What explains the evolution of productivity and competitiveness? The innovation link

This paper addresses the recent evolution of productivity and competitiveness in Catalonia and their links with the innovation activity of firms. Firstly, it summarizes the evolution of productivity, competitiveness, firms' strategies and the state of innovation. A slowdown in productivity growth and increasing revealed difficulties in some world markets are real, and the weakness of innovation may be a reason. The paper then quantifies some of the links between innovation, productivity and competitiveness. Innovation has a positive impact on productivity and competitiveness. First of all, innovation expenditures induce cost advantages and these cost advantages are a significant explanation for firms' exports. Furthermore, product innovation helps exports, too. Moreover, R&D activities in Catalonia benefit from high spillovers, and productivity impact is even higher when firms develop R&D activities outside as well. Despite all this, the current level of innovation expenditure is comparatively low and shows signs of lack of dynamism. Firms need to switch from the current equilibrium to the requirements of the coming years.Labor productivity; Competitiveness; innovation; cost;

Automobile demand, model cycle and price effects

The purpose of this paper is to explore the models’ life cycle in automobile demand, exploiting a newly-constructed data set. In particular, we analyze the characteristics of the cycle of models by means of non-parametric regressions of model shares on model ages (or time of permanence in the market). Then we test for the presence of price effects of the cycle, using techniques of the discrete-choice approach to demand estimation in differentiated product markets. Results show that own-price elasticities vary with age. Elasticities decrease after the introduction of the model and begin to increase when it has been marketed for three years

R&D and productivity : estimating production functions when productivity is endogenous

We develop a simple estimator for production functions in the presence of endogenous productivity change that allows us to retrieve productivity and its relationship with R&D at the firm level. By endogenizing the productivity process we build on the recent literature on structural estimation of production functions. Our dynamic investment model can be viewed as a generalization of the knowledge capital model (Griliches 1979) that has remained a cornerstone of the productivity literature for more than 25 years. We relax the assumptions on the R&D process and examine the impact of the investment in knowledge on the productivity of firms. We illustrate our approach on an unbalanced panel of more than 1800 Spanish manufacturing firms in nine industries during the 1990s. Our findings indicate that the link between R&D and productivity is subject to a high degree of uncertainty, nonlinearity, and heterogeneity across firms. By accounting for uncertainty and nonlinearity, we extend the knowledge capital model. Moreover, capturing heterogeneity gives us the ability to assess the role of R&D in determining the differences in productivity across firms and the evolution of firmlevel productivity over time

R&D and productivity: Estimating production functions when productivity is endogenous

We develop a simple estimator for production functions in the presence of endogenous productivity change that allows us to retrieve productivity and its relationship with R&D at the firm level. Our dynamic investment model can be viewed as a generalization of the knowledge capital model (Griliches 1979) that has remained a cornerstone of the productivity literature for more than 25 years. We relax the assumptions on the R&D process and examine the impact of the investment in knowledge on the productivity of firms. We illustrate our approach on an unbalanced panel of more than 1800 Spanish man- ufacturing firms in nine industries during the 1990s. Our ¯ndings indicate that the link between R&D and productivity is subject to a high degree of uncertainty, nonlinearity, and heterogeneity across firms. Abstracting from uncertainty and nonlinearity, as is done in the knowledge capital model, or assuming an exogenous process for productiv- ity, as is done in the recent literature on structural estimation of production functions, overlooks some of its most interesting features.production function; knowledge capital; productivity; R&D;

R&D and productivity : estimating production functions when productivity is endogenous

We develop a simple estimator for production functions in the presence of endogenous productivity change that allows us to retrieve productivity and its relationship with R&D at the firm level. By endogenizing the productivity process we build on the recent literature on structural estimation of production functions. Our dynamic investment model can be viewed as a generalization of the knowledge capital model (Griliches 1979) that has remained a cornerstone of the productivity literature for more than 25 years. We relax the assumptions on the R&D process and examine the impact of the investment in knowledge on the productivity of firms. We illustrate our approach on an unbalanced panel of more than 1800 Spanish manufacturing firms in nine industries during the 1990s. Our findings indicate that the link between R&D and productivity is subject to a high degree of uncertainty, nonlinearity, and heterogeneity across firms. By accounting for uncertainty and nonlinearity, we extend the knowledge capital model. Moreover, capturing heterogeneity gives us the ability to assess the role of R&D in determining the differences in productivity across firms and the evolution of firmlevel productivity over time.

Dangerous shortcuts: Ignoring marginal cost determinants in markup estimation

De Loecker and Warzynski (2012) proposed a way to estimate markups under imperfect competition from firm-level data. The basic idea is first to estimate the elasticity of output with respect to a variable factor of production, and then divide this elasticity by the share of the input expenditure in the relevant sales. This note argues that this way to estimate markups is affected by a problem of circularity: under imperfect competition, to estimate the elasticity of an input you need to know, or estimate at the same time, the markups. The application of the proposal, ignoring this fact, is likely to produce inconsistent estimates and generate large biases in inferences about markups.First author draf

Diferencias de coste laboral: razones y evidencia para la industria española

The systematic analysis on wages data for individuals and enterprises, more and more frequent in the studies of empirical labour economy, shows invariably this finding: there are important wage differences (and, in a more general sense, differences of labour cost) which may not be explained through the competitive model of labour market functioning. This article makes a brief review of the forecasts of the competitive modelo It al so examines the main non-competitive advanced reasons for the existence of cost differentials (wages negociation models and efficiency wages theory), describes the evidence obtained -in a recent research- on the presence and magnitude of these differentials in the Spanish manufacture to finally compare it with the evidence obtained in other researches.Publicad

Identifying behaviour in a multiproduct oligopoly: Incumbents reaction to tariffs dismantling

The Spanish automobile market of the nineties experienced a perfectly foreseeable tariff dismantling and a strong demand downturn, with the observed result of an apparently sharpened producer competition in products and perhaps in prices. This paper is aimed at testing whether or not there really was a change in pricing behaviour, using a structural model of competition. To answer that question, we specify, estimate and test semiparametric pricing equations with panel data for 164 models belonging to the 31 firms which competed in the market. The specification includes several equilibriums as alternative estimating models, considering prominently tacit coalitions by which a group of firms sets prices, taking into account the cross effects on their demands. The statistical test selects as the best model given the data an unbroken coalition of domestic and European producers. Comparative results using tight demand side specifications show that an inadequate specification of the demand side may induce wrong inferences.behaviour; tariffs; oligopoly; coalition;

Barriers to innovation and subsidy effectiveness

We explore the effects of subsidies by means of a model of firms' decisions about performing R&D when some government support can be expected. We estimate it with data on about 2,000 performinga nd nonperformingS panishm anufacturingfi rms. Wec omputet he subsidies required to induce R&D spending, we detect the firms that would cease to perform R&D without subsidies, and assess the change in the privately financed effort. Results suggest that subsidies stimulate R&D and some firms would stop performing in their absence, but most actual subsidies go to firms that would have performed R&D otherwise. We find no crowding out of private funds.Publicad

Innovation and jobs: evidence from manufacturing firms

This paper is aimed at structurally assessing the employment effects of the innovative activities of firms. We estimate firm level displacement and compensation effects in a model in which the stock of knowledge capital raises firm relative efficiency through process innovations and firm demand through product innovations. Displacement is estimated from the elasticity of employment with respect to innovation in the (conditional or Hicksian) demand for labour. Compensation effects are estimated from a firm-specific demand relationship. We also assess the enlargement and weakening of these effects due to firm agents’ behaviour aimed at appropriating innovation rents. We find that the potential employment compensation effect of process innovations surpasses the displacement effect, both in the short and long run (when competitors react), and that product innovation doubles the expanding impact by unit of expenditure, but also that agents’ behaviour can seriously reduce these effects. The actual elasticity of employment to knowledge capital is estimated, however, not far from unity, while “passive” productivity growth is suggested to have null or negative employment effects