Working Inflow, Outflow, and Churning

Linked employer-employee data from the Finnish business sector is used in an analysis of worker turnover. The data is an unbalanced panel with over 219 000 observations in the years 1991-97. The churning (excess worker turnover), worker inflow (hiring), and worker outflow (separation) rates are explained by various plant and employee characteristics in type 2 Tobit models where the explanatory variables can have a different effect on the probability of the flow rates to be non-zero and on the magnitude of the flow rate when it is positive. Most of the characteristics are defined as 5-group categorical variables defined for each industry separately in each year. We compare the Tobit results to OLS estimates, and also use weighting by plant employment. It turns out that weighted OLS results are fairly close to Tobit results. The probabilities of observing non-zero churning, inflow, and outflow rates increase with plant size. The magnitudes of the non-zero churning and inflow rates depend positively on size, but the magnitude of outflow rate negatively. High-wage plants have low turnover, whereas plants with large within-plant variation in wages have high turnover. Average tenure of employees has a negative impact on turnover. High plant employment growth increases churning and separation but reduces hiring in the next year. We also control various other plant and average employee characteristics like average age and education, shares of women and homeowners, foreign ownership, ownership changes, and regional unemployment.http://deepblue.lib.umich.edu/bitstream/2027.42/39997/3/wp611.pd

Factor income shares and micro-level restructuring: An analysis of Finnish manufacturing

This paper examines the relationship between productivity-enhancing restructuring at the micro level and changes in aggregate factor income shares in Finnish manufacturing. As a framework we make use of a simple model where long-run aggregate productivity growth is determined by successive technology steps that are taken in the new plants by seizing new technological opportunities. This requires investments into tangible and intangible capital that involve sunk costs. Wages are determined through centralised bargaining. In the equilibrium wages are set so that the present value of profits of the plants are squeezed to zero. Identical workers share the same wage level and the wages are increased at the rate of previous aggregate productivity growth, so that in the steady state factor income shares are unchanged. According to the model, the larger the new technological opportunities, the higher is the R&D intensity and the higher is the restructuring component of aggregate productivity growth and the larger is the income share of capital. We find evidence that the decline in the aggregate labour share can be very much explained by the transfer of payroll shares from high labour income share (poorly profit-making) plants to low labour income share (profitable) plants. Empirical findings about the micro-level sources of aggregate productivity growth and the micro-level features of the changes in aggregate income shares are consistent with the interpretation that Finnish manufacturing experienced a positive technology shock in the latter part of the 80s. Some signs of the chilling of restructuring can be found in the late 90s.Tutkimuksessa selvitetään tuottavuutta vahvistavan mikrotason rakennemuutoksen ja aggregaattitason tulo-osuusmuutosten välistä yhteyttä Suomen tehdasteollisuudessa. Tarkastelun kehikkona on yksinkertainen malli, jossa pitkän aikavälin aggregaattitason tuottavuuskasvu määräytyy peräkkäisissä teknologia-askeleissa, jotka tehdään uusissa toimipaikoissa tarttumalla uusiin teknologisiin mahdollisuuksiin. Tämä vaatii investointeja aineelliseen sekä aineettomaan pääomaan, josta aiheutuu upotettuja kustannuksia. Palkoista sovitaan keskitetysti. Tasapainossa palkat ovat asettuneet siten, että toimipaikkojen voittojen nykyarvo on nolla. Identtisillä työntekijöille on samat palkat ja palkkoja nostetaan samalla vauhdilla kuin aggregaattituottavuus on parantunut aikaisemmin, jolloin normaalioloissa tulo-osuudet pysyvät muuttumattomana. Mallin mukaan mitä enemmän on uusia teknologisia mahdollisuuksia, sitä korkeampi on T&K intensiteetti, sitä korkeampi on aggregaattitason tuottavuuskasvun rakennekomponentti ja sitä suurempi on pääoman tulo-osuus. Tutkimuksessa saadaan näyttöä siitä, että työn tulo-osuuden pieneneminen aggregaattitasolla voidaan paljolti selittää palkkaosuuksien siirtymällä korkean työn tuloosuuden (huonosti kannattavista) toimipaikoista matalan työosuuden (hyvin kannattaviin) toimipaikkoihin. Empiiriset havainnot aggregaattitason tuottavuuskasvun mikrotason lähteistä sekä aggregaattitason tulo-osuusmuutosten mikrotason piirteistä puhuvat sen puolesta, että Suomen teollisuus koki positiivisen teknologiashokin 1980-luvun jälkimmäisellä puoliskolla. Joitakin merkkejä saadaan siitä, että rakennemuutos on rauhoittunut 1990-luvun lopulla

Working Inflow, Outflow, and Churning

Linked employer-employee data from the Finnish business sector is used in an analysis of worker turnover. The data is an unbalanced panel with over 219 000 observations in the years 1991-97. The churning (excess worker turnover), worker inflow (hiring), and worker outflow (separation) rates are explained by various plant and employee characteristics in type 2 Tobit models where the explanatory variables can have a different effect on the probability of the flow rates to be non-zero and on the magnitude of the flow rate when it is positive. Most of the characteristics are defined as 5-group categorical variables defined for each industry separately in each year. We compare the Tobit results to OLS estimates, and also use weighting by plant employment. It turns out that weighted OLS results are fairly close to Tobit results. The probabilities of observing non-zero churning, inflow, and outflow rates increase with plant size. The magnitudes of the non-zero churning and inflow rates depend positively on size, but the magnitude of outflow rate negatively. High-wage plants have low turnover, whereas plants with large within-plant variation in wages have high turnover. Average tenure of employees has a negative impact on turnover. High plant employment growth increases churning and separation but reduces hiring in the next year. We also control various other plant and average employee characteristics like average age and education, shares of women and homeowners, foreign ownership, ownership changes, and regional unemployment.worker turnover, churning, employer-employee data

Kilpailun kehitys ja kannattavuuden mikrodynamiikka Suomen yrityssektorilla

The use of traditional industry-level profitability indicators for assessing the state of competition is problematic for two reasons. First, short-term variation reflects business cycles more than it does the impact of competition policy. Second, rough industry-level indicators hide different mechanisms that are dependent on competition but may affect profitability in opposite directions. In this analysis both problems are avoided by using firm-level Financial Statement Statistics of Statistics Finland over the years 1995-2006 and by applying a decomposition method. With these tools the micro- level sources of industry-level profitability changes have been examined over a long-run period. The findings provide support to the general view having emerged from the earlier micro-level analysis that competition has developed in a favorable way in Finland until the end of the 1990s. On the other hand, the results reveal interesting differences between periods, sectors and regions, which describe challenges of competition policy in the future

From R&D to productivity through micro level restructuring

This paper investigates the determinants of the between component of aggregate productivity growth, which gauges the productivity-enhancing part of plant-level restructuring. Results obtained from a panel of twelve Finnish manufacturing industries in the period from the mid-70s to the late 90s suggest that R&D contributes to aggregate productivity growth through plant-level restructuring with a lag of some 3 to 5 years. More generally, our empirical evidence is in keeping with the conjecture that the technology advances made in the industries, generated or captured by R&D efforts, initially tend to widen productivity dispersion between plants, but the plant-level restructuring needed to fully reap the fruits of technology improvements at the industry level simultaneously compresses the heterogeneity. We observe that international trade, and imports in particular, is positively related to the between component. This finding can be interpreted so that the competitive pressure being one important element of the creative destruction process. Finally, we do not find evidence that wage dispersion between plants stimulates labour reallocation in a productivity- enhancing way. – productivity ; total factor productivity ; plant level restructuring ; R&D ; international trade ; competitionTutkimuksessa selvitetään, mitkä tekijät selittävät aggregaattituottavuuden kasvun osuussiirtymäkomponenttia, joka mittaa tuottavuutta vahvistavan osan toimipaikkatason rakennemuutoksesta. Kaksitoista toimialaa 1970-luvun puolivälistä 1990-luvun loppuun käsittävästä paneeliaineistosta saadut tulokset viittaavat siihen, että T&K vaikuttaa aggregaattitason tuottavuuteen toimipaikkatason rakennemuutoksen kautta noin 3-5 vuoden viiveellä. Yleisesti ottaen empiirinen evidenssi on sopusoinnussa sen otaksuman kanssa, että toimipaikkatason rakennemuutosta tarvitaan teknologisten parannusten täysimääräiseen hyödyntämiseen ja että tämä prosessi samaan aikaan tiivistää heterogeenisuutta. Havaitaan, että kansainvälinen kauppa ja tuonti eritoten ovat positiivisessa yhteydessä osuussiirtymäkomponentin kanssa. Tämä havainto on tulkittavissa niin, että kilpailun luoma paine on yksi merkittävä luovan tuhon prosessin elementti. Lopuksi, empiirinen näyttö ei viittaa siihen, että toimipaikkojen väliset palkkaerot vilkastuttaisivat työvoiman uudelleenkohdentumista tuottavuutta vahvistavalla tavalla

The micro-level dynamics of regional productivity growth: The source of divergence in Finland

Productivity growth of the Finnish regions in 13 manufacturing industries is decomposed into micro-level sources by using plant-level data from 1975 to 1999. There are substantial regional differences in the intensity of productivity-enhancing restructuring. Dynamic competition is more intensive in Southern Finland, where the productivity level is also high. In contrast, plants located in Eastern Finland are equipped with low-productivity technologies owing to persistently sluggish micro-level dynamics. Productivity dispersion between plants within industries is greatest in Southern Finland. We argue that intensive experimentation is a more reasonable interpretation of this finding than large static X-inefficiency in this high productivity region.

Foreign-owned firms and productivity-enhancing restructuring in Finnish manufacturing industries

The direct contribution of foreign-owned companies (FOCs) to productivity-enhancing intra-industry restructuring in Finnish manufacturing is analyzed by means of a productivity decomposition method. It is found that the FOCs have had an increasing role on the micro-level productivity dynamics after the liberalization of the foreign-ownership legislation in 1993. However, when proportioned to the employment share, the change of their contribution seems less outstanding. Initially the restructuring component of the FOCs was disproportionally large but had normalized by the end of the 1990s.Tutkimuksessa selvitetään ulkomaalaissomisteisten yritysten suoraa vaikutusta tuottavuutta vahvistavaan, toimialojen sisällä tapahtuvaan toimipaikkarakenteiden muutokseen Suomen teollisuudessa. Kysymystä on tutkittu tuottavuuden hajontamenetelmää käyttäen. Havaitaan, että ulkomaalaisomisteisten yritysten merkitys tuottavuuden mikrotason dynamiikalle on lisääntynyt vuonna 1993 tapahtuneen ulkomaalaisomistuksen liberalisoinnin jälkeen. Toisaalta kun ulkomaalaissomisteisten yritysten kontribuutio suhteutetaan niiden työllisyysosuuteen, kontribuution muutoksen merkitys näyttää vähemmän esiinpistävältä. Alussa ulkomaalaisomisteisten yritysten merkitys oli suhteellisesti ottaen suuri, mutta tilanne tasaantui 1990-luvun jälkipuoliskolla

Sources of job and worker flows: Evidence from a panel of regions

The aim of this study is to explore the structure and the dynamics of regional labour markets in terms of gross job and worker flows. The regional turnover rates are related to macroeconomic factors, industry-structure and demographic factors by employing the data of 85 Finnish regions over the period of 1988-1997. The results imply that different factors can have similar effects on net changes in employment and unemployment by various means of affecting gross changes.job flows; worker flows; dynamic panel data estimation

Do foreign players change the nature of the game among local entrepreneurs?

The effect of foreign-owned companies on entrepreneurial survival in the Finnish business sector is analyzed by using a new, exceptionally rich linked data on employees, entrepreneurs and their companies. Our new indicator of foreign presence, based on the observed spatial scopes of the local labor markets, outperforms other commonly used alternatives for measuring regional effects. According to the results, foreign-owned companies crowd out local entrepreneurship. They increase competitive pressure in a way that selects efficient entrepreneurs from inefficient ones, which stimulates productivity-enhancing restructuring at the micro-level. In contrast to the theoretical prediction, higher education does not seem to make entrepreneurs less vulnerable to the foreign presence despite their possibly higher ability to adopt knowledge from foreign-owned companies.Ulkomaalaisten yritysten vaikutusta yrittäjien jatkamistodennäköisyyteen Suomen yritystoiminnassa on tutkittu käyttämällä uusia ja poikkeuksellisen arvokkaita yhdistettyjä aineistoja palkansaajista, yrittäjistä ja heidän yrityksistään. Tutkimuksessa käytetään uutta ulkomaalaisten yritysten läsnäolon intensiteetin mittaa, joka pohjautuu havaittuihin työssäkäyntialueisiin. Uusi indikaattori näyttää toimivan paremmin kuin perinteiset tavat tutkia alueellisia vaikutuksia. Tulosten mukaan ulkomaalaiset yritykset syrjäyttävät paikallista yrittäjyyttä. Ne lisäävät kilpailupainetta niin, että tehokkaat yrittäjät valikoituvat tehottomista. Näin ne lisäävät alueiden tuottavuutta vahvistavaa mikrotason rakennemuutosta. Teoreettisten ennusteiden vastaisesti yrittäjän hyvä koulutus ei sinänsä näytä tekevän hänestä vähemmän altista ulkomaalaisten yritysten syrjäyttävälle vaikutukselle, vaikka koulutuksen voisi odottaa parantavan kykyä omaksua ulkomaalaisista yrityksistä leviävää tietämystä

The micro-level dynamics of regional productivity growth: The source of divergence in Finland

Productivity growth of the Finnish regions in 13 manufacturing industries is decomposed into micro-level sources by using plant-level data from 1975 to 1999. There are substantial regional differences in the intensity of productivity-enhancing restructuring. Dynamic competition is more intensive in Southern Finland, where the productivity level is also high. In contrast, plants located in Eastern Finland are equipped with low-productivity technologies owing to persistently sluggish micro-level dynamics. Productivity dispersion between plants within industries is greatest in Southern Finland. We argue that intensive experimentation is a more reasonable interpretation of this finding than large static X-inefficiency in this high productivity region