Productivity and computers in Canadian banking

Canadian banks have invested millions in computer systems in the last two decades. Yet the banks and outside observers have been uncertain that these investments have had net benefits. In this paper, unique data collected directly from a bank is used to investigate the impact of these investments on bank output, input and productivity. Using data from 1974–1987, a translog cost model is estimated. Both capital and labor are divided into information and noninformation inputs. The results are generally consistent with economic theory. The attempt to separate technical change from possible scale effects is very sensitive to alternative specification. Overall there has been some productivity growth associated with the changing computer technology. However, many of the benefits seem to have accrued to the customer and have not directly lead to gains for the bank.     

Regional dimensions of factor and fuel substitution in U.S. manufacturing

This paper analyzes the regional responses to price increases in U.S. manufacturing in the form of fuel and factor substitution. A translog specification of a production process with eight inputs organized into a two stage optimization process — optimizing the mix of four fuels that constitute the energy input and then optimizing the input mix of physical capital, working capital, labor and aggregate energy — is used. Sectoral and regional variations in factor and fuel substitutions as evident from econometric estimation of the model at the level of 50 states and four census regions are discussed and interpreted.     

要素替代弹性、有偏技术进步对我国工业能源强度的影响

从要素替代弹性和有偏技术进步视角分析我国工业能源强度,通过采用标准化供给面系统方法,对1994~2008年工业行业数据进行实证估计,确定不同类型行业资本、能源与劳动的嵌套CES生产函数结构。结果表明,多数行业的技术进步是资本、能源偏向型技术进步,这是因为在多数行业内,资本和能源表现为互补关系。在此基础之上,进一步分析有效资本、有效能源和有效劳动在特定要素替代弹性条件下,通过影响能源份额进而影响能源强度的作用机制,并利用工业行业数据刻画这3种有效要素对能源强度的动态影响。     

Capital–labor substitution and equilibrium indeterminacy

This paper examines the quantitative relationship between the elasticity of capital–labor substitution in production and the conditions needed for equilibrium indeterminacy (and belief-driven fluctuations) in a one-sector growth model. With variable capital utilization, the substitution elasticity has little quantitative impact on the minimum degree of increasing returns needed for indeterminacy. However, when capital utilization is constant, a below-unity substitution elasticity sharply raises the minimum degree of increasing returns because it imposes a higher effective adjustment cost on labor hours. Overall, our results show that empirically-plausible departures from the Cobb–Douglas production specification can make indeterminacy more difficult to achieve.     

Aggregate productivity losses from factor misallocation across Chinese manufacturing firms

Aggregate productivity can be largely determined by how efficiently production factors are allocated across heterogeneous establishments. This paper estimates aggregate productivity losses from factor misallocation using a large sample of Chinese manufacturing firms. We analyze the institutional background and provide some stylized facts on factor misallocation of capital and labor in China. Using an approximation method based on the estimation of input gaps, we find that aggregate productivity losses reach an average rate of 11.18 percentage points per year. On average, capital and labor misallocation account for 6.73 and 4.45 percentage points, respectively. State ownership plays an important role in generating factor misallocation and productivity losses. Our results imply that factor misallocation have become a major obstacle preventing China from moving to a more efficient economy.     

改革开放以来中国经济增长动力转换的时空特征

基于中国1978~2012年的省级面板数据,采用检验后的超越对数生产函数的随机前沿模型,利用两套资本存量核算方法,对中国经济增长动力的来源及其时空特征进行分析,并对2008年金融危机的4万亿元投资政策进行了效率评价。研究结果表明,中国属于典型的投资主导型经济,资本投入是中国经济增长持续稳定的最主要来源,TFP贡献率呈现逐年下降的趋势;中国经济增长动力由改革开放初期的资本、劳动力和TFP三驾马车平衡拉动,形成了现阶段的资本投入与TFP反向角力态势;区域经济差距主要源于资本投入与TFP双重差异,但TFP差异是最重要因素;4万亿元经济刺激政策下中国经济复苏属于典型的“投资主导型复苏”,是以牺牲中国生产率为代价的,TFP在2008年后呈现断崖式下降,平均拉低中国TFP达0.23~0.32个百分点。     

Returns to scale in the United States intercity bus industry

This paper has taken into account the a priori restrictions available from neoclassical cost theory in evaluating the relationship between cost and the level of output and input prices for U.S. intercity bus service. A general translog cost function is used which allows tests of the degree of returns to scale, homotheticity and non-constant elasticities of substitution among input pairs. Major empirical findings are: (i) the intercity bus service can be modeled by a homothetic production function, (ii) operators can substitute labor for capital by using vehicles more extensively, (iii) there are potential economies of scale in the provision of intercity bus service, and (iv) the Cobb-Douglas functional form used in earlier studies of the industry is inappropriate.     

资本投入、技术进步与就业促进

经济转轨过程中我国将始终面临着持续上升的就业压力。缓解日益严重的就业压力,必然要求从战略高度审视就业问题,把就业作为经济社会发展的基本优先目标,保持劳动供给与劳动需求的均衡协调。本文通过构建基于劳动供需协调率sncr的AK模型,采用1952~2004年时间序列样本数据,运用协整检验(Cointegration Test)和格兰杰因果关系检验(Granger Causality Test),研究了资本投入、技术进步、实际工资与劳动供需协调率之间的关系。经验分析表明,资本投入与劳动供需协调之间存在稳定的正相关关系,技术进步则与劳动供需协调呈稳定的负相关关系,偏离比较优势的资本深化与技术进步弱化了就业促进功能并加速了劳动市场的分化。最后据此提出了简短的对策建议。     

The precious bane

Are natural resources harmful to growth? We address this question using a two-sector, endogenous growth model in which human capital is the engine of growth. By increasing the rewards to unskilled labor, natural resources make schooling more expensive. As long as the intertemporal elasticity of consumption substitution is not too high, this slows down human capital accumulation and growth. The presence of production spillovers from human capital, however, implies that a planner could react to a resource boom by increasing human capital accumulation even though the decentralized solution yields the exact opposite. The paper also shows that as the production complementarity between natural resources and unskilled labor declines, the growth effects of natural resources become increasingly sensitive to whether or not there is free trade in goods. The empirical evidence lends support to the main channel – natural resources to human capital to growth – that is suggested in the paper.     

Technological Choices and Prices,and Their Implications for the US Economy, 1963–2000

This paper examines the influence of techological change and changing factor prices in the US economy on prices and incomes between 1967 and 2000. Dynamic input–output physical, price and income models provide the conceptual framework for the analysis. The investigation is focused on sectoral price changes, the distribution of income and outlays between capital and labor, and the changing real purchasing power of capital and labor. One major conclusion is that the shares of national income earned by labor and capital have remained relatively constant over the entire period due to offsetting changes which are explicitly identified. At the same time, labor's purchasing power has not increased as much as that of capital.     

The Input Relationship Between Co-Authors in Economics: A Production Function Approach

A bstract .   This study addresses the question of what the relative input relationship is between co-authors in economics. Using the direct addilog production function, the partial elasticities of substitution between co-authors are estimated. The empirical results suggest that co-authors in economics are equivalent substitutes in production. The empirical results are robust whether the direct addilog production is estimated using each co-author's research capital stock, depreciated research capital stock, impact-adjusted research capital stock, or depreciated impact-adjusted research capital stock.     

Factor substitution and taxation in a finance constrained economy

In this paper, we examine the effects of constant-rate factor taxation on macroeconomic stability in the Woodford (1986) model. Our focus is on how the degree of factor substitution, as measured by the elasticity of factor substitution (EOS) in production, affects different balanced-budget tax rules. Analytically, we show that indeterminacy can occur under capital income taxation only when the EOS is very low, whereas indeterminacy under labor income taxation is not subject to the EOS restriction. This finding is robust when we tax all of the factor incomes with equal rates. Thus, in terms of macroeconomic stability, taxing capital income is preferred to taxing labor income.     

SUPPLY-USE FRAMEWORK FOR INTERNATIONAL ENVIRONMENTAL POLICY ANALYSIS

The technical variation between countries in the production of goods and services, in terms of not only input coefficients, but also emission coefficients, creates scope for international trade to reduce environmental pressures. For this purpose we extend the theory of trade and the environment as to accommodate technical variation between countries in production and emissions. We use and steer close to the extended input and output tables, which include emission data. By treating environmental standards analogous to capital and labor capacity constraints, the aggregation problem for economic and environmental measures gets the same format as the well-understood aggregation problem for labor and capital. In a pilot application we determine the gains to free trade in products and emission permits.     

Capital-skill complementarity,productivity and wages: Evidence from plant-level data for a developing country

Different types of labor and capital inputs have varying productive contributions that are dependent on plant characteristics. We estimate such contributions and their underlying determinants, recognizing the interactions among labor and capital components that reflect their substitutability or complementarity, for Turkish manufacturing plants. We distinguish technical and non-technical labor, and structures, machinery and computer capital, as well as the shares of female workers and imported capital in our production function specification. We find capital-skill complementary for both machinery and computers; greater productive contributions and thus wages for skilled labor are associated with more machinery intensity and computer use. The reverse is true for unskilled labor, which is complementary only with capital structures. Our results suggest that synergies among skilled (technical) labor, computers, and machinery capital have productivity- and skilled wage-enhancing effects that could contribute to productivity convergence of developing toward developed countries, even with their differing industry and input composition.     

Production with land and nonland factors: Which functional form?

Recent literature has investigated alternative CES and VES specifications for the production of building services with land and nonland inputs. The evidence presented here is consistent with a wide range of functional forms; the Cobb-Douglas form cannot be rejected but neither is it strongly supported. These findings are not inconsistent with previous estimates which are likely to be biased by errors-in-variables. Furthermore, the results reported here parallel findings from the literature on the substitution of labor for capital. Since data are not as readily available as in the labor-capital context, one must be pessimistic about the prospects for definitive empirical work.     

A deterministic profit attribution model: The postal service,a case study

This paper derives a positive model relating changes in profitability to output levels, price, input quantities, and costs. The model involves decomposition of profit changes to define contributions associated with changes in the product market and production input variables. It can be derived from basic profit concepts without additional assumptions regarding the organization's behavioral decisions or about the shapes of the demand or production functions. It therefore avoids all normative underpinnings and is based strictly on measurable changes in the environment. The model is applied to results obtained from the United States Postal Service income statement. Changes in the Service's productivity and its components (e.g., labor, materials, and capital) are fully reconciled in an accounting sense with reported changes in net income. This reconciliation permits the identification of the sources of net income change.     

Intangible investment in people and productivity

Organizational activity, information and communication technology work, and research and development (R&D) can be classified as work that creates intangible capital. We measure the returns to these three types of labor input by accounting for differences in their productivity compared with other labor inputs using Finnish firm-level data from 1998 to 2008. We apply a novel idea to use hiring as one proxy for productivity and demand shocks. We find that organizational workers increase total factor productivity and improve the profitability of high-productivity firms. R&D workers account for a large share of intangible capital; however, the returns to R&D are low. Investments in organizational competence are more likely to result in more rapid productivity growth. Firms with performance-related pay or domestically owned firms with extensive foreign activities have been among the highest performers with respect to the use of organizational work.     

Long-run growth and welfare effects of public policies with distortionary taxation

In a one-sector growth model with infrastructure investment, we study the impact of fiscal policies on growth. The government collects taxes on labor income and profits. The government uses these revenues to purchase infrastructure investment, provide utility enhancing government services, and to provide transfer payments to the households. We show that the balanced growth rate is an increasing function of the percent of government revenues that goes to infrastructure. We find that the growth maximizing mix of taxes depends on the elasticity of substitution between inputs. In particular, with distortionary taxes, the growth maximizing tax rate on capital is higher the lower the elasticity of substitution between private physical capital and public capital. In addition, the growth maximizing size of the government is higher when the elasticity of substitution between public and private inputs is low. We also investigate welfare effects of other public expenditures as well. Depending on the elasticity of substitution in production, the welfare implications of different public policies can be substantial.     

How to optimize the allocation of research resources? An empirical study based on output and substitution elasticities of universities in Chinese provincial level

Although significant progress has been made in China's basic research in recent years, there remains a wide gap between research in China and that from developed countries. How to optimize the allocative efficiency of research resources is of great importance for increasing research output. In this paper, using the fixed effect stochastic frontier model based on the translog production function, we estimate output and substitution elasticities of research and development (R&D) inputs at universities in China's provincial level during 2009–2016. We find that the R&D technical efficiency of China's universities, after a rapid growth, has tended to become relatively stable. Improvements of internationalization degree and exogenous R&D capabilities are conducive to promoting R&D technical efficiency, whereas expenditures from government grants inhibit the promotion of R&D technical efficiency; the effects of R&D capital deepening and internet penetration are not evident. The output elasticity of R&D capital is much higher than that of R&D personnel, suggesting that R&D capital is the main driving force of research output. The substitution elasticity between R&D capital and personnel has experienced a change from substitution to complementary since 2014. To realize sustained growth of research output, we should increase R&D input with positive output elasticity or reduce R&D input with negative output elasticity, making the necessary trade-offs according to the substitution relationship between the two R&D inputs.