Skills, Education and Productivity in the Service Sector - Firm Level Evidence on the Presence of Externalities

Increased productivity is one of the main drivers of economic growth. Considering the increasing importance of the service sector in many economies studies of productivity in service firms are essential, but still rare. Questions concerning the underlying reasons for productivity differences in service firms are therefore important. Why is the productivity in certain firms higher than in others and what are the possibilities for less-productive firms to increase their productivity levels? This paper aims to examine these issues with a particular focus on the importance of externalities. Externalities are defined as region-specific economic effects influencing firm efficiency. These externalities can be broadly divided in the following categories: i) urbanization economies which relate to diversity and density (Jacobs externalities), ii) localization economies which concern specialization and concentration (MAR externalities), iii) competition (Porter externalities), and iv) labor market externalities. The purpose of the paper is to explain the productivity levels of Swedish service firms using measures of these externalities. However, also firm specific characteristics, including characteristics of the workforce, are included. These are used both as control variables and to capture potential spillover effects that indirectly affect productivity through the employees. The characteristics of the workforce are essential to include since the employees have the potential to affect the way different firms absorb and use possible spillover effects. They are therefore a crucial component to channel externalities to the firm as a whole. This is the case especially for service firms since these are generally very labor intensive. The results of this study should be of interest to policy makers since they have the possibility to make decisions that contribute to more productive regional environments. This is also of interest to company leaders since they have the possibility to decide where to locate and how to structure their firms in order to take advantage of productivity enhancing externalities.

Assessing long-term effects of CAP investment support on indicators of farm performance

In this study of Swedish farms from 2007 to 2016, we estimate the effects of investment support from the Common Agricultural Policy on indicators of farm performance, focusing on long-term effects. To isolate the impact and alleviate problems of selection bias, we employ a counterfactual empirical design using Coarsened Exact Matching and dynamic panel fixed-effects estimations. The average treatment effect on the treated estimates show a positive and significant long-term improvement of farm performance with regard to productivity and turnover. However, the results indicate significant time lags between investments and accumulated observable effects, as we find most short-term effects of the subsidy to be insignificant

The role of collaboration and external knowledge for innovation in small food firms

In this study, we use unique purpose-built survey data to show that small food firms are more innovative when externally engaged. To capture this, we apply a broad classification of innovative activities, including new products, processes, markets, organization, and distribution channels, and examine them against types of external interactions. The analysis, an ordered logit estimation, controls for heterogeneity across firms as well as geographic conditions. The results demonstrate a positive relationship between external interaction and firm innovation, though there are differences across types of external engagement and innovation activities. Product innovation benefits from knowledge from extra-regional firms, while several of the other forms of innovation show a positive relationship with support from regional and municipality boards. Additionally, firm collaboration regarding transports and sales enhances most types of innovation, but there are few relationships of benefit with research-intensive organizations. We conclude that, to be effective, innovation strategies of both the firms themselves and policymakers need to consider local context, access to intra- and extra-regional knowledge sources, and what types of innovation activities the firms are engaged in

Child Prostitution in Thailand A Supply Side Analysis from an Economic Perspective Title: Child Prostitution in Thailand -A Supply Side Analysis from an Economic Perspective

Abstract The purpose of this essay is to analyze the economic factors behind the supply of children engaged in child prostitution in Thailand. Children are recruited to the sex industry either by parents, adults in their immediacy or choose it themselves. There are several factors that contribute to pushing children towards prostitution. Many of these factors such as credit constraints and mortality are related to poverty, the most quoted of economic factors behind the supply of child prostitution. Associated to poverty is the high discount rate which means that people prioritize present over future consumption. In combination with a lack of alternatives, this makes people engage in risky activities such as prostitution. This also seems to be the case in Thailand. To analyze the different alternatives faced by children in Thailand, a calculation of present value of life time wages of the alternative activities a child faces was computed. The computation of present value of life time wages of alternative activities of children in the face of different discount rates is in line with economic theory and shows that education confers the highest reward unless the discount rate is extremely high. If education is unavailable, as it is for unregistered children in Thailand, or discount rates are very high, as it can be for very poor families, prostitution will be the occupation with the highest returns

Regional diversity and economic performance

This thesis consists of an introductory chapter and four individual papers. In each paper the relationship between some form of spatial diversity and economic performance is analyzed. Diversity is treated as a potential source of externality effects, mainly in the form of knowledge spillovers. The first paper studies the impact of a broad range of spatial externalities on the productivity of manufacturing plants. While finding positive effects of specialization and competition, there is no support for positive spillovers of either related or unrelated industry diversity. The second paper argues that relatedness should be framed at the level of individuals and consequently should be measured in terms of, for example, education and occupation rather than industry belonging. The results show that educational- and occupational related diversity matter for regional productivity growth, while related industry diversity is positively related to employment growth. The third paper analyzes the importance of neighborhood related diversity, in terms of both industries and education, and internal human capital for firms’ propensity to innovate. The findings support that education and skills are strongly related to firm innovation. Additionally, firms in metropolitan regions are more innovative in neighborhoods with more related diversity in industries, while firms in rural regions seem to benefit more from related diversity in education. In the fourth paper, the location factor of interest is segregation, which may be regarded as inverse diversity. The results show that neighborhood segregation has a negative effect on individual employment. However, it is not the spatial separation of individuals with different backgrounds that causes lower employment but rather the distress of segregated neighborhoods

The effect of globalization on the Swedish growth : A study of the years 1980 to 2050

Sverige är ett av världens mest globaliserade länder och globalisering känns därmed som en självklarhet i dagens samhälle. Att något är en självklarhet behöver dock inte betyda att det är bra, varför det finns anledning till att undersöka vilken effekt globaliseringen egentligen har haft och kan komma att få på den svenska välfärden. Eftersom välfärd ofta mäts som tillväxt i BNP är det också detta mått som används i denna uppsats.   Syftet med denna uppsats är tudelat där den första delen består av att ta fram en modell inne­fattande faktorer av globalisering, som förklarar Sveriges BNP-utveckling mellan åren 1980 och 2008. Den andra delen av syftet är att, genom användande av den framtagna modellen, analysera hur globalisering har påverkat och kan komma att påverka den svenska BNP-tillväxten fram till år 2050. Studiens metod består av en teoretisk och en empirisk del. Det teoretiska momentet utgörs av en litteraturstudie i dels globalisering och dels tillväxt vilken mynnar ut i en Solow-modell med humankapital som är utvidgad med faktorer av globalisering. Uppsatsens empiriska del består av insamling och bearbetning av statistik samt skattning och tillämpning av modellen för att skapa de olika scenarier som behövs för att uppfylla syftets andra del. Slutsatsen för denna uppsats är att globalisering är en långsiktig källa till tillväxt. Studiens resultat visar att ekonomisk globalisering har haft mycket stora positiva effekter på den svenska tillväxten sedan år 1980. Med globalisering har Sverige haft en genomsnittlig årlig tillväxttakt på drygt två procent medan motsvarande siffra för ett scenario med helt avstannad globalisering ligger mycket nära noll. Globaliseringens effekter på den framtida BNP-tillväxten är dock ännu större. En simulering av den fortsatta utvecklingen med bibe­hållen globaliserings­­takt ger en tillväxttakt för år 2050 på nästan fyra procent, vilket är tre och en halv procentenheter högre än för det alternativa scenariot. Studiens resultat visar också att även med en halverad globaliseringstakt uppnås stora positiva effekter på både den historiska och den framtida tillväxten.Sweden is one of the most globalized countries in the world and globalization is therefore a natural phenomenon in the Swedish society. However, that something is natural does not necessarily mean that it is good, why there is reason to examine the effect of globalization on the Swedish welfare. Since welfare is often measured as growth in GDP, this measure is also used in this study. The purpose of this thesis is divided in two parts where the first consists of developing a model, including factors of globalization, which explains the growth in Swedish GDP between the years 1980 and 2008. The second part of the purpose is to, by use of the developed model, analyze how globalization has previously affected and in the future may affect the economic growth in Sweden to the year 2050. The method of this study is divided in a theoretical and an empirical part. The theoretical element consists of a literature study in globalization and growth that results in a human capital augmented Solow model that includes factors of economic globalization. The empirical element of the thesis consists of collecting and working with statistical data as well as estimation and use of the model to create the different scenarios that is needed to fulfill the second part of the purpose. The conclusion of this thesis is that globalization is a long-run source for economic growth. The results of the study show that economic globalization has had large positive effects on the Swedish growth since 1980. During globalization Sweden has had an average annual growth rate of just over two percent while the corresponding figure for a scenario with no globalization is close to zero. The effects of globalization on the future growth are even larger. A simulation with continuing globalization shows a growth rate for year 2050 of four percent, which is three and a half percent units higher than for the alternative scenario. The results of the study also show that even a slower rate of globalization attains large positive effects on both the historical and the future growth

The impact of spatial externalities : Skills, education and plant productivity

This paper analyses the role of a broad range of spatial externalities in explaining average labour productivity of Swedish manufacturing plants. The main findings show positive effects from general urbanization economies and labour market matching, as well as a negative effect from within-industry diversity. These results confirm previous research despite methodological differences,which implies wider generalizability. Additionally, the empirical findings support Marshall–Arrow–Romer (MAR) and Porter externalities, i.e. positive effects from specialization and competition. No evidence is found of Jacobs externalities, neither when measured as between-industry diversity nor as within-industry diversity. Finally, plant-specific characteristics play a key role in explaining plant-level productivity

Which Types of Relatedness Matter in Regional Growth? Industry, Occupation and Education

This paper provides a conceptual discussion of relatedness, which suggests a focus on individuals as a complement to firms and industries. The empirical relevance of the main arguments is tested by estimating the effects of related and unrelated variety in education and occupation among employees, as well as in industries, on regional growth. The results show that occupational and educational related variety are positively correlated with productivity growth, which supports the conceptual discussion put forth in the paper. In addition, related variety in industries is found to be negative for productivity growth, but positive for employment growth.Cet article cherche à fournir une base conceptuelle sur laquelle on peut discuter de la connexité, ce qui laisse supposer que l'on met l'accent sur les individus ainsi que sur les entreprises et les industries. On évalue la pertinence empirique des principaux arguments en estimant les effets sur la croissance régionale de la variété connexe et de la variété non-apparentée des salariés dans l’éducation et dans les professions, ainsi que dans les entreprises. Les résultats montrent qu'il existe une corrélation étroite entre la variété connexe dans les professions et l’éducation et la croissance de la productivité, ce qui soutient le débat conceptuel que propose cet article. En plus, la variété connexe dans les industries s'avère négative pour la croissance de la productivité, mais positive quant à la croissance de l'emploi.Dieser Beitrag enthält eine konzeptuelle Erörterung der Verbundenheit, in der eine Konzentration auf Einzelpersonen als Ergänzung von Firmen und Branchen vorgeschlagen wird. Zur Überprüfung der empirischen Relevanz der Hauptargumente wird geschätzt, wie sich verbundene und unverbundene Vielfalt in den Bereichen der Bildung und des Beschäftigungsniveaus von Arbeitnehmern sowie im Bereich der Branchen auf das Regionalwachstum auswirkt. Aus den Ergebnissen geht hervor, dass verbundene Vielfalt in den Bereichen des Beschäftigungsniveaus und der Bildung in einem positiven Zusammenhang mit dem Produktivitätswachstum steht, was die konzeptuelle Erörterung dieses Beitrags unterstützt. Darüber hinaus wirkt sich verbundene Vielfalt im Bereich der Branchen negativ auf das Produktivitätswachstum, aber positiv auf das Beschäftigungswachstum aus.En este artículo aportamos un debate conceptual sobre los vínculos proponiendo un enfoque en las personas como un complemento para las empresas y las industrias. Para comprobar la relevancia empírica de los principales argumentos, calculamos los efectos de la variedad relacionada y no relacionada en educación y ocupación entre los empleados, así como en las industrias, para el crecimiento regional. Los resultados indican que la variedad relacionada de ocupación y educación está positivamente vinculada al crecimiento de la productividad, lo que respalda el debate conceptual presentado en este artículo. Asimismo observamos que la variedad relacionada en las industrias es negativa para el crecimiento de la productividad, pero positiva para el crecimiento del empleo

Amenities and new firm formation in rural areas

Building on the neo-endogenous rural development model and the resource-based view of the firm, this paper investigates the role of place-based amenities for new firm formation. Empirically, we employ a full-population dataset encompassing new firms in Sweden from 2009 to 2016, combined with geocoded datasets with the spatial distribution of nature- and culture-based amenities. The results show that local amenities are indeed important factors in determining the rate of new firm formation. Estimating the model across urban and rural neighborhoods show that amenities are relatively more important in explaining new firm formation in rural areas as compared to urban. As such, our study contributes to the literature on diversification of the economies of rural areas by pointing at the important role that place-based amenities may play for an entrepreneurially-driven development of less developed and/or rural areas