Workforce churning,human capital disruption,and organisational performance in different technological contexts

We assess the influence of workforce churning on the relationship between organisational human capital and labour productivity. Building on collective turnover research and human capital theory, we examine how the components of workforce churning (i.e., voluntary turnover, involuntary turnover, and new hires) influence the relationship between existing human capital and labour productivity. Further, we examine how this influence varies according to a firm's technological intensity. Our data come from 1,911 Italian manufacturing firms and reveals that collective voluntary turnover negatively affects the relationship between organisational human capital and labour productivity regardless of an organisation's level of technological intensity. In contrast, collective involuntary turnover enhances the relationship between human capital and labour productivity, and its effect is even stronger for organisations with more technologically intensive operations. Finally, our results suggest that the integration of new hires disrupts the relationship between human capital and productivity, particularly for firms with technologically intensive operations.     

The World Technology Frontier: What Can We Learn from the US States?*

We re‐estimate the world technology frontier non‐parametrically using a dataset covering OECD country‐level data and US state‐level data on GDP per worker and the stocks of physical capital, unskilled labour and skilled labour. The auxiliary use of US state‐level data significantly reduces the upward bias in cross‐country estimates of technical efficiency, and so does allowing for imperfect substitutability between skilled and unskilled labour. We then use our adjusted estimate of the world technology frontier in a series of decompositions of productivity differences and sources of economic growth in the OECD in 1970–2000, including also ‘appropriate technology vs. efficiency’ decompositions.     

Productivity, convergence and policy: a study of OECD countries and industries

This paper analyses trends in labour productivity and its underlying determinants in a panel of OECD countries from 1979 to 2002. Data Envelopment Analysis (DEA) is used to estimate a Malmquist measure of multifactor productivity (MFP) change. We decompose the growth in labour productivity into (i) net technological change (ii) input biased technical change (IBTC) (iii) efficiency change and (iv) capital accumulation. We analyse the effect of each of these factors in the transition towards the equilibrium growth paths of both labour productivity and per capita GDP for the OECD countries, controlling for the effects of different policies and institutions. The results indicate that on average gaps in productivity or income levels are narrowing down although there is no evidence to suggest that the entire OECD area comprises a single convergence “club”. Using kernel estimation methods we find that that labour productivity and per capita GDP are settling toward a twin peak (bimodal) distribution. Panel unit root tests over an extended (1960–2001) period provide general support for the convergence hypothesis. Analysis of the contributions of productivity growth within industries and sectoral composition changes show that aggregate productivity change is predominantly driven by ‘net’ within sector effects with very little contribution emerging from sectoral shifts (the ‘in-between’ static or dynamic effects resulting from higher or above average productivity industries gaining employment shares or low productivity industries losing shares).     

Factor Utilization and Adjusted Productivity Estimates for the UK*

This paper derives series for capital utilization, labour effort and total factor productivity (TFP) for the UK from a general equilibrium model with variable utilization and labour adjustment costs. Capital utilization tracks survey‐based measures closely, but persistent movements in total hours worked mean our labour effort series is not as highly correlated with its comparators. Our estimated TFP series is less cyclical than the traditional Solow residual, although a weighted average of capital utilization and labour effort – aggregate factor utilization – and the Solow residual are not closely related.     

Productivity change in a multisectoral economic system

We estimate productivity growth without recourse to data on factor input shares or prices. In the proposed model, the economy is represented by the Leontief input–output model, which is extended by the constraints of primary inputs. A Luenberger productivity indicator is proposed to estimate productivity change; this is then decomposed in a way that enables us to examine the contributions of individual production factors and individual commodities to productivity change. The results allow for the identification of inputs or outputs that are the drivers of the overall productivity change. Their contributions are then decomposed into efficiency change and technical change components. Using input–output tables of the US economy for the period 1977–2006, we show that technical progress has been the main source of productivity change. Technical progress was mostly driven by capital, whereas low-skilled labour contributed negatively.     

Feasibility and optimality of the initial capital stock in the Ramsey vintage capital model

Using a discrete-time version of the Ramsey Vintage Capital Model we provide a characterization of the set of initial capital stocks compatible with a predefined scrapping time, given the rate of technical progress and the level of capital productivity. Each profile of initial capital stock in that set generates a complete infinite horizon feasible capital path. From that characterization, we prove the existence of a minimum value for the scrapping time of the machines compatible with the rate of technological progress. Moreover, for each level of capital productivity, there exists an upper bound for the technological progress which allows the existence of feasible capital paths with full employment. Finally, we transform the infinite horizon dynamic programming problem into one of finite dimension. We use this to find the optimal lifetime for the machines as well as the optimal composition of the initial capital stocks. A numerical example shows that, in accordance with the infinite horizon approach to the problem, the increase in the rate of technological progress leads to a decrease in optimal scrapping time of capital goods.     

Technology Flows Matrix Estimation Revisited

This paper revisits the methodological problems of estimating matrices showing how technological advances--measured by industry research and development outlays--flow from industries of origin to using industries. An early effort relied upon the analysis of 15 112 US patents. Several alternative methods are explored to address methodological questions concerning the choice of carrier matrices, the handling of diagonal elements, and the treatment of capital goods flows. Technology flow matrices estimated using diverse combinations of assumptions are tested for goodness-of-fit relative to the original patent-based matrix and for their ability to "predict' productivity growth in Solowian regression equations. Although some anomalies emerge, the best results are obtained using combined first-order transactions and capital flows matrices with diagonal elements adjusted to reflect the ratio of internal process to all R&D spending. However, flow data compiled using the Leontief inverse matrix add explanatory power in productivity growth regressions.     

基于等效益面的大庆油田企业科技进步贡献率测算研究

科技进步贡献率是反映科技进步作用的一项综合指标。本文在"等效益面法"原理的基础上,利用Lingo软件计算了大庆油田有限责任公司C-D生产函数的资本和劳动力要素的产出弹性系数,进而测算2005~2008年间的科技进步贡献率。计算结果表明,大庆油田的科技进步贡献率呈现逐年上升的趋势,均值达到60%以上,超过国家40%的水平。科技在弥补自然递减率、保证原油产量的稳定方面发挥着越来越重要的作用。     

The disabling effects of enabling social policies on organisations’ human capital development practices for women

Paid parental leave and externally provided childcare are social policies designed to enhance parents' labour force participation. These policies influence not only men's and women's decisions regarding their labour market activity but also organisational decision makers' (ODMs) expectations about their employees' availability to work and thus, their willingness to invest in their employees' human capital. Using a sample of over 13,000 individuals from 19 countries, we investigate the interaction between gender and social policies on human capital development practices. In line with statistical discrimination theory, which suggests that ODMs hold different expectations about female and male productivity, we find that paid parental leave and externally provided childcare are negatively associated with the provision of human capital development for women but not for men.     

The impact of embodied and disembodied technical progress on productivity gaps—An applied general equilibrium analysis for Germany and Spain

The purpose of this paper is to analyze the impact of disembodied and of capital embodied technical progress on the closing of international productivity gaps. Within the framework of a partial equilibrium model the direct effect of technical progress on the change of productivity gaps can be calculated directly. However, since the two types of technical progress affect unit costs of industries differently, and hence the system of relative prices, an applied general equilibrium model is required in order to measure the indirect effect of technical progress on the change in productivity gaps. We employ variable cost functions with quasi-fixed effective capital, depending on the rate of embodied technical change, in order to generate a system of prices. Based on similarly structured applied general equilibrium models for Spain and Germany, we quantify the effects of sectoral embodied or disembodied technical change on reduction in national inflation as well as the effect on closing productivity gaps.     

Is technical change embodied in the capital stock or new investment?

The question of technical change and productivity growth is one of the fundamental empirical issues of our time. Surprisingly, Solow's original question of whether technical change is embodied in investment or the entire capital stock has been largely neglected. This paper seeks to bridge the early work of Solow and others on the extent of embodiment of technical change with the more modern approach to estimating the structure of production and technical change using multifactor cost functions. We also attempted to identify the source and structural nature of embodied technical change by decomposing it. Our theoretical model is applied to a pooled cross-section of six OECD countries for the 1965–1989 period. Our preferred model is one of full factor-augmenting embodied technical change because technical change augmenting the entire capital stock tends to overstate quality change in the aggregate capital stock more than that embodied in new investment. This model specification supports the view that technical change is embodied in the stock of capital structure and is embodied in new investment of capital equipment.     

Interindustry Technology Flows and Productivity in Finnish Manufacturing

The paper examines the importance of interindustry technology flows in finnish manufacturing in the 1980s and early 1990s. An attempt is made to distinguish between embodied technology flows and spillovers, so clarifying the spillover concept.Embodied technology covers intermediate goods and capital equipment. The embodied technology data that have been used are partly based on input—output analysis, while the spillover estimates presented are based on measures of technological distance based on the industry-specific distributions of R&D expenditures. Econometric analysis of the effects of the various technology inputs on total factor productivity implies that technology embodied in foreign machinery, domestic spillovers and, to some extent, the firms' own R&D have been the most important technology sources on average.     

Trade,Technology and the Labour Market: The Case of South Africa*

This study advances previous work on the effects of trade and technological change on labour markets within the framework of Heckscher–Ohlin trade theory. We provide evidence for an unskilled labour abundant developing country by employing dynamic heterogeneous panel estimation techniques. For South African manufacturing, trade‐mandated increases in earnings are positive for labour and negative for capital whilst technology‐mandated increases are negative for both factors. We also find it important to take account of endogeneity issues in analysing the impact of technology and price changes on factor returns and in isolating factor‐ and sector‐bias of technological changes.     

Polarization of the worldwide distribution of productivity

We employ data envelopment analysis (DEA) methods to construct the world production frontier, which is in turn used to decompose (labor) productivity growth into components attributable to technological change (shift of the production frontier), efficiency change (movements toward or away from the frontier), physical capital deepening, and human capital accumulation over the 1965–2007 period. Using this decomposition, we provide new findings on the causes of polarization (the emergence of bimodality) and divergence (increased variance) of the world productivity distribution. First, unlike earlier studies, we find that efficiency change is the unique driver of the emergence of a second (higher) mode. Second, while earlier studies attributed the overall change in the distribution exclusively to physical capital accumulation, we find that technological change and human capital accumulation are also significant factors explaining this change in the distribution (most notably the emergence of a long right-hand tail). Robustness exercises indicate that these revisions of earlier findings are attributable to the addition of (more recent) years and a much greater number of countries included in our sample. We also check to see whether our results are changed by a correction for the downward bias in the DEA construction of the frontier, concluding that these corrections affect none of our major findings (essentially because the level correction roughly washes out in changes.)     

资本体现式技术进步、技术合意结构和我国生产率增长来源

本文基于动态前沿生产面的非参数方法获取分行业全要素生产率指数,依据资本体现式技术进步发展耦合于蕴涵前沿技术的机器设备投资过程逻辑,以分行业固定资产投资中的设备工器具投资表征资本体现式技术进步,通过面板数据回归检验不同类型技术进步及其匹配结构对我国制造业生产率的影响。结果显示:资本体现式技术进步是生产率增长的重要来源,但技术效率实现与否内嵌于经济环境,受制于行业利润率及技术与人力资本的匹配程度。行业整体合意技术结构效应不明显,而以利润率和国有化程度分组发现,高国有化行业和高利润率行业存在合意技术结构。     

The London Business School with Gower Publishing

The theory of employment is reasonably well understood. Producers are confronted with a given level of aggregate demand. They decide how much they can profitably produce, and decide on the mix of capital and labour in response to a given set of relative prices. Over most of the post-war period variations in employment were accounted for mainly by variations in aggregate demand, but that situation changed dramatically during the 1970s. As unemployment has mounted, so has the interest in so-called supply-side explanations of the problem, since it has become obvious that an increase in employment on the scale required can hardly come from a demand stimulus alone. In our account of the 1980 recession, we tended to focus on profitability as a key element in the decision to supply. If the price of goods is too low relative to the price of the factors of production needed to produce them, then the supply of output will fall. In the 1980 recession the price of all the factors of production rose dramatically: real wages shot up following the Clegg awards; real interest rates were at record levels; and the price of energy had recently soared following the OPEC II oil shock. At the same time goods prices were being constrained by the government's counter-inflationary strategy, and most notably by a strong exchange rate. Under these circumstances a substantial proportion of firms, especially in the traded goods sector, found it unprofitable to continue producing. When unprofitable production lines were abandoned, the associated capital equipment was scrapped. These decisions, once taken, were for the most part irreversible even if, as must have happened in some cases, subsequent movements in factor prices would have made production profitable once again. We discussed this phenomenon in the April Forecast Release and showed that, on the assumption that capital-labour ratios had remained at their trend levels, some £25bn of capital equipment (at I980 prices) had been scrapped. The fact that manufacturing output and employment have remained far below their 1979 levels, even though total output at home and abroad is at or well above that level is, we believe, mainly due to this capital scrapping. The jobs in manufacturing will not be re-created - even though UK competitiveness has been restored to pre-1980 levels - until the capital stock is re-built. The scrapping phenomenon is important because it creates a link between employment and too-high real wages (or other factor costs) that is often ignored. In standard production theory a rise in real wages leads to the substitution of capital for labour and employment may fall (if the rive in real wages does not create a more than offsetting increase in aggregate demand). However, production theory is complicated by the fact that capital and labour are complements as well as substitutes. Since a large part of the nation's productive-capacity, once built, uses capital and labour in fixed proportions, a rise in real wages may render part of the existing capital stock uneconomic. High real wages thus destroy capital as well as jobs. In our April Forecast Release, in order to estimate the scale of the scrapping problem, we made the simplifying assumption that capital-labour ratios remained on trend. In practice they vary in line with movements in relative factor prices. In the present Forecast Release we look more closely at the role of factor prices. We find some evidence that changes in relative factor prices affect the capital-labour mix. However, the substitution elasticities are small. The conclusion of this analysis is that the job losses which resulted from too-high factor prices (mainly wages) during the recession cannot be quickly reversed.     

Sustainability matters

This document aims at bridging productivity measurement and weak sustainability in a specific data envelopment analysis framework that allows for negative output. In this framework countries use two inputs: capital and labour and seeks to maximize output and adjusted net saving. Adjustment net saving is seen as a sustainability indicator and then the productivity indicator computed can be understood as a sustainability productivity index. The higher the indicator is the higher productivity is and the probability of targeting sustainability.     

Spillovers,Linkages and Technical Change

Using US input–output data for the period 1958–87, I find strong evidence that industry total factor productivity (TFP) growth is significantly related to the TFP performance of the supplying sectors, with an elasticity of almost 60%. R&D intensity is also found to be a significant determinant of industry TFP growth, with an estimated return of about 10–13% and the return to embodied R&D is estimated at 43%. Direct productivity spillovers, from the technological progress made by supplying sectors, appear to be more important than spillovers from the R&D performed by suppliers. They also play a key role in explaining changes in manufacturing TFP growth over time. Changes in the contribution made by direct productivity spillovers to TFP growth account for almost half of the slowdown in TFP growth in manufacturing from 1958–67 to 1967–77, and for 20% of the TFP growth recovery in this sector from 1967–77 to 1977–87. Changes in R&D intensity and embodied R&D are relatively unimportant in explaining movements in manufacturing TFP growth over these three periods.     

Temporary contracts and labour productivity in Spain: a sectoral analysis

This paper analyses the impact on sectoral labour productivity growth caused by the increase in the use of temporary employment contracts in Spain over the period 1987–2000. With this aim, we estimate a production function model in which effective labour is represented by the shares of permanent, temporary and self-employed workers. Results suggest that productivity growth has been slowed down by the use of temporary contracts for regular jobs and that this has not been affected by compositional changes in activity over the period. However, this effect has only been detected in the manufacturing and energy sector, in contrast to low-technology low-human capital sectors like construction and hospitality.