population agglomeration and the effectiveness of enterprise subsidies a chinese analysis this paper investigates the impact of population agglomeration on the relation between government subsidies and firm innovation it constructs a parsimonious model to show that the positive effect

internal and external effects of r d subsidies and fiscal incentives empirical evidence using spatial dynamic panel models abstract most studies evaluating the macroeconomic effects of financial support policies on business funded r d use econometric methods that do not consider the existence of spatial effects and generate biased estimates in this paper we discus and address this problem using spatial dynamic panel data methods this allow us to provide new insights on the internal in country and external out of country effects of both research and development r d subsidies and fiscal incentives we use a database of 25 oecd countries for the period 1990 2009 in relation to internal effects for both instruments we find a non linear relationship between their effect on private r d and their level suggesting the possibility of leveraging and crowding out effects we also find a substitution effect between the r d subsidies and fiscal incentives implemented within a country concerning the spatial component we find evidence of positive spatial spillovers among private r d investments however our results suggest the existence of competition substitution effects between national r d policies

do r d tax credits work evidence from a panel of countries 1979 1997 this paper examines the impact of fiscal incentives on the level of r d investment an econometric model of r d investment is estimated using a new panel of data on tax changes and r d spending in nine oecd countries over a 19 year period 1979 1997 we find evidence that tax incentives are effective in increasing r d intensity this is true even after allowing for permanent country specific characteristics world macro shocks and other policy influences we estimate that a 10 fall in the cost of r d stimulates just over a 1 rise in the level of r d in the short run and just under a 10 rise in r d in the long run

real rigidities and the non neutrality of money rigidities in real prices are not sufficient to create rigidities in nominal prices and real effects of nominal shocks and by themselves small frictions in nominal adjustment such as costs of changing prices create only small non neutralities but this paper shows that substantial nominal rigidity can arise from a combination of real rigidities and small nominal frictions the paper shows the connection between real and nominal rigidity given the presence of nominal frictions both in general and for two specific sources of real rigidity one arising from goods market imperfections and the other from labour market imperfections

gender differences in rent sharing and its implications for the gender wage gap evidence from sweden abstract this study using matched employer employee data analyses gender differences in rent sharing results indicate significantly smaller remuneration from firm profits for women a difference that increases along the wage distribution gender differences in rent sharing explain less than 2 of mean gender wage differentials as differences are found in remuneration from firm profit and not in the mean profit levels of employing firms

wages profits and capital intensity evidence from matched worker firm data swedish data on workers matched with firms balance sheet reports are used to examine the relation between wages and firms ability to pay results indicate that experienced and highly educated workers are sorted into profitable firms wages are positively correlated with profits and the capital labor ratio after controlling for worker quality degree of effort supervision job characteristics local unemployment firms employment history and employer size lester s range of pay due to rent sharing is around 12 24 of the mean wage in sweden which is close to the estimates for the united states and united kingdom

how effective are fiscal incentives for r d a review of the evidence this paper surveys the econometric evidence on the effectiveness of fiscal incentives for r d we describe the effects of tax systems in oecd countries on the user cost of r d the current position changes over time and across different firms in different countries we describe and criticize the methodologies used to evaluate the effect of the tax system on

does government r d policy mainly benefit scientists and engineers conventional wisdom holds that the social rate of return to r d significantly exceeds the private rate of return and therefore r d should be subsidized in the u s the government has directly funded a large fraction of total r d spending this paper shows that there is a serious problem with such government efforts to increase inventive activity the majority of r d spending is actually just salary payments for r d workers their labor supply however is quite inelastic so when the government funds r d a significant fraction of the increased spending goes directly into higher wages using cps data on wages of scientific personnel this paper shows that government r d spending raises wages significantly particularly for scientists related to defense such as physicists and aeronautical engineers because of the higher wages conventional estimates of the effectiveness of r d policy may be 30 to 50 too high the results also imply that by altering the wages of scientists and engineers even for firms not receiving federal support government funding directly crowds out private inventive activity this abstract was borrowed from another version of this item

the creation and capture of rents wages and innovation in a panel of u k companies this paper examines the impact of technological innovation on wages using a panel of british firms a head count measure of major innovations between 1945 and 1983 is combined with share price and accounting information innovating firms are found to have higher average wages but rival innovation tends to depress own wages this appears consistent with a model where wages are partly determined by a sharing in the rents generated by innovation in other words innovation may be a good instrument for proxies for rents such as profitability quasi rents or tobin s average q instrumental variable estimates of the elasticity between wages and quasi rents are about 0 29

real wages over the business cycle evidence from panel data one topic on which keynes did not disagree with classical economists was the cyclical behavior of real wages keynes 1936 as well as various classical writers predicted that real wages should move countercyclically quoting the general theory p 17 in general an increase in employment can only occur through the accompaniment of a decline in real wages thus i am not disputing this vital fact which the classical economists have rightly asserted as indefeasible this prediction is based on the premise of competition and a given short run capital stock increases in employment then correspond to more intensive use of capital and through diminishing product lower real wages for this reason evidence by dunlop 1938 and tarshis 1939 that real wages move procyclically was viewed as paradoxical both dunlop and tarshis based their findings on an observed positive correlation between real and money wages which given the procyclical movement of money wages implies a positive correlation between

business cycle models aggregation and real wage cyclicality a substantial literature has developed to estimate the true cyclicality of real wages that is composition bias free two major issues are addressed in this article aggregation of heterogeneous workers and potential bias in the measurement of the labor input a general analysis of the biases is presented and alternative approaches in the literature are nested in a single framework estimates based on an efficiency units concept that avoids the usual aggregation problems are presented composition bias underestimates the usual parameters of interest unless both the price and the quantity of the labor input are adjusted appropriately

sticky price models of the business cycle can the contract multiplier solve the persistence problem we construct a quantitative equilibrium model with firms setting prices in a staggered fashion and use it to ask whether monetary shocks can generate business cycle fluctuations these fluctuations include persistent movements in output along with the other defining features of business cycles like volatile investment and smooth consumption we assume that prices are exogenously sticky for a short time persistent output fluctuations require endogenous price stickiness in the sense that firms choose not to change prices much when they can do so we find that for a wide range of parameter values the amount of endogenous stickiness is small thus we find that in a standard quantitative model staggered price setting alone does not generate business cycle fluctuations

optimal inattentive length in macroeconomic models abstract this paper proposes an approximate solution of firm s optimal inattentive length in a standard macroeconomic model the approximate solution conceptually fits a sticky information model better and predicts empirically more plausible inattentive length than the one proposed by reis reis r 2006 inattentive producers review of economic studies 73 793 821

is public r d a complement or substitute for private r d a review of the econometric evidence is public r d spending complementary and thus additional to private r d spending or does it substitute for and tend to crowd out private r d conflicting answers are given to this question we survey the body of available econometric evidence accumulated over the past 35 years a framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross section data from various levels of aggregation laboratory firm industry country the findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the experiment s that the investigators envisage is not adequately specified we conclude by offering suggestions for improving future empirical research on this issue

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

investment tax incentives prices and the supply of capital goods using data on the prices of capital goods this paper shows that much of the benefit of investment tax incentives does not go to investing firms but rather to capital suppliers through higher prices the reduction in the cost of capital from a 10 percent investment tax credit increases equipment prices 3 5 7 0 percent this lasts several years and is largest for assets with large order backlogs low import competition or with a large fraction of buyers able to use investment subsidies capital goods workers wages rise too instrumental variables estimates of the short run supply elasticity are around 1 and can explain the traditionally small estimates of investment demand elasticities in absolute value the demand elasticity implied here exceeds 1

rent sharing and wages evidence from company and establishment panels a central question in labor economics and macroeconomics is whether the textbook competitive model provides an adequate representation of the labor market using longitudinal data on companies and establishments this article suggests that it may not as predicted by rent sharing models of the labor market changes in profitability are shown to feed through into long run changes in wages these are not temporary wage effects and are not driven by the unionized workplaces in the data the article s estimates imply that for rent sharing reasons alone lester s range of wages is approximately 16

the private r d investment response to federal design and technical competitions it is the federal government s role to promote investment in research and development rd and 2 contracting with private firms and nonprofit organizations such as universities to perform rd the winning firm recovered its development costs in the form of profits on the sale of the airplanes and the losing firms did not recoup their r d investment mansfield 1971 p 122

shareholder wealth and wages evidence for white collar workers we present empirical evidence on the relationship between individual wages conditional on worker characteristics and equity returns using a unique survey from the bureau of labor statistics equity returns affect the wages only of workers with three or more years of tenure a 4 percent increase in a firm s market value raises pay by 0 3 percent within three years our estimates suggest that each 10 increase in shareholder wealth raises the present value of a firm s wage bill by 1 the elasticity of white collar wages with respect to equity returns is one third smaller than the ceo salary elasticities in our sample

the impact of government subsidies and enterprises r d investment a panel data study from renewable energy in china in this research we aim to understand the influence of government subsidies on enterprises research and development r d investment behavior particularly in china s renewable energy sector we are also interested in examining how the attributes of enterprise ownership act as a moderating variable for the relationship between government subsidies and r d investment behavior three classical panel data analysis models including the pooled ordinary least squares ols model the fixed effect model and the random effect model are employed we find that government subsidies have a significant crowding out influence on enterprises r d investment behavior and that the influence is further moderated by the attributes of enterprise ownership moreover a panel threshold regression model is used to demonstrate how the influence of government subsidies on enterprises r d investment behavior will change when government subsidies increase two thresholds 0 6 and 10 1 are identified we recommend that relevant government departments should motivate enterprise r d investment behavioral intention by increasing subsidies within a certain range different attributes of enterprise ownership should also be considered as part of policy reform and re structuring relating to government subsidies

what drives business research and development r d intensity across organisation for economic co operation and development oecd countries this paper empirically investigates the potential determinants of business sector r d intensity using a panel of oecd countries for the period of 1975 2002 with data measured as five year averages estimates using a system gmm estimator controlling for endogeneity show a high degree of persistence in business sector r d expenditures tax incentives for r d have a significant and positive impact on business r d spending regardless of the specification and estimation techniques furthermore we find that expenditures for r d performed by universities are significantly positively related to business enterprise sector expenditures on r d indicating that public sector r d and private r d are complements direct r d subsidies and the high tech export share are significantly positively related to business sector r d intensity but these effects are only significant using the first differenced gmm estimator the static fixed effects results show that countries characterised by strong patent rights appear to hav

how effective are level based r d tax credits evidence from the netherlands this paper examines the impact of the r d fiscal incentive program on r d by dutch firms taking a factor demand approach we measure the elasticity of firm r d capital accumulation to its user cost econometric models are estimated using a rich unbalanced panel of firm data covering the period 1996 2004 with firm specific r d user costs varying with tax incentives using the estimated user cost elasticity we perform a cost benefit analysis of the r d incentive program we find some evidence of additionality suggesting that the level based program of r d incentives in the netherlands is effective in stimulating firms investment in r d however the hypothesis of crowding out can be rejected only for small firms the analysis also indicates that the level based nature of the fiscal incentive scheme leads to a substantial social dead weight loss

a traditional interpretation of macroeconomic fluctuations under the traditional interpretation of macroeconomic fluctuations aggregate demand shocks move output and prices in the same direction while aggregate supply shocks move output and prices in opposite directions this paper examines the joint behavior of u s output unemployment prices wages and nominal money and asks whether it is consistent with this interpretation the answer is a qualified yes

investment dynamics with information costs investment in physical capital at the micro level is infrequent and large or lumpy the most common explanation for this is that firms face non convex physical adjustment costs the model developed in this paper shows that information costs make investment lumpy at the micro level even in the absence of non convex adjustment costs when collecting and processing information is costly the firm optimally chooses to do it sporadically and to be inactive most of the time this behavior results in infrequent and possibly large capital adjustments the model fits plant level investment rate moments well and it also matches some higher order moments of aggregate investment rates keywords investment dynamics information costs inattentiveness lumpy investment jel classification d21 d83 d92 e22

wage premia price cost margins and bargaining power in belgian manufacturing abstract an asymmetric nash bargaining model as developed by j svejnar 1986 is empirically tested on industry wage negotiations in belgium union s relative bargaining power emerges from this model as the fraction of firm s profits per worker which the unions are able to capture in excess of the alternative wage the estimates of the bargaining power coefficients for blue as well as white collar workers reject the symmetric split the difference outcome determinants of the cross industry variation of bargaining power are explored as well

evaluating the innovation box tax policy instrument in the netherlands 2007 13 patent boxes are tax incentive schemes aimed at stimulating research and development r d in firms by providing favourable tax rates to profits that can be linked to a specific immaterial asset such as a patent because these profits are often hard to separate from other firm profits patent boxes have been argued to be prone to tax shifting of firms and tax competition between nations as they might shift the location of the profits without affecting the location of r d activities whether or not this occurs may also depend on conditions set in the patent box we evaluate the innovation box policy instrument in the netherlands which is essentially a patent box but without the formal requirement of a patent we ask whether the innovation box has an effect on local r d investment of the firm additionality thereby putting the hypothesis of tax shifting to the test we find that the innovation box indeed has a positive effect on r d investment but the average firm that uses the policy tends to use only a part of the tax advantage for extra r d investment

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

are firms that received r d subsidies more innovative this paper looks at the effectiveness of r d grants for canadian plants that already benefit from r d tax credits using a non parametric matching estimator we find that firms that benefited from both policy measures introduced more new products than their counterparts that only benefited from r d tax incentives they also made more world first product innovations and were more successful in commercializing their innovations

the effect of government funding on private industrial research and development a re assessment a number of previous studies have attempted to determine the effect of federal support of research and development r d performed in industry on the rate of private investment in r d by estimating regressions of private r d expenditure on federal industrial r d expenditure controlling for total demand sales and in some cases other variables this paper presents arguments and econometric evidence in support of the hypothesis that due to misspecification of the private r d equation i e failure to distinguish government sales from other sales previous estimates of the effect of federal industrial r d on private r d funding are seriously upwardly biased

insider effects in wage determination abstract the paper attempts to shed new light on the determinants of industry wages by a cross country comparison of wage setting relationships making use of comprehensive and consistent panel data on industries from the early 1960s to the mid 1980s the empirical analysis involves estimations of identically specified industry wage equations for each of five countries sweden norway finland germany and the united states a key finding is that industry wages in the u s are the most responsive to sectoral price and productivity changes by contrast industry wages in the nordic countries are largely unaffected by sectoral conditions the results cast doubt on the competitive model as an accurate characterization of wage setting under decentralization

do r d tax incentives lead to higher wages for r d workers evidence from the netherlands this paper examines the impact of the dutch r d tax incentive scheme on the wages of r d workers we construct firm specific r d tax credit rates that vary over time following variations in the dutch r d tax incentive program using instrumental variables we estimate a wage sharing model with an unbalanced firm level panel data covering the period 1997 2004 the elasticity of the r d wage with respect to the fraction of the wage supported by the fiscal incentives scheme is estimated at 0 2 in the short run and 0 24 in the long run

estimating the benefits of targeted r d subsidies we study the expected welfare effects of targeted r d subsi dies using project level data from finland we model the application and r d investment decisions of firms and the subsidy granting decision of the public agency in charge of the program our model and institutional environment allow us to identify different benefits and costs of the r d subsidy program we find that expected effects of subsidies are very het erogeneous and estimated application costs low on average the social rate of return on targeted subsidies is 30 to 50 but spillover effects of subsidies are smaller than effects on firm profits

real wages and the business cycle the objectives of this review are threefold 1 to characterize the empirical literature on the cyclical behavior of real wages 2 to identify the sources of the differences in results across studies and 3 to enumerate key factors that determine the cyclicality of real wages given a host of measurement and methodological issues drawing firm conclusions is difficult but several generalizations can be made the estimated cyclicality of real wages depends crucially on the time period of analysis and the choice of whether to examine the production or the consumption wage composition effects play an important but complicated role as well

heart of darkness modeling public private funding interactions inside the r d black box abstract this paper is a first step toward closing the analytical gap in the extensive literature on the results of interactions between public and private r d expenditures and their joint effects on the economy a survey focusing on econometric studies in this area reveals a plethora of sometimes confusing and frequently contradictory estimates of the response of company financed r d to changes in the level and nature of this category of public expenditures yet a theoretical framework seldom is provided within which the empirical results are to be interpreted some such structure is necessary in view of the multiple channels through which public research can affect private r d performance especially as not all the effects flow in the same direction a major cause of inconsistencies in the empirical literature is the failure to recognize key differences among the various policy experiments being considered depending upon the economy in which they are embedded and the type of public sector r d spending that is contemplated using a simple stylized structural model we identify the main channels of impact of public r d we thus can characterize the various effects distinguishing between short and long run impacts that would show up in simple regression analyses of nominal public and private r d expenditure variables within the context of our simple model it is possible to offer interpretations that shed light on recent cross section and panel data findings at both high i e national and low specific technology area levels of aggregation

beggar thy neighbor the in state out of state and aggregate effects of r d tax credits abstract the proliferation of r d tax incentives among u s states in recent decades raises two questions i are these tax incentives effective in increasing in state r d ii how much of any increase is due to r d being drawn away from other states this paper answers i yes and ii nearly all the paper estimates an augmented r d factor demand model using state panel data from 1981 to 2004 i estimate that the long run elasticity of in state r d with respect to the in state user cost is about 2 5 while its elasticity with respect to out of state user costs is about 2 5 suggesting a zero sum game among states

demand side vs supply side technology policies hidden treatment and new empirical evidence on the policy mix this paper provides new empirical evidence about the impact of various technological policies upon firms innovative behaviour we take into consideration the role of policies for innovative activities and we focus on their interaction while supply side policies such as r d subsidies and tax credits have been both extensively discussed in the literature and empirically investigated the analysis of innovative public procurement is a growing trend in the literature which still lacks robust empirical evidence in this paper we replicate the existing results on supply side policies surmise fresh empirical evidence on the outcome of innovative public procurement and address the issue of possible interaction among the various tools when controlling for the interaction with other policies supply side subsidies cease to be as effective as reported in previous studies and innovative public procurement seems to be more effective than other tools the preliminary evidence suggests that technology policies exert the highest impact when different policies interact

do research subsidies crowd out private r d of large firms evidence from european framework programmes abstract we evaluate whether public research subsidies are complements or substitutes to the private r d spending of large firms combining data on the ec s three most recent framework programmes fp6 fp7 and h2020 with data on the world s largest research companies we use matching and difference in difference estimation to compute the causal impact of subsidies on private r d spending while on average subsidies have not led to increased private research budgets we identify policy relevant heterogeneities finding that subsidies increased own r d for smaller firms and projects as well as more r d intensive firms we also find that horizon 2020 successfully stimulated firms private r d spending while its predecessors did not

estimating the impact of government r d abstract if we do not pay for an input it is important it is suggested that the r d literature by ignoring the fact that government r d is given away has confused zero value of marginal product with zero marginal physical product