The Effects of Capital Subsidization on Israeli Industry

An industrial policy of subsidizing physical capital investment has been utilized in many countries in order to encourage export growth and spread economic development to outlying areas. For Israel, we possess a unique time series-cross section micro data set that details investment and its associated subsidies by vintage at the level of the individual enterprise for 620 firms. These data provide the means by which an empirical analysis of the effects of the policy of subsidizing capital can be undertaken. We estimate that, for the years 1990-94, this policy has resulted in production inefficiencies ranging from 5% for firms that receive the average level of subsidies to 15% for heavily subsidized firms. We also document the fact that much of the subsidization appears not to have been necessary, in the sense that subsidized firms generally have earned higher rates of return on their total physical capital (included that portion which was subsidized) than firms that were not subsidized.

Productivity and Firm Turnover in Israeli Industry: 1979-1988

An analysis of a large panel data set on Israeli industrial firms finds that most of the growth in aggregate productivity comes from productivity changes within firms rather than from entry, exit, or differential growth; that firms which will exit in the future have lower productivity performance several years earlier (the "shadow of death" effect); and that, overall, there was little total factor productivity growth in Israeli industry during 1979-1988 (another "lost decade").

High Tech Firms in Israeli Industry

The main purpose of this study is to characterize and analyze high technology industrial firms in Israel. We are able to advance beyond previous empirical studies of high technology because we have access to a unique individual firm data set, a sample of 670 establishments in Israel for the year 1982. Not only do we have basic production data at the individual firm level, but also each firm's capital stock revalued to 1982 dollars. A technology index is constructed from three technological indicators -- substantial R&D investment, a high proportion of the work force consisting of engineers and technicians, and a high proportion of the capital stock being of recent vintages. This technology index is used to classify firms. The largest concentration of High Tech firms are found in electronics and transport equipment industries, and the lowest in textiles and clothing. High Tech firms appear to be more productive, pay higher wages, and earn higher rates of return. Part of the higher wages to workers in High Tech firms accrue in the form of rents whereby workers in these firms exappropriate a portion of monopoly profits, a phenomenon which does not appear to be the case for Low Tech firms.

The Production and Cost Structure of Israeli Industry: Evidence From Individual Firm Data

The main purpose of this paper is to present estimates of production and cost functions obtained from using a time-series, cross-section data set pertaining to Israeli industry, We include a detailed list of heterogeneity controls in the specifications which substantially enhances the explanatory power of the models and contributes to our understanding of the nature of Israeli industry. Econometric problems which arise in attempting to estimate production and cost functions from panel data, such as sample selectivity, serial correlation due to unobserved firm effects, and endogeneity are addressed. A surprising finding is the relative inefficiency of large firms listed on the stock exchange. Histadrut and public firms appear to be poor performers in a number of dimensions. Large public firms are inefficient and pay excessively high wages. Small « 300 employees) public firms are not inefficient but pay excessive wages. Large Histadrut firms are inefficient while small Histadrut firms pay excessive wages. The wage structure in Israeli industry is seen to be systematically related to the heterogeneity controls used in this study. One productivity - related result is that firms experiencing higher than expected productivity also pay higher than expected wages, and about 70% of this productivity "bonus" appears as a wage rate increment.

The Youngest Victims: Children and Youth Affected by War

In 1989, the United Nation Convention on the Rights of the Child declared, “[state parties] shall take all feasible measures to ensure protection and care of children who are affected by an armed conflict.” In addition to attempting to secure the welfare of children in armed conflict, the Convention went on to ban the recruitment and deployment of children during armed conflict. Despite the vast majority of sovereign nations signing and ratifying this agreement, this treaty, unfortunately, has not prevented children and youth from witnessing, becoming victims of, or participating in political, ethnic, religious, and cultural violence across the past three decades. This chapter offers an “ecological perspective” on the psychosocial consequences of exposure to the trauma of war-related violence and social disruption

Innovation, Skilled Labour, Technology And Performance In Israeli Industrial Firms

A technology index based on R&D, skilled labour and capital vintage was developed and used to characterise industrial firms by technology level, facilitating the analysis of relationships between technology and economic performance at the firm level. The results show that technology-intensive firms are important players in industrial performance, accounting for a disproportionate share of total production. Compared to other kinds of firms, technology intensive firms are larger, more productive, offer higher average salaries, generate a higher value added and a highcr profit per employee and capital. They also tend to operate in more highly concentrated industries and are more involved in external trade. While down-sized as a group, high-tech firms show net job creation during the 11-year period surveyed.Technology, Innovation, High-tech, Israe Industry, Panel data JEL classification: 621,

The Demand for Labor and Job Turnover: Israeli Manufacturing 1970 - 1994

Job turnover is a major sources of labor turnover, and perhaps a contributing factor to unemployment. Job turnover in Israeli manufacturing, in spite of the rigidity of the labor market, does not differ from job turnovers in Europe and North America. New jobs in expanding and new ¿rms increase employment by 10 percent, and contracting and closing firms destroy about 8 percent of all jobs annually. Job turnover can be explained in the framework of a dynamic model of labor demand. The major driving force behind the change in employment are changes in productivity. The negative correlation between the demand for labor and changes in wages is less pronounced. Adjustment costs result in inbuilt inertia in job turnover. The inertia effect is, however, asymmetric. Declines in employment have a much stronger effect than emp- loyment increases

The Demand for Labor and Job Turnover: Israeli Manufacturing 1970 - 1994

labor, job turnover, Israeli manufacturing