224,411 research outputs found
Shocking Technology: What Happens When Firms Make Large IT Investments?
Many economists see information technology (IT) as central to understanding trends in productivity, laborâs share of output, and employment, especially as new âartificial intelligenceâ (AI) technologies emerge. Yet it has been difficult to measure its effects. This paper takes a first look at the economic impacts of large custom software investment by firmsââIT shocks.â Using a novel difference-in-differences methodology, we estimate the productivity of these shocks and the associated effects on revenues and employment and we explore the implications in terms of laborâs share and other variables, including heterogeneous relationships by industry, AI use, and time. In our preferred models, IT shocks increase firm productivity by about 5%, followed by increases in revenue of 11% and in employment of 7% on average. However, employment growth following IT shocks is small or negative in mature industries; also, it has been slower in recent years, reducing job reallocation and aggregate productivity growth. Also, laborâs share of revenue decreases and operating profits rise following IT shocks
Innovation, skills and performance in the downturn: an analysis of the UK innovation survey 2011
The link between firmsâ innovation performance and economic cycles, especially
major downturns such as that of 2008-10, is a matter of great policy significance, but
is relatively under-researched at least at the level of micro data on business
behaviour. It is, for example, often argued that economies need to âinnovate out of
recessionsâ since innovation is positively associated with improvements in
productivity that then lead to growth and better employment (Nesta, 2009).
The issues of how individual firms respond to downturns through their investment in
innovation, and how this impacts on innovation outputs and ultimately business
performance and growth during and after downturns, has been less studied because
relevant data has not been readily available. The UK Innovation Survey (UKIS) 2011
now makes this possible. The UKIS 2011 with reference period 2008 to 2010 covers
the downturn in economic activity generated by the global financial crash. The build-up of panels over the life of the UKIS also supports analysis of the longer-term interactions between innovation and the business cycle. This report analyses the last four waves of the surveys. Further, the latest survey includes questions on whether firms employ a specific set of skills, which adds materially to the ability to research the role of skills and human capital in innovation at the micro level
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Outsourcing and Insourcing Jobs in the U.S. Economy: Evidence Based on Foreign Investment Data
The impact of foreign direct investment on U.S. employment continues to attract national attention. While local communities compete with one another for investment projects, many of the residents of those communities fear losing their jobs as U.S. companies seek out foreign locations and foreign workers to perform work that traditionally has been done in the United States, generally referred to as outsourcing. Some observers suggest that current U.S. experiences with outsourcing are different from those that have preceded them and that this merits legislative actions by Congress to blunt the economic impact of these activities. Other observers argue that investing abroad by U.S. multinational companies impedes the growth of new jobs in the economy and thwarts the nationâs investments in high technology sectors. Some opponents also argue that mid-career workers who lose good-paying manufacturing and service-sector jobs likely will never recover their standard of living.
Economists and others generally argue that free and unimpeded international flows of capital ultimately have a positive impact on both domestic and foreign economies. Direct investment is unique among international capital flows because it adds permanently to the capital stock and skill set of a nation, but it also challenges the general theory of capital flows because of the presence of strong cross-border and intra-industry investment. Supporters contend that to the extent that foreign investment shifts jobs abroad, it is a minor component of the overall economic picture and that it is offset somewhat by the investment of foreign firms in the U.S. economy (referred to as insourcing), which supports existing jobs and creates new jobs in the economy.
Broad, comprehensive data on U.S. multinational companies generally lag behind current events by two years and were not developed to address the issue of jobs outsourcing. Many economists argue, however, that there is little evidence to date to support the notion that the overseas investment activities of U.S. multinational companies play a significant role in the rate at which jobs are created in the U.S. economy. Instead, they argue that the source of job creation in the economy is rooted in the combination of macroeconomic policies the nation has chosen, the rate of productivity growth, and the availability of resources. This report addresses these issues by analyzing the extent of direct investment into and out of the economy, the role such investment plays in U.S. trade, jobs, and production, and the relationship between direct investment and the broader economic changes that are occurring in the U.S. economy
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Outsourcing and Insourcing Jobs in the U.S. Economy: Evidence Based on Foreign Investment Data
[Excerpt] The impact of foreign direct investment on U.S. employment is provoking a national debate. While local communities compete with one another for investment projects, many of the residents of those communities fear losing their jobs as U.S. companies seek out foreign locations and foreign workers to perform work that traditionally has been done in the United States, generally referred to as outsourcing. Some observers suggest that current U.S. experiences with outsourcing are different from those that have preceded them and that this merits legislative actions by Congress to blunt the economic impact of these activities. Other observers argue that investing abroad by U.S. multinational companies impedes the growth of new jobs in the economy and thwarts the nationâs investments in high technology sectors. Some opponents also argue that mid-career workers who lose good-paying manufacturing and service-sector jobs likely will never recover their standard of living.
Economists and others generally argue that free and unimpeded international flows of capital have a positive impact on both domestic and foreign economies. Direct investment is unique among international capital flows because it adds permanently to the capital stock and skill set of a nation, but it also challenges the general theory of capital flows because of the presence of strong cross-border and intra-industry investment. Supporters contend that to the extent that foreign investment shifts jobs abroad, it is a minor component of the overall economic picture and that it is offset somewhat by the investment of foreign firms in the U.S. economy (referred to as insourcing), which supports existing jobs and creates new jobs in the economy.
Broad, comprehensive data on U.S. multinational companies generally lag behind current events by two years and were not developed to address the issue of jobs outsourcing. Many economists argue, however, that there is little evidence to date to support the notion that the overseas investment activities of U.S. multinational companies play a significant role in the rate at which jobs are created in the U.S. economy. Instead, they argue that the source of job creation in the economy is rooted in the combination of macroeconomic policies the nation has chosen, the rate of productivity growth, and the availability of resources. This report addresses these issues by analyzing the extent of direct investment into and out of the economy, the role such investment plays in U.S. trade, jobs, and production, and the relationship between direct investment and the broader economic changes that are occurring in the U.S. economy. This report will be updated as events warrant
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