Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries

This paper studies the impact of process and product innovations introduced by firms on employment growth in these firms. A simple model that relates employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products is developed and estimated using comparable firm-level data from France, Germany, Spain and the UK. Results show that displacement effects induced by productivity growth in the production of old products are large, while those associated with process innovations, which are likely to be compensated by price decreases, appear to be small. The effects related to product innovations are, however, strong enough to overcompensate these displacement effects

Productivity Growth and Levels in France, Japan, the United Kingdom and the United States in the Twentieth Century.

This study compares labor and total factor productivity (TFP) in France, Japan, the United Kingdom and the United States in the very long (since 1890) and medium (since 1980) runs. During the past century, the United States has overtaken the United Kingdom and become the leading world economy. During the past 25 years, the four countries have also experienced contrasting advances in productivity, in particular as a result of unequal investment in information and communication technology (ICT). The past 120 years have been characterized by: (i) rapid economic growth and large productivity gains in all four countries; (ii) a long decline in productivity in the United Kingdom relative to the United States, and to a lesser extent also relative to France and Japan, a relative decline that was interrupted by the second world war (WW2); (iii) the remarkable catching-up to the United States by France and Japan after WW2, interrupted in the case of Japan during the 1990s. Capital deepening (at least to the extent this can be measured) accounts for a large share of the variations in performance; increasingly during the past 25 years, this has meant ICT capital deepening. However, the capital contribution to growth varies considerably over time and across the four countries, and it is always less important, except in Japan, than the contribution of the various other factors underlying TFP growth, such as, among others, labor skills, technical and organizational changes and knowledge spillovers. Most recently (in 2006), before the current financial world crisis, hourly labor productivity levels were slightly higher in France than in the United States, and noticeably lower in the United Kingdom (by roughly 10%) and even lower in Japan (30%), while TFP levels are very close in France, the United Kingdom and the United States, but much lower (40%) in Japan.Productivity, growth accounting, macro-economic history.

Does innovation stimulate employment? A firm-level analysis using comparable micro data on four European countries

This paper studies the impact of process and product innovations introduced by firms on their employment growth. A model that relates employment growth to process innovations and to the growth of sales due to innovative and unchanged products is derived and estimated using a unique source of comparable firm-level data from France, Germany, Spain and the UK. Results for manufacturing show that, although process innovation tends to displace employment, compensation effects are prevalent, and product innovation is associated with employment growth. In the service sector there is less evidence of displacement effects, and growth in sales of new products accounts for a non-negligible proportion of employment growth. Overall the results are similar across countries, with some interesting exceptions

Do product market regulations in upstream sectors curb productivity growth? Panel data evidence for OECD countries

The paper focuses on the influence of upstream competition for productivity outcomes in downstream sectors. This relation is illustrated with a neo-Schumpeterian theoretical model of innovation (Aghion et al., 1997) with market imperfections in the production of intermediate goods. In this context, upstream market imperfections create barriers to competition in downstream markets and upstream producers use their market power to share innovation rents sought by downstream firms. Thus, lack of competition in upstream markets curbs incentives to improve productivity downstream, negatively affecting productivity outcomes. We test this prediction by estimating an error correction model that differentiates the potential downstream effects of lack of upstream competition in situations close and far from the global technological frontier. We measure competition upstream with regulatory burden indicators derived from OECD data on sectoral product market regulation and the industry-level efficiency improvement and the distance to frontier variables by means of a multifactor productivity (MFP) index. Panel regressions are run for 15 OECD countries and 20 sectors over the 1985-2007 period with country, sector and year fixed effects. We find clear evidence that anticompetitive regulations in upstream sectors have curbed MFP growth downstream over the past 15 years. These effects tend to be strongest for observations (i.e. country/sector/period triads) that are close to the global technological frontier. Our results suggest that, measured at the average distance to frontier and average level of anticompetitive regulations, the marginal effect of increasing competition by easing such regulations is to increase MFP growth by between 1 and 1.5 per cent per year in the OECD countries covered by our sample. Our results are robust to changes in the way MFP and the regulatory burden indicators are constructed, as well as to variations in the sample of countries and/or sectors.Productivity, Growth, Regulations, Competition, Catch-up.

Panel data estimates of the production function and product and labor market imperfections

Consistent with two models of imperfect competition in the labor market, the efficient bargaining model and the monopsony model, we provide two extensions of a microeconomic version of Hall's framework for estimating price-cost margins. We show that both product and labor market imperfections generate a wedge between factor elasticities in the production function and their corresponding shares in revenue that can be characterized by a joint market imperfections parameter. Using an unbalanced panel of 10646 French firms in 38 manufacturing industries over the period 1978-2001, we can classify these industries into six different regimes depending on the type of competition in the product and the labor market. By far the most predominant regime is one of imperfect competition in the product market and efficient bargaining in the labor market (IC-EB), followed by a regime of imperfect competition in the product market and perfect competition or right-to-manage bargaining in the labor market (IC-PR), and by a regime of perfect competition in the product market and monopsony in the labor market (PC-MO). For each of these three predominant regimes, we assess within-regime firm differences in the estimated average price-cost mark-up and rentsharing or labor supply elasticity parameters, following the Swamy methodology to determine the degree of true firm dispersion. As a way to assess the plausibility of our findings in the case of the dominant regime (IC-EB), we also relate our industry and firm-level estimates of price-cost mark-up and (relative) extent of rent sharing to industry characteristics and firmspecific variables respectively

Cross-Sectional Heterogeneity in Price-Cost Margins and the Extent of Rent Sharing at the Sector and Firm Level in France

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Intangible Capital and Productivity at the Firm Level: a Panel Data Assessment

The econometric literature on measuring returns on intangible capital is vast, but we still know little about the effects on productivity of different types of intellectual capital (R&D and patents) and customer capital (trademarks and advertising). The aim of this paper is to estimate the marginal productivity of different types of intangibles by relying on the theoretical framework of the production function, which we apply to a large panel of Italian companies. To this end, the European accounting system makes it possible to compare the impact on productivity of intangibles measured from expenditures (as usual in Anglo-American studies) with the impact of intangible assets reported by companies in their balance sheets (a measure which is available in the Italian context, for example, but less common in the literature). Our results contribute two main findings to the literature. First, among the intangible components, the highest marginal productivity is that of intellectual capital, customer capital and intangible assets. Second, the use of accounting information on intangible investments is crucial to find high effects of intangible assets on productivity, while intangibles measured from expenses seem to play a more limited role. Preliminary results obtained from sub-samples mimicking the presence of spillovers deliver higher effects of intellectual capital on productivity, suggesting that intangibles\u2019 social value is larger than the part we can estimate with individual firm data

Ph.D. research output in STEM: the role of gender and race in supervision

We study whether student-advisor gender and race couples matter for publication productivity of Ph.D. students in South Africa. We consider the sample of all Ph.D.s in STEM graduating between 2000 and 2014, after the recent systematic introduction of doctoral programs in this country. We investigate the joint effects of gender and race for the whole sample and looking separately at the sub-samples of (1) whitewhite; (2) black-black; and (3) black-white student-advisor couples. We find early career productivity differences: while female students publish on average 10% to 20% fewer articles than males, this is true mainly for female students working with a male advisor, not for those working with a female one. These disparities are similar, though more pronounced, when looking at the joint effects of gender and race for the white-white and black-black student-advisor pairs. We also explore whether publication productivity differences change significantly for students with a high, medium, or low “productivity-profile”, and find that they are U-shaped. Female students with a high (or low) “productivity-profile” studying with female advisors are as productive than male students with a high (or low) “productivity-profile” studying with male advisor

Innovativity: a comparison across seven European countries

Nous proposons, dans cette étude, un cadre d'analyse, ou « comptabilité de l'innovation », semblable à celui très généralement utilisé pour la « comptabilité de la croissance », ainsi qu'une mesure de la « productivité des facteurs d'innovation » ou « innovativité » comparable à celle de la productivité totale des facteurs. Nous appliquons ce cadre d'analyse à la comparaison de l'innovation pour sept pays européens - l'Allemagne, la Belgique, le Danemark, l'Irlande, l'Italie, la Norvège et les Pays-Bas -, à partir des données d'entreprises « micro agrégées » de la première enquête communautaire sur l'innovation (CIS1) portant sur l'année 1992. Sur la base d'un modèle Tobit généralisé et en mesurant l'innovation par la part du chiffre d'affaires des entreprises en produits innovants (nouveaux ou améliorés sur les trois années 1990-1992), nous estimons la propension à innover et l'intensité de l'innovation (conditionnellement ou non au fait d'innover) pour les industries manufacturières de haute et basse technologie des sept pays. Bien que disposant de variables explicatives peu nombreuses, nous rendons compte ainsi de différences déjà très significatives d'intensité d'innovation entre pays. Les différences d'innovativité entre pays restent néanmoins très fortes.This paper proposes a framework to account for innovation similar to the usual accounting framework in production analysis and a measure of "innovativity" comparable to that of total factor productivity. This innovation accounting framework is illustrated using micro-aggregated firm data from the first Community Innovation Surveys (CIS1) for seven European countries: Belgium, Denmark, Ireland, Germany, the Netherlands, Norway and Italy for the year 1992. Based on the estimation of a generalized Tobit model and measuring innovation as the share of total sales due to improved or new products, it compares the propensity to innovate, and the innovation intensity conditional and unconditional on being innovative, across the seven countries and low- and high-tech manufacturing sectors. Even with relatively few explanatory variables our innovation framework already accounts for sizeable differences in country innovation intensity. It also shows that differences in innovativity across countries can be nonetheless very large