R&D and Non-Linear Productivity Growth of Heterogeneous Firms

The present paper studies the relationship between R&D investment and firm productivity growth by explicitly accounting for non-linearities in the R&D-productivity relationship and inter-sectoral firm heterogeneity. In order to address these issues, we employ a two step estimation approach, and match two firm-level panel data sets for the OECD countries, which allows us to relax both the linearity and homogeneity assumptions of the canonical Griliches (1979) knowledge capital model. Our results suggest that: (i) R&D investment increases firm productivity with an average elasticity of 0.15; (ii) the impact of R&D investment on firm productivity is differential at different levels of R&D intensity - the productivity elasticity ranges from -0.02 for low levels of R&D intensity to 0.33 for high levels of R&D intensity; (iii) the relationship between R&D expenditures and productivity growth is non-linear, and only after a certain critical mass of R&D is reached, the productivity growth is significantly positive;(iv) there are important inter-sectoral differences with respect to R&D investment and firm productivity - high-tech sectors' firms not only invest more in R&D, but also achieve more in tfirms of productivity gains connected with research activities

Job Creation and Job Destruction in EU Agriculture

This is the first paper to study job creation and destruction in EU agriculture. We disaggregate gross employment patterns and net job flows into detailed intra-sectoral labour adjustment dynamics based on a unique EU-wide firm level panel dataset for 1990-2005. We find that: (1) job creation and destruction rates in EU agriculture are comparable to other sectors; (2) there is some evidence of ongoing substitution of family labour for hired labour (3) there are important differences in job creation and destruction rates between different Member States; (4) these differences can be attributed to structural differences across countries, sectors and firm types; (5) time variation of job reallocation fluctuates countercyclically; (6) idiosyncratic effects are the main driver of time variance in job reallocation

Food Standards and Welfare: A General Equilibrium Model with Market Imperfections

We analyze the effects of high standards food chains on household welfare taking into account general equilibrium effects and market imperfections. To measure structural production changes and welfare effects on rural and urban households, our model has two types of agents, five kinds of products and four types of factors. We calibrate the model using dataset from China. The simulation results show that how poor rural households are affected depends on a variety of factors, including the nature of the shocks leading to the expansion of high standards sector, production technologies, trade effects, spillover effects on low standards markets, market imperfections, and labor market effects

Static and Dynamic Distributional Effects of Decoupled Payments: Single Farm Payments in the European Union

This paper analyses the distributional effects of decoupled Single firm Payments (SFP) in the European Union. In a static world the SFP benefit only firmers, irrespective of the implemented SFP model and irrespective of whether entitlements are tradable or not, except when the size of the allocated entitlements is larger than the eligible area and/or if entrants are eligible for the SFP. Then the SFP gets either partially or fully capitalized into land values and landowners benefit. In a dynamic world the effects depend on the nature of structural change, on the tradability of entitlements, and on the implementation model

Variety Gains of Trade Integration in a Heterogeneous Firm Model

The present paper studies the variety gains of regional integration in Asia. Applying a heterogenous firm model we are able to assess the gains arising from the increased product and consumer choice, which is not possible in trade models with representative firms. We analyse the impacts of the ongoing trade liberalisation in South East Asia in three scenarios: CIFTA, ASEAN+3, and ASEAN+6. We find that the gains from trade integration are substantial, particularly in the multilateral liberalisation scenario ASEAN+6. A multilateral reduction of fixed and variable trade barriers by 15 percent results in a trade growth of 34 percent, which due to the additional extensive margin of trade, is larger than in trade models with representative firms. Similarly, due to the additional gains from variety growth, the welfare gains of trade integration in Asia are up to 9 percent higher than trade models with representative firms would predict

Modelling regional labour market dynamics: Participation, employment and migration decisions in a spatial CGE model for the EU

Este paper describe cómo los ajustes en los mercados de trabajo regionales tanto a los shocks de política como macroeconómicos se modelizan en RHOMOLO a través de decisiones de los trabajadores sobre participación, empleo y migración. RHOMOLO, como modelo de equilibrio general multisectorial e interregional es complejo tanto en términos de dimensionalidad como de modelización de interacciones espaciales a través de flujos de comercio y movilidad de factores. La modelización del mercado de trabajo está por ello limitada tanto por la capacidad computacional como por la facilidad para obtener una solución (en forma de expresión matématica, en forma reducida) del modelo. El módulo del mercado de trabajo consiste en decisiones de participación individuales, incluyendo el margen extensivo (participar o no) y el margen intensivo (horas de trabajo). El desempleo se determina a través de la curva de salarios y las decisiones de migración interregional se modelizan en un esquema de elección discreta basado en expectativas pasadas