Finally the paper raises the question of long-term public policies for supporting the creation of a better scale-up environment. |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12004&r=tid |
| By: | Daniel Susskind |
| Abstract: | Abstract In the past 15 years a ‘task-based’ literature has emerged, exploring the consequences of technological change on the labour market. This literature supports an optimistic view about the threat of automation. In this paper I build a task-based model based on different reasoning about how machines operate. This leads to a far more pessimistic account of the prospects for labour. In a static model, increasingly capable machines drive down relative wages and the labour share of income and force labour to specialise in a shrinking set of tasks. In a dynamic version of the model, labour is driven out the economy at an endogenously determined rate, forced to specialise in a shrinking set of types of tasks, and wages steadily decline to zero. In the limit, labour is fully immiserated and ‘technological unemployment’ follows. |
| Keywords: | Technological Change; Computerization; Automation; Job Tasks; Wages |
| JEL: | J20 J21 J23 J24 J30 J31 |
| Date: | 2017–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:819&r=tid |
| By: | Pedro Neves (Universidade da Beira Interior and CEFAGE-UBI); Tiago Sequeira (Universidade da Beira Interior and CEFAGE-UBI) |
| Abstract: | The production of knowledge has been subjected to quantitative analysis following the development of the R&D based endogenous growth theory. There is a spirited discussion about the empirical validity of the semi-endogenous or endogenous (Shumpeterian) growth theories, with clear policy relevance. While the first theory points out ineffective policies in the long run, the latter allows for important effects of fiscal policies, namely subsidies or taxes to R&D. We survey the empirical literature on this topic and implement a meta-analytic regression for the spillover effect, which crucially determines the validity of those theories. We discover that the average spillover effect is lower than one but with the upper bound of the confidence interval above one. We also find that the spillover effect tends to be higher once patents are used to measure knowledge and the estimation of knowledge production accounts for foreign inputs and time-effects; it tends to be lower when the sample includes more countries, only rich economies and industrial data, and when estimations use instrumental variables. Although most recent contributions argue in favor of the Shumpeterian growth theory, we show that when looking at a more complete picture, semi-endogenous theory cannot be neglected. |
| Keywords: | Semi-endogenous growth; Shumpeterian growth; Knowledge production function; R&D; National innovative capacity; Research policy. |
| JEL: | O10 O30 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:cfe:wpcefa:2017_03&r=tid |
| By: | Marc Baudry; Clément Bonnet |
| Abstract: | Renewable energy technologies are called to play a crucial role in the reduction of greenhouse gas emissions. Since most of these technologies did not yet reach grid parity, public policies can rely on two types of approach: supply push and demand pull. The latter aims at creating demand for new technologies and at stimulating their diffusion. Nevertheless, due to the complex self-sustained dynamics of diffusion and to spillovers between the countries it is hard to determine whether newly installed capacities are imputable to national support policies and/or to policies implemented by neighbor countries. The paper addresses this problem. A micro-founded model of technology diffusion is developed and calibrated. It captures the influence of demand pull policies on installed capacities for six European countries over the last decade. A counter-factual analysis is carried out to assess the impact of demand pull policies on wind power development by taking into account the interplay between national policies via spillovers. |
| Keywords: | Renewable energy, Technology diffusion, Demand pull instruments. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1607&r=tid |