the replacement problem abstract a prototypical vintage capital model of economic growth is developed where the decision to replace old technologies with new ones is modeled explicitly technological change is investment specific depreciation in this environment is an economic not a physical concept the vintage capital economy s balanced growth paths and transitional dynamics are analyzed the transitional dynamics are markedly different from the standard neoclassical growth model

factor productivity and income inequality a general equilibrium analysis economic growth over the past two decades has failed to reduce income inequality we contend that major reasons for this are the slowdown and bias in technological change productivity growth given the complexity of the many interactions that take place this phenomenon is best addressed in a general equilibrium context for this purpose we have developed a computable general equilibrium cge model with advanced features relating to income distribution we perform a series of simulations based on recent overall productivity changes but under various forms of technological change bias factor mobility and government budgetary balance we find the labour augmenting technological change cases to be most consistent with recent experience

stylized facts and stylized illusions inflation and productivity revisited recent estimates of a negative empirical relationship between inflation and the rate of growth of productivity provide a strong case for vigorous anti inflationary policy this paper tests the robustness of this evidence using long quarterly and annual datasets for four countries canada united states united kingdom west germany our results from cointegration and other time series tests show no evidence for any connection between inflation and the level of productivity we do find a strong connection between inflation and productivity growth but it is so internally inconsistent as to be incredible the best explanation is that it is accounted for entirely by statistical bias from attempting to cointegrate stationary and non stationary variables

capital quality improvement and the sources of economic growth in the euro area sources of growth europe s growth slowed in the 1990s reinforcing the overall impression of a need to catch up with the us regarding standards of living in reaction eu leaders adopted the famous lisbon agenda in 2000 the agenda is now under review the aim being to determine why progress on its pro growth goals has been unsatisfactory and what can be done about it the first crucial step in this process is to understand the true sources of the european growth slowdown sources of growth calculations have always been imprecise but evidence from the us suggests that quality upgrading especially in capital goods has substantially worsened the precision problem since the 1990s unfortunately quality adjusted sources of growth calculations however have not performed satisfactorily for europe so europe s leaders are working with potentially misleading accounts of europe s growth slowdown redressing this omission is the goal of this paper failure to account properly for capital quality improvements leads to two mistakes first overall gdp is underestimated our calculations for example show that euro area gdp growth was underestimated on average by 0 7 percentage points annually in the late 1990s however similar quality adjustment figures raise us growth figures in the same period by even more so quality adjusting suggests that the us eu growth gap was even more pronounced than previously believed secondly the sources of growth calculations used to prioritize europe s pro growth policies are skewed our calculations show that the contribution of the slowdown in disembodied technical progress to the overall slowdown is more pronounced after quality adjustment our findings point to the need for adoption of microeconomic measures aimed at enhancing overall efficiency and boosting innovation activity such measures would aim at a better business environment e g by easing regulatory and administrative burden and liberalizing energy and telecommunications markets plutarchos sakellaris and focco vijselaar

the effect of distance and road quality on food collection marketing margins and traders wages evidence from the former zaire abstract food price variation is typical of the food economies of many low income countries the presence or absence of road infrastructure is perceived to be one of the main determinants of this variation this analysis shows that in the case of the former zaire food price dispersion is significant both across products and across regions it is demonstrated that transportation costs explain most of the differences in food prices between producer regions and that road quality is an important factor in the transportation costs however food prices decrease relatively faster than transportation costs increase and traders wages are higher on bad roads

technological innovation and the distribution of employment growth a firm level analysis this work studies the firm level relationship between different types of innovative activities and employment growth rates improving on previous investigations on the topic it combines a detailed analysis of the effects of product and process innovation on average employment growth with a broader outlook on the whole conditional employment growth distribution results show that product innovation especially in terms of good new to the entire market has a positive effect on employment growth this role is likely to be particularly relevant for both fast growing and shrinking firms process innovation appears instead to have less clear cut dynamics consistently with existing evidence among different types of process innovation the introduction of novel auxiliary processes appears to be more positively linked with employment growth

the transatlantic productivity gap is r d the main culprit the literature has pointed to different causes to explain the productivity gap between europe and united states in the last decades this paper tests the hypothesis that the lower european productivity performance in comparison with the us can be explained not only by a lower level of corporate rd however using different estimation techniques the r d coefficients for the us firms always turn out to be significantly higher to see to what extent these transatlantic differences may be related to the different sectoral structures in the us and the eu we differentiated the analysis by sectors the result is that both in manufacturing services and high tech sectors us firms are more efficient in translating their r d investments into productivity increases

economic growth and development towards a catchup model we develop a model for economic growth applicable to a group of countries constituting around half of the gross global production that have been consistently catching up to the us since 1960 or so this group can be termed the convergence club the model has a theoretical basis developed in other publications cited but the present work is essentially empirical it demonstrates that there is a very strong correlation between catchup growth with respect to the us and an energy proxy ep the energy proxy that works best is a linear combination of domestic electric power consumption petroleum oil consumption per capita compared to the us levels the results presented here do not constitute a theory of growth but they are consistent with theory presented elsewhere on a practical level we argue that consistent catchup trends over the past 40 years can safely be extrapolated for a few more decades for scenario construction purposes we also believe that the observed catchup trends can be regarded as potential mid term or long term growth trajectories for transition economies and others that have recently been adversely affected by conflict or mismanagement

growth accounting with investment specific technological progress a discussion of two approaches two approaches taken to the embodiment question are compared and discussed quantitative theory and traditional growth accounting the two approaches give very different estimates for the contribution of investment specific technological advance to economic growth therefore the approach taken matters it is argued that the measures used in traditional growth accounting to gauge the importance of investment specific technological progress have little economic content unlike the measure obtained from quantitative theory

measuring productivity in economic growth since world war ii the improvement in the material well being of their citizens has been an explicit goal of nearly every nation associated with this goal is the challenge of how to utilize primary resources more efficiently to get more from what goes into the productive process success in this endeavor requires that the economic processes be in continual disequilibrium which gives rise to opportunities that decision makers can use to advan

directed technical change with capital embodied technologies implications for climate policy abstract we develop a theoretical model of directed technical change in which clean zero emissions and dirty emissions intensive technologies are embodied in long lived capital stocks switching from dirty to clean innovation leads to ongoing reductions in the relative costs of producing clean investment goods making them ever cheaper to purchase and so encouraging clean investment at the same time falling replacement costs imply falling asset values consequently continuing innovation in capital embodied clean technologies also generates obsolescence costs which are borne by users of clean capital the negative effect of obsolescence costs on demand for clean investment and consequently on the speed of transition to clean growth has been neglected in the literature on directed technical change we show theoretically and using numerical simulations that optimal policies differ in our model of embodied technological change relative to an otherwise comparable model of disembodied technological change with embodied technologies i optimal emissions taxes start higher and rise faster ii much higher clean research and development subsidies are required to effect the switch to clean innovation and iii climate damages under optimal policies are greater we suggest that more attention should be paid to the role of obsolescence costs in modelling transitional effects of climate policies

selling at the farmgate or traveling to market using detailed survey data from uganda this article examines whether coffee producers sell to itinerant traders or directly to markets where they can get a higher price but must incur a transport cost we find that selling to the market is more likely when the quantity sold is large and the market is close by wealthy farmers are less likely to sell to the market possibly because the shadow value of their time is higher but if they have a large quantity of coffee for sale they are more likely to sell it to the market they are also more likely to travel to a distant market these findings are consistent with their better ability to pay for public transportation we find no evidence that the decision to sell at the farmgate is driven by a self control motive

cross sectional heterogeneity and the persistence of aggregate fluctuations abstract the microevidence indicates that small firms grow faster than big firms i argue that this relationship between the expected growth rate of a firm and its size may provide a microfoundation for the well known high degree of persistence of shocks to aggregate output the logic goes as follows almost any shock tends to temporarily alter firms incentive to invest in growth thereby leading to a reallocation of firms across size categories if small firms grow faster than big ones the impact effect of the shock on aggregate output is gradually absorbed but as fast growing small firms become big and start to grow at the lower rate of big firms the rate at which the shock is absorbed decreases over the adjustment path as a result shocks are absorbed yet at a very low decreasing rate which induces long memory in aggregate output i argue that this transmission mechanism may reconcile the microevidence with the observed degree of aggregate persistence it requires changes in neither the number of firms in the market nor the rate of technological progress it is merely the result of the cross sectional heterogeneity that we observe in real economies

structural change and labor productivity growth in latin american manufacturing industries 1970 96 abstract this paper examines recent changes in the pattern of production specialization attained by latin american manufacturing industries comparing argentina brazil colombia chile and mexico to the united states the paper identifies catching up and lagging behind industries during 1970 96 it considers the evolution of macro and micro forces that affect whether an industry manages to close down the gap with the international technological frontier evidence is presented showing that recent structural reforms did not result in a major discontinuity with the past rather path dependency forces have acted as a major factor explaining differential performance among industries after recent changes in the global incentive regime

the impact of electric power on productivity according to the historical record the increased use of energy in general and electric power in particular stands as one of the key factors in productivity growth growth accountants however find little support for this view rejecting claims that the productivity slowdown can be attributed to the lower rate of growth of the energy input in us manufacturing in this study an attempt at reconciling the historical record with the empirical facts is made specifically the commonly used factor income shares in the relevant divisia input growth index are replaced by the estimated output input elasticities the latter attribute a considerably larger role to electric power than previous studies indicated these are then used to reevaluate the sources of growth in us manufacturing

technology shocks and job flows we consider a version of the solow growth model where technological progress can be investment specific or investment neutral the labour market is subject to search frictions and the existing productive units may fail to adopt the most recent technological advances technological progress can lead to the destruction of technologically obsolete jobs and cause unemployment we calibrate the model to replicate the high persistence that characterizes the dynamics of firms neutral technology and the frequency of firms capital adjustment we find that neutral technological advances increase job destruction and job reallocation and reduce aggregate employment investment specific technological advances reduce job destruction have mild effects on job creation and are expansionary hence neutral technological progress prompts schumpeterian creative destruction while investment specific technological progress operates essentially as in the standard neoclassical growth model using structural var models we provide support to the key dynamic implications of the model copyright 2007 wiley blackwell

deconstructing the pioneer s advantage examining vintage effects and consumer valuations of quality and variety several studies have demonstrated an order of entry effect on market share suggesting that pioneers outperform later entrants however other research has pointed out the limitations of these studies and found evidence that many pioneers fail or have low market share given this background the purpose of this research is to understand the conditions under which pioneers are more likely and also less likely to have an advantage we propose a game theoretic model that includes important sources of pioneer advantages as well as disadvantages specifically we incorporate a pioneer advantage due to preemption in markets with heterogeneous tastes in addition we incorporate a potential pioneer disadvantage due to technology vintage effects where later entrants utilizing improved technology can have lower costs and higher quality the model allows us to evaluate the extent of vintage effects necessary to overcome a pioneer s advantage key relationships are found between the magnitude of the pioneer advantage or disadvantage and consumer valuations of product attributes e g variety and quality we empirically validate the model with vintage effect data in 36 product categories and measures of consumer valuations of product variety and quality for 12 of these 36 categories the results show that pioneers do better in product categories wherevariety is more important and worse in categories where productquality is more important pioneers in categories with high vintage effects are shown to have lower market shares and higher failure rates similar results appear when analyzing persistence of market leadership over time further validating our model s major implications we also present two case studies that illustrate key elements of the model

the interplay between micro frontier and sectoral short run production functions we apply leif johansen s dynamic production function framework to the development of the finnish brewery industry over a 30 year time span 1955 to 1984 based on micro data plants the relationship between the micro frontier and short run industry production functions is analysed particularly with respect to the evidence of embodied technical progress the empirical analysis reveals striking differences in the time pattern of productivity growth of the two functions illustrates the importance of capacity expansion for technical progress at the frontier and clarifies the distinction between embodied and disembodied technical progress

an econometric model of production with endogenous improvement in energy efficiency 1970 1995 the purpose of this paper is to introduce a modification of a standard four input production process where energy is used in an inefficient way due to partly unnecessary waste of energy in this production process r d investment is an additional input in order to improve energy efficiency it closes the gap between energy purchased and energy used effectively the more is invested the less is the waste of energy with the cost and benefit of r d investment incorporated in our model of the firm we analyze the impact of an energy tax on r d effort on output and on the waste of energy the model is implemented empirically by choosing a translog cost function and a set of first order conditions using data for the german chemical industry 1970 1995 in a simulation study based on higher energy prices we found outsourcing as the consequent reaction of the firm more material is used and less of energy labor and capital given the unchanged output level there is no indication of a double dividend in terms of environmental improvement as well as higher demand for labor on the industry level calling for a computable general equilibrium approach in order to answer this open question

the incidence of classified property taxes in a three sector model with an imperfectly mobile population abstract this paper analyzes the incidence of a classified property tax imposing different effective tax rates on residential commercial and industrial property as compared to a uniform property tax taxing capital and land in all sectors at the same rate our model includes three sectors commercial industrial and residential and three factors of production land labor and capital capital is assumed to be perfectly mobile but we consider varying degrees of labor mobility allowing the possibility that part of a classified property tax may be shifted to workers through lower wages

customer satisfaction productivity and profitability differences between goods and services there is widespread belief that firms should pursue superiority in both customer satisfaction and productivity however there is reason to believe these two goals are not always compatible if a firm improves productivity by downsizing it may achieve an increase in productivity in the short term but future profitability may be threatened if customer satisfaction is highly dependent on the efforts of personnel if so there are potential tradeoffs between customer satisfaction and productivity for industries as diverse as airlines banking education hotels and restaurants managers in these types of service industries as well as goods industries in which the service component is increasing need to understand whether or not this is the case for example if efforts to improve productivity can actually harm customer satisfaction and vice versa the downsizing of u s and european companies should be viewed with concern it follows that developing a better understanding of how customer satisfaction and productivity relate to one another is of substantial and growing importance especially in light of expected continued growth in services throughout the world economy the objective of this paper is to investigate whether there are conditions under which there are tradeoffs between customer satisfaction and productivity a review of the literature reveals two conflicting viewpoints one school of thought argues that customer satisfaction and productivity are compatible as improvements in customer satisfaction can decrease the time andeffort devoted to handling returns rework warranties and complaint management while at the same time lowering the cost of making future transactions the second argues that increasing customer satisfaction should increase costs as doing so often requires efforts to improve product attributes or overall product design a conceptual framework useful in resolving these contradictory viewpoints is developed the framework serves in turn as a basis for developing a theoretical model relating customer satisfaction and productivity the model predicts that customer satisfaction and productivity are less likely to be compatible when 1 customer satisfaction is relatively more dependent on customization the degree to which the firm s offering is customized to meet heterogeneous customers needs as opposed to standardization the degree to which the firm s offering is reliable standardized and free from deficiencies and 2 when it is difficult costly to provide high levels of both customization and standardization simultaneously to move forward from the model s propositions to the development of testable hypotheses we argue that services are more likely than goods to have the preceding characteristics hence tradeoffs between customer satisfaction and productivity should be more prevalent for services than for goods although this classification is not precise many services are standardizable and many goods have a service component it has the advantage of allowing an initial test of the propositions the empirical work employs a database matching customer based measures of firm performance with traditional measures of business performance such as productivity and return on investment roi the central feature of this database is the set of customer satisfaction indices provided by the swedish customer satisfaction barometer scsb the scsb provides a uniform set of comparable customer based firm performance measures and offers a unique opportunity to test the study s hypotheses the findings indicate that the association between changes in customer satisfaction and changes in productivity is positive for goods but negative for services in addition while both customer satisfaction and productivity are positively associated with roi for goods and services the interaction between the two is positive for goods but significantly less so for services taken together the findings suggest support for the contention that tradeoffs are more likely for services hence simultaneous attempts to increase both customer satisfaction and productivity are likely to be more challenging in such industries of course this does not imply that such firms should not seek improvements in both productivity and customer satisfaction for example appropriate applications of information technology may improve both customer satisfaction and productivity simultaneously the findings should provide motivation for future research concerning the nature of customer satisfaction and productivity as well as appropriate strategy and tactics for each one it is worth emphasizing that this is an issue that is not only important today but certainly will become even more important in the future as the growth of services continues and world markets become increasingly competitive the importance of customer satisfaction will also increase to compete in such a world firms must strike the right balance between their efforts to compete efficiently and their efforts to compete effectively

price leadership and dynamic aspects of oligopoly in u s manufacturing this study which covers a sample of 314 four digit industries taken from an exhaustive set of 450 four digit industries shows that increases in concentration associated with rising productivity occur mainly in low concentration industries while decreases in concentration associated with rising productivity occur mainly in high concentration industries the empirical results of this study indirectly lend support to a plausible hypothesis that a small group of firms makes a big impact on the productivity of an initially unconcentrated industry and thereby concentrates it later the small firms imitate the now big firms and concentration goes down while productivity keeps rising

workers machines and economic growth this paper models technology adoption as replacing workers by machines which perform the same job in the production process the paper shows that such modelling of technology adoption affects significantly the analysis of economic growth this model can explain large and persistent international differences in output levels and growth rates caused by small differences in underlying parameters

determinants of smallholder farmers participation in banana markets in central africa the role of transaction costs a bivariate probit model was employed to jointly and separately estimate banana market participation decisions of buying and selling households in rwanda and burundi using household survey data selectivity bias was corrected for estimating the transacted volumes using heckman s procedure the results showed that transaction cost related factors such as geographical location of households market information sources and travel time to the nearest urban center influence market participation non price related factors such as security of land tenure labor availability off farm income gender of the household head and years of farming experience had a significant influence on the transacted volumes output prices had a significant correlation with sales volume indicating price incentives increased supply by sellers generally the findings suggest that policies aimed at investments in rural road infrastructure market information systems collective marketing and value addition of banana products may provide a potential avenue for mitigating transaction costs and enhancing market participation and production of marketed surplus by rural households

balanced growth despite uzawa i use an event study approach to present novel evidence on the impact of trade liberalization on firm level profits using the uncertainty surrounding the negotiation and ratification process of the canada united states free trade agreement of 1989 cusfta i estimate the impact of different types of tariff reductions on the abnormal returns of canadian manufacturing firms i find that canadian import tariff reductions lead to lower and reductions in canadian intermediate input tariffs to higher abnormal returns the impact of u s tariff reductions is less clear and depends on the size of the affected firms i also calculate the total profit increase implied by my estimates overall cusfta increased per period profits by around 1 2 this was mainly driven by intermediate input tariff reductions which more than offset the negative effect of canadian import tariff reductions

spatial patterns of market participation and resource extraction fuelwood collection in northern uganda while distance to markets is a key determinant of market participation for households that are dependent on natural resources the distance to the resource stock is also essential thus a household s location with respect to markets and the resource stock determines household market participation and associated resource degradation applying a discrete choice framework for fuelwood collection in a developing country we characterize the spatial pattern of market participation regimes and forest use all else being equal autarkic households are closest to the forest and furthest from the market buyer households are closest to the market and furthest from the forest and seller households are at intermediate distances empirical tests based on survey data from northern uganda support the predictions from our theoretical model our findings have important implications for understanding the spatial patterns of forest degradation and determining the control group when designing impact evaluations of the effectiveness of development and conservation interventions

productivity in the united states trends and cycles productivity growth in the us has taken a sharp downturn in recent years two experts provide a new body of comparative data on productivity since 1948 by major sector and industry the book analyzes 20 industries to highlight trends and fluctuations in productivity and to provide a better context for the discussion of policy options the authors set forth the causes of productivity advances based on growth accounting for the business economy as a whole they detail interindustry regressions with particular reference to the productivity slowdown since 1966 they look at both the traditional measure of productivity labor output per hour and the more recently developed measure of total factor productivity which takes into account capital as well as labor inputs the quarterly and annual data are used to relate changes to other basic variables such as factor prices unit costs and product prices an appendix presents data for 35 industries 42 references 8 figures 30 tables

vintage human capital growth and the diffusion of new technology we develop a model of vintage human capital in which each technology requires vintage specific skills we examine the properties of a stationary equilibrium for our economy the stationary equilibrium is characterized by an endogenous distribution of skilled workers across vintages the distribution is shown to be single peaked under general conditions there is a lag between the appearance of a technology and its peak usage a phenomenon known as diffusion an increase in the rate of exogenous technological change shifts the distribution of human capital to more recent vintages thereby increasing the diffusion rate

productivity and the embodiment of technical progress this survey of the issues involved in the embodiment hypothesis that technical change and productivity can be explained by changes in the quality of inputs into the production process treats the interrelationships of technical change and productivity presents some empirical findings on this subject and discusses some fundamental issues in further studies of embodiment topics covered include the nature of the embodiment hypothesis the vintage model of capital and embodiment in other inputs the use of the embodiment hypothesis to study productivity trends the embodiment hypothesis and the productivity slowdown in the 1970s and 1980s and potential future applications of the embodiment hypothesis

tenure security investment and productivity in gambian agriculture a generalized probit analysis the determinants of investment input use and productivity are investigated under customary tenure in peri urban areas of the gambia a structural model is specified to investigate the role of tenure security on farm investments and input use and thereby on yield testing of the structural form hypotheses requires simultaneous equation estimation containing both continuous and discrete endogenous variables the model is estimated as a feasible generalized least squares amemiya s generalized probit some of the positive relationships hypothesized between tenure security investment and yields are corroborated in particular tenure security is found to enhance long term investments which in turn enhance yields

the medium term effect of r d on firm growth this study analyses the effect of r d expenditure on firm employment growth in the medium term using six cross sectional waves of an innovation survey conducted in the netherlands in all sectors the analysis is focused on firms having positive r d expenditure and investigates whether higher investments in r d in proportion to firm turnover translate into higher medium term growth rates comparisons with growth on a shorter term are conducted by following the firm size evolution since the r d investment for five consecutive years and allowing for firm exit at all time terms quantile regression techniques indicate that a higher r d has a positive effect on high growers and allows a higher number of firms to be high growers still once a firm invests in r d even if a higher investment makes the firm more likely to have a very good performance it does not make it less likely to have a bad one

critical survey savings and economic growth in neoclassical theory in neoclassical economics economic growth depends upon savings the paper discusses problems with this conventional view and how these have been tackled from pre solowian authors up to the recent new or endogenous growth theory egt these difficulties became particularly clear with the solow swan model of growth in which the savings rate did not affect the rate of growth in the absence of exogenous circumstances savings would only depress the marginal productivity of capital forcing the economy towards a stationary state the paper interprets egt as an attempt to react to this gloomy theoretical prospect the paper examines various difficulties with this attempt

impacts of innovation export and other factors on firm employment growth in chinese manufacturing industries this article presents empirical evidence on the impacts of product innovation export and other important factors on employment growth in chinese manufacturing industries over the period 2000 2006 the results of our analysis show that the overall demand effect of firms output growth on their average yearly employment growth amounts to 7 0 of which 3 5 1 2 1 6 and 0 7 correspond to the output growth of respectively domestic old export old domestic new and export new products the displacement effect from process and organizational innovations as measured by firms productivity efforts to catch up with industry regional productivity frontiers accounts for a 5 4 average reduction of yearly employment growth we also observe a trade off between growth of productivity and growth of employment which could have been on average higher by 2 for productivity 16 8 instead of 14 8 and lower by 2 for employment 1 4 instead of 3 4

welfare implications of oligopoly in u s food manufacturing a statistical procedure is used to show that increased concentration in u s food manufacturing industries is associated with increased total input productivity a price leadership model is employed in order to estimate total welfare loss if an elasticity of 1 is assumed deadweight loss to society is estimated at 0 5 of food value if an elasticity of 0 5 is assumed total loss to consumers amounts to 6 11 of food value which is 10 billion in 1975 the increase in total factor productivity which is linked to concentration is roughly sufficient to offset the entire loss to consumers

real wage growth technical change and competition in the labor market the paper measures the rate of growth of average labor cost and the real wage for the twenty u s two digit manufacturing industries 1948 76 it is argued that these rates of growth give interesting information which other studies on the real wage ignore the results suggest that the gains from technical advance are shared equally across all labor markets consistent with the competitive paradigm a simple and appealing rationale for the observation that high growth industries show the slowest relative rate of growth of prices is also given t he general theory keynes 1936 unleashed many controversies one of the earliest and still topical controversy is the cyclical behavior of the real wage essentially the real wage employment debate has focussed on whether or not the demand schedule slopes downwards and there have been many studies on this topic producing a variety of conflicting findings a common feature of the real wage employment studies is to abstract away from the growth in the real wage that is bound to occur in a growing economy these studies are primarily concerned with deviations from trend or innovations in the real wage and the theme of this paper is that to ignore the growth in the real wage is to throw away valuable and interesting information this information on real wage growth tells us a great deal about competition in the labor market this study should be seen as being complementary rather than conflicting with the real wage employment studies the existence of a downward sloping demand curve for labor is after all not sufficient and probably not necessary for the functioning of competitive labor markets over the span of years 1948 76 i find that individual u s manufacturing industries record widely varying rates of productivity growth however these same industries tend to show a common rate of growth of the real wage this feature of productivity growth was emphasized by the late salter 1960 in his pathbreaking analysis of technical change he writes there is no tendency for above average increases in labour productivity to be accompanied by above average increases in earnings

decomposing growth in revenues and costs into price quantity and total factor productivity contributions this article employs the superlative fisher and tornqvist indexes for exact decomposition of growth in nominal revenues and costs the findings confirm the well known result that these indexes very closely approximate each other implying that the mathematically simpler and computationally easier tornqvist is the more practicable index moreover this article s nominal growth decomposition yields all the results from the more common real growth decomposition and is also more informative for policy purposes application to the us agricultural sector during 1948 2001 shows that of the 3 31 average annual growth in revenues tfp growth contributed 1 90 percentage points pct pts growth in output prices added 1 43 pct pts while growth in input quantities contributed 0 02 pct pts i e fewer inputs therefore real output growth or revenue growth less output price growth was 1 88 pct pts revealing that tfp s 1 90 pct pts growth contribution was fully responsible for real output growth with

energy price energy efficiency and capital productivity empirical investigations and policy implications abstract the immediate effect of carbon pricing policy is to raise energy costs which in turn reduces energy consumption either through induced capital under utilization or investments in new energy efficient capital the latter mechanism which implies improvements in energy efficiency is realized in the long run while the former which has implications for capital productivity tends to occur in the short run we employ panel vector autoregressions as well as co integration and error correction techniques to identify these short and long run relationships including their differences across canadian industries

quantile estimates of the impact of r d intensity on firm performance this paper investigates the relationship between initial research and development r d intensity and firm growth using a unique data set for firms with r d activities in austria during the period 1995 2006 results based on the least absolute deviation lad estimator show that initial r d intensity has a positive and significant impact on both employment and sales growth in the subsequent 2 years quantile regressions for each cross section reveal that the impact of r d intensity is significant from 0 3 to the highest quantile of the conditional distribution of employment growth furthermore the elasticity of employment growth with respect to r d intensity is highest for firms at or slightly below the median of the distribution of firm growth finally we find that the impact of r d decreases significantly over time

a note on growth accounting with vintage capital abstract we show how growth accounting can be performed in the classic vintage capital model of solow solow r 1956 technical change and the aggregate production function review of economics and statistics the growth in real output can be decomposed into the labor share times the growth of labor plus the gross quasi rents on capital times the saving rate we show that data easily obtained from conventional national income accounts can be used to perform this growth accounting

r d and employment an application of the lsdvc estimator using european microdata abstract the job creation effect of business r d is tested applying the dynamic lsdvc estimator to a longitudinal database covering 677 european companies over the period 1990 2008 job creation is detected in services and high tech manufacturing but not in traditional sectors

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

the impact of technological and organizational innovations on employment in european firms by using firm level data provided by the fourth community innovation survey cis4 for a selected number of eu countries this article explores the employment impact of innovation extending the analysis to organizational change the empirical evidence presented shows that both technological and organizational innovation exert a positive impact on employment mainly indirectly that is by improving growth performances in firms the strength of these indirect effects have been found to vary across different types of innovations despite the limits imposed by data at our disposal the evidence presented seems to somewhat diminish the relevance of the labor displacing effects of the process innovation the latter being strong and clearly visible only within the manufacturing industry and only when process innovations are combined with organizational changes copyright 2012 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

r d subsidies and productivity in smes this paper examines the effect of r d subsidies on labour productivity we use firm level data on finnish smes from 2000 to 2012 and apply a combined matching and difference in differences method to control for selection bias we find no significant positive effect on labour productivity over the five year period after a subsidy is granted however the results vary over time and indicate a 2 4 negative effect on smes annual productivity growth one to 2 years after the subsidy year nevertheless subsidies generate a positive employment effect and enhance firm survival additional scrutiny reveals that subsidies positively affect the human capital level of low skill firms

innovation and employment a firm level analysis with european r d scoreboard data abstract this article analyzes the microeconomic relation between innovation and employment using company data from r d scoreboard for europe covering 2000 2008 a reduced form equation in which r d can account for both product and process innovation is estimated the existence of non constant elasticities is assessed due to the combination of efficient scale and decreasing return to r d in our empirical estimates the scale effect tends to prevail for a given r d intensity generating an increasing relation between total turnover and employment these results have important implications for policymakers innovation supporting policies should be correctly tailored and monitored since the results depend on the characteristics of the benefiting firms moreover r d intensity on gdp should be managed with care if taken as a policy target given that the denominator is endogenous and non linearly dependent on research expenditure

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

investment and technical progress models in which the growth rate is exogenous provide no role for government in determining growth in our model growth is associated with investment through externalities from learning by watching rather than with the level of the capital stock presumption of a technical progress function with first increasing and then decreasing returns leads to multiple steady state growth equilibria there is also an explicit role of government policy in setting tax rates on output it follows that two economies with identical structures and stochastic tax policies may exhibit very different growth paths over sustained periods although the stationary distribution of growth rates is the same given the desirability in principle of subsidizing investment various practical methods are considered copyright 1992 by oxford university press

an ordered tobit model of market participation evidence from kenya and ethiopia do rural households in developing countries make market participation and volume decisions simultaneously or sequentially this article develops a two stage econometric method to test between these two competing hypotheses regarding household level marketing behavior the first stage models the household s choice of whether to be a net buyer autarkic or a net seller in the market the second stage models the quantity bought sold for net buyers sellers based on observable household characteristics using household data from kenyan and ethiopian livestock markets we find evidence in favor of sequential decision making the welfare implications of which we discuss

education and economic growth in taiwan a case of successful planning abstract taiwan s education system had three features which were instrumental to its spectacular economic success first it had an infrastructure already built up by 1950 for basic education that extended fairly broadly among the population second a ready supply of highly educated labor arrived in 1949 50 from the mainland to replace the japanese and to begin the process of building the local economy most important the education system was planned to grow in a manner that closely matched the changing requirements of the growing economy the compulsary basic education was raised from six to nine years the secondary level curriculum was shifted more toward vocational fields the supply of university graduates was strictly limited and the university curriculum changed to emphasize science and engineering subjects the levels above basic junior high level were expanded but disproportionately into the private sector so they were not as costly to the government

computers obsolescence and productivity this paper develops a new technique for measuring the effect of computer usage on u s productivity growth standard national income and product accounts nipa measures of the computer capital stock which are constructed by weighting past investments according to a schedule for economic depreciation the rate at which capital loses value as it ages are shown to be inappropriate for growth accounting because they do not capture the effect of a unit of computer capital on productivity this is due to technological obsolescence machines that are still productive are retired because they are no longer near the technological frontier and anticipation of retirement affects economic depreciation using a model that incorporates obsolescence alternative stocks are developed that imply a larger computer usage effect this effect together with the direct effect of increased productivity in the computer producing sector accounted for the improvement in u s productivity growth over 1996 1998 relative to the

the quantitative consequences of raising the u s saving rate the authors investigate the consequences of a permanent unphased increase in the u s gross saving rate they find that the sacrifice time the time that elapses until consumption surpasses the value it would have had under the initial saving rate is roughly six years and is insensitive to the percentage increase in the saving rate delta sub s the percentage gain in output at the end of decade the decade gain is roughly 26 of delta sub s while the percentage gain in consumption is roughly 8 of delta sub s the saving rate return the internal rate of return on a permanent increase in the saving rate is roughly 16 and is insensitive to delta sub s copyright 1991 by mit press

transport costs and smallholder cropping choices an application to siaya district kenya smallholders regularly devote shares of resources to low yielding food crops than they do to cash crops that have higher market returns in this paper costly exchange is incorporated into an agricultural household model and a numerical nonseparable version of the model is used to show that seemingly inefficient cropping choices of this type in siaya district kenya can be explained as rational food import substitution given high transport costs in product markets improved rural road networks that reduce these costs could abate motives to meet food needs through domestic production and promote specialization that raises farm incomes

a paler shade of green environmental policy under induced technical change conventional wisdom argues that environmental policy is less costly if it induces the development of cleaner technologies in contrast to this argument we show that once the second best nature of actual economies is taken into account the cost of environmental policy may well be larger with induced technical change itc than without thus itc may lower both the emissions reductions and the welfare gains associated with environmental policy in an endogenous policy framework itc may reduce the desired stringency of the policy

economic growth lessons from two centuries of american agriculture this paper reviews the growth experience of u s agriculture over the past two centuries in consonance with the view that growth is determined by the economic environment which consists of the available technology incentives constraints and institutions within this framework the implemented technology is determined jointly with the resource allocation the review covers the role played by resource endowment resource flow technical change and its factor bias and product demand it highlights the importance of the income elasticity of demand and the labor augmentation of the technical change the total factor productivity tfp was almost nil at the beginning of the nineteenth century increasing gradually to the point where it exhausted output growth in the latter part of the twentieth century this pattern is consistent with the postulate emerging from this framework where the tfp is endogenous and determined jointly with growth rather than determining it the more recent performance of u s agriculture is placed within a global perspective in order to generalize the discussion

the age of capital the age of utilized capital tests of the embodiment hypothesis revisited early tests of the embodiment hypothesis which suggests that new capital is more productive than old may have been biased due to the incorrect use of age rather than utilized age of capital this study which attempts to correct for the potential mismeasurement bias by using the utilized age of capital in the analysis finds evidence that the embodiment hypothesis is valid

the influence of industry downturns on the propensity of product versus process innovation this article sheds light on how industry fluctuations affect firms propensity to innovate we test two seemingly conflicting arguments that suggest how firms are more or less inclined to engage in innovation activities during industry fluctuations by studying a panel of 622 italian manufacturing firms during the period 1995 2003 we show how differentiating between product and process innovation may help reconcile the theory of opportunity cost of innovation with the cash flow effect argument we find that industry downturns are related to product and process innovation in different ways firms tend to invest in product innovation rather than process innovation in downturns the findings have implications for both theory showing when the opportunity cost of innovation dominates and research design showing the importance of both the input and output measures in innovation studies and how they might influence the results

employment innovation and productivity evidence from italian microdata italian manufacturing firms have been losing ground with respect to many of their european competitors this paper presents some empirical evidence on the effects of innovation on employment growth and therefore on firms productivity with the goal of understanding the roots of such poor performance we use firm level data from the last three surveys on italian manufacturing firms conducted by mediocredito capitalia which cover the period 1995 2003 using a modified version of the model proposed by harrison jaumandreu mairesse and peters 2005 which separates employment growth rates into those associated with old and new products we provide robust evidence that there is no employment displacement effect stemming from process innovation the sources of employment growth during the period are split equally between the net contribution of product innovation and the net contribution from sales growth of old products however the contribution of product innovation is somewhat lower than that for the four comparison european countries considered by harrison et al

taxation and the cost of capital the uk experience since the 1960s the uk has witnessed a series of reforms to its corporation tax system these include the creation of corporation tax as an independent tax in 1965 the gradual introduction of generous capital allowances in the early 1970s the introduction of the partial imputation system in 1973 and stock relief in 1975 and the 1984 reforms which reduced the tax rate and capital allowances and abolished stock relief a number of these reforms were designed with the specific intention of influencing company decisions regarding investment and finance through the real cost of capital

the impact of vintage and survival on productivity evidence from cohorts of u s manufacturing plants this paper examines the evolution of productivity in u s manufacturing plants from 1963 to 1992 we define a vintage effect as the change in productivity of recent cohorts of new plants relative to earlier cohorts of new plants and a survival effect as the change in productivity of a particular cohort of surviving plants as it ages both factors contribute to industry productivity growth but play offsetting roles in determining a cohort s relative position in the productivity distribution recent cohorts enter with higher productivity than earlier entrants did whereas surviving cohorts show productivity increases as they age these two effects roughly offset each other however so there is a rough convergence in productivity across cohorts in 1992 and 1987

seniority rules and productivity an empirical test the primary purpose of this paper is to test empirically the effect of labor quality on short run manufacturing productivity in doing so the study makes major advances in two areas for the first time a job tenure function is estimated and a time series of job tenure in manufacturing is developed this estimated tenure series empirically verifies the use of seniority rules in the firm worker employment relationship having generated a tenure series the authors then test whether tenure enhances productivity in manufacturing the results clearly indicate that seniority rules have a statistically significant positive impact on productivity and the pattern of the seniority rules is reminiscent of a model where human capital has a specific component copyright 1989 by the london school of economics and political science

putty clay technology and stock market volatility abstract firms first order conditions imply that stock returns equal investment returns from the production technology much applied work uses the adjustment cost technology which implies that the realized return is high when the investment capital ratio is high this paper derives for an arbitrary stochastic discount factor the investment return implied by the putty clay technology the combination of capital heterogeneity and irreversibility creates a novel channel for return volatility the investment return is high when the ratio of investment to gross job creation is low empirically the putty clay feature helps account for u s stock market data

educational expansion and economic output in the united states 1890 1969 a production function analysis our research analyzes the effect of educational expansion on economic output in the united states from 1890 to 1969 in a departure from the individual level inferences often used in prior research we use an aggregate production function framework to estimate directly educational effects on economic output net of labor and capital the two basic factors of production using aggregate time series analyses we find that expansion at the secondary and doctorate levels was positively related to economic output in the years since 1933 we do not however find consistent evidence for effects of these or other levels of schooling from 1890 to 1928 consequently while we have found that educational expansion has made contributions to economic output the effects of education are more limited and time specific than shown in previous studies

employment and technological innovation evidence from u k manufacturing firms this article uses british firm level panel data on actual innovative activity drawn from different statistical sources to identify the effect of technical change on jobs previous work tends to find positive associations of proxies for technical change and employment but such studies suffer from various statistical drawbacks in this study even when one controls for fixed effects dynamics and endogeneity innovations have a positive and significant effect on employment which persists over several years there seems to be little direct role for spillover effects from industry innovations or any role for industry wages or union power

labor supply with job assignment under balanced growth abstract we consider a competitive equilibrium growth model where technological progress is embodied into new jobs which are assigned to workers of different skills in every period workers decide whether to actively participate in the labor market and if so how many hours to work on the job balanced growth requires that the job technology is complementary with the worker s total labor input on the job which is jointly determined by his skill and his working hours since lower skilled workers can supply longer hours we show that the equilibrium features positive assortative matching higher skilled workers are assigned to better jobs only if differences in consumption are small relative to differences in worker skills when the pace of technological progress accelerates wage inequality increases and workers participate less often in the labor market but supply longer hours on the job this mechanism can explain why as male wage inequality has increased in the us labor force participation of male workers of different skills has fallen while their working hours have increased

towards an explanation of the productivity slowdown an acceleration deceleration hypothesis after two and a half decades of prosperous post war development western industrialised countries recently experienced a slowdown of economic growth and productivity advance together with an increase in the rates of inflation and unemployment in trying to explain this malaise we are looking at a diagnosis that could help us to identify early indicators of a future turnaround or some policy variables which deserve to be included in a therapeutic programme although we shall focus on what can be measured complying with the standards of the guild we shall not refrain from considering complex relationships which can be grasped only intuitively even if they include phenomena which lie beyond the limits of official statistics 2 the outcome may be soft economics but we find some consolation in the dictum that it is better to be vaguely right than to be precisely wrong

experience innovation and productivity empirical evidence from italy s slowdown the authors investigate whether the level of employee experience is good or bad for innovation and productivity using a sample of italian manufacturing firms during the early 2000s the authors find different results for managers versus workers experience the effect of managerial experience proxied by age on firm performance appears to depend on the type of firm in innovative firms having older managers and board members has a negative effect on innovation and productivity while in non innovative firms the costs and benefits of having older managers appear to cancel each other out for workers the effect of having a high share of inexperienced temporary workers is unambiguously associated with low innovation and low productivity these results also hold when endogenous regime switching is taken into consideration

the greener the better job creation effects of environmentally friendly technological change this article investigates the link between environment related innovation and job creation at firm level employing italian data on 4507 manufacturing firms matched with patent records for the period 2001 2008 we test whether green innovation measured by the number of environment related patents has a positive effect on long run employment growth that is specific with respect to non environmental innovation results show a strong positive impact of green innovation on long run job creation substantially bigger than the effect of other innovations our findings are robust to a number of additional tests including controls for patents quality and cost differential between generic and green innovation and endogeneity

the productivity inflation nexus the case of the australian mining sector this paper examines the causal links between productivity growth and two price series given by domestic inflation and the price of mineral products in australia s mining sector for the period 1968 1969 to 1997 1998 the study also uses a stochastic translog cost frontier to generate improved estimates of total factor productivity tfp growth the results indicate negative unidirectional causality running from both price series to mining productivity growth regression analysis further shows that domestic inflation has a small but adverse effect on mining productivity growth thus providing some empirical support for australia s inflation first monetary policy at least with respect to the mining sector inflation in mineral price on the other hand has a greater negative effect on mining productivity growth via mineral export growth

on endogenizing long run growth this assessment of recent theoretical work on endogenous growth identifies three different engines of long run growth i the asymptotic average product of capital is positive ii labor productivity increases as an external effect of capital accumulation iii there are feedback effects on the cost of accumulating knowledge or innovating a general model encompassing all three is considered and then used to review different proposed determinants of long run growth rates the contribution of endogenous growth theory has been to create a framework in which to explain why economic institutions and policies can have long run effects on growth rates

measuring the cost of capital when taxes are changing with foresight abstract the familiar hall jorgenson 1967 cost of capital perturbation is not a uniquely feasible one because of institutional features of actual tax systems the optimal holding time for an incremental unit of capital will generally be infinite the impossibility of an optimal rule for recapturing excess depreciation allowances on disposal is demonstrated when tax changes are foreseen the error in the traditional measure of cost of capital can become highly significant ignorance of this effect led to underestimates of the extent to which the radical changes to the u k corporation tax in 1984 would affect cost of capital and incentives to forestall planned investment

a selectivity model of household food marketing behavior in sub saharan africa the agricultural household s discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy conditional on participation failure to participate in markets results from high fixed transactions costs a selectivity model endogenously switches households into alternative market participation states correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions improved market information increases the probability of participation by sellers while access to cereals processing technology increases quantities transacted by both sellers and buyers conditional on participation

smallholder market participation under transactions costs maize supply and fertilizer demand in kenya abstract this paper assessed the effects of transactions costs relative to price and non price factors on smallholder marketed surplus and input use in kenya a selectivity model was used that accounts for the effects of transactions costs assets technology and support services in promoting input use and generating a marketable surplus output supply and input demand responses to changes in transactions costs and price and non price factors were estimated and decomposed into market entry and intensity the results showed that while transactions costs indeed have significant negative effects on market participation institutional innovations such as group marketing are also emerging to mitigate the costs of accessing markets output price has no effect on output market entry and only provides incentives for increased supply by sellers on the other hand both price and non price factors have significant influence on adoption and intensity of input use overall the findings suggest that policy options are available other than price policies to promote input use and marketed surplus the paper concludes with implications for policy to induce greater input output market participation among smallholders in africa

regional and technological determinants of company productivity growth in the late 1980s ke s and bergman e m 1995 regional and technological determinants of company productivity growth in the late 1980s reg studies 29 59 71 this paper estimates the impacts on productivity growth of regional factors and technological inputs two unique data sets for us textile apparel and computer electronics companies are combined with secondary data to estimate a total factor productivity tfp growth equation a neutral technological progress ntp equation and an equation of scale economies the estimates show that regional factors and technological inputs are more significant contributors to tfp and ntp in computer electronics production than in textile apparel similarly regional factors and technological inputs have stronger influence on scale economies in computer electronics than in textile apparel scale economies as traditionally measured show a complicated pattern of empirical performance and may not be a straightforward indicator of productivity growth in an era of downsizing and flex

innovation and productivity growth the puzzle confronting economists has been that the rate of growth of output that was being observed has been much larger than the rate of increase in the principal resources that were being measured it is now clear that this puzzle is of our own making because we have been using measures of capital and labor which had been refined and narrowed in ways that excluded many of the improvements that have been made in the quality of these resources theodore w schultz 1962