Outsourcing and computers: Impact on urban skill level and rent

Cities in the U.S. with a higher initial share of college graduates have had a greater subsequent increase in this share over the past two decades. Concurrently, housing prices have grown faster in these skilled cities. This paper argues that the diffusion of computers and outsourcing may partly explain these two phenomena. In the presented model, skilled workers are more productive in skilled cities and need unskilled support services. The cities' unskilled workers can perform the support services, but when it is cheaper, such services can be undertaken by computers or outsourced to less-skilled cities. New technologies facilitating computerization and outsourcing can increase the skill share and housing prices in skilled cities relative to less-skilled cities, under reasonable assumptions. The basic economics is that the new technologies diminish the demand for unskilled workers in skilled cities and permit skilled workers to earn higher wages, which in turn increases the supply of skilled workers in skilled cities and drives up housing prices. Empirically, this paper documents five stylized facts that the theory can rationalize. Particularly important is rising skill premium in skilled cities relative to less-skilled cities, which supports a production theory involving shifts in labor demand.     

Technology Choice:

ABSTRACT Suppose, unlike the endogenous growth literature, that technological innovation may actually create structural problems. If capital and labor inputs of specific skill levels are complementary, and new technology changes the skill mix needs, then this mismatch may create underemployment or unemployment. High-tech investment maximizes output but at the expense of unemployment of unskilled workers; lower-tech investment results in smaller unskilled labor unemployment, but a smaller increase in output (or underemployment of skilled labor). A policy solution for this tradeoff is to allocate investment between physical capital and human capital in the right proportions to ensure both maximum output and full employment.     

中国出口技术复杂度的演进机理——四部门模型及对出口产品的实证检验

本文将金融发展纳入出口技术复杂度的演进动因中,构建了一个解释其演进机理的四部门模型,并对1996～2006年中国出口美国的131种典型产品进行了产品层面和出口技术复杂度演进机理的实证检验。结果发现,中国出口产品技术水平的推动因素逐渐转变为熟练劳动力、利率机制、国内各部门的效率水平以及国外因素,其中外国服务资本价格和外国贷款利率的作用在增大,非本土劳动力因素对出口复杂度较高的产品影响程度较大。     

Misallocation,informality, and human capital: Understanding the role of institutions

The aim of this paper is to quantify the role of formal-sector institutions in shaping the demand for human capital and the level of informality. We propose a firm dynamics model where firms face capital market imperfections and costs of operating in the formal sector. Formal firms have a larger set of production opportunities and the ability to employ skilled workers, but informal firms can avoid the costs of formalization. These firm-level distortions give rise to endogenous formal and informal sectors and, more importantly, affect the demand for skilled workers. The model predicts that countries with a low degree of debt enforcement and high costs of formalization are characterized by relatively lower stocks of skilled workers, larger informal sectors, low allocative efficiency, and measured TFP. Moreover, we find that the interaction between entry costs and financial frictions (as opposed to the sum of their individual effects) is the main driver of these differences. This complementarity effect derives from the introduction of skilled workers, which prevents firms from substituting labor for capital and in turn moves them closer to the financial constraint.     

Energy crises and change of technology

A production model is formulated for the Finnish metal product and machinery industry for studying energy crises-related structural changes. Two models are estimated: a partial static equilibrium model, where capital is treated as a fixed input in the short run, and a dynamic model, where adjustment costs of the capital input are taken into account. Alternative hypotheses of structural change are formulated as gradual parameter shifts. The results show that some of the energy-related parameters have changed over time. Also the contributions of parameter changes and variations in the average values of the variables on the changes in the energy demand elasticities are studied. The most important effect is the strengthening of the energy-saving bias in technical change.     

Indeterminacy in a finance constrained unionized economy

We introduce labor unions and unemployment in a finance constrained monetary economy with heterogenous agents and productive labor externalities. We find that unions, introducing endogenous markup variability, influence the dynamics of the model. Although a lower bound for labor externalities is always required for indeterminacy, this lower bound decreases with union power when the elasticity of substitution between capital and labor is above one. For values of this elasticity below one, this result is reversed. We also show that Hopf bifurcations may occur as union bargaining power crosses a critical value. Finally, we find that unions increase simultaneously steady state employment, capital accumulation and welfare iff the (equilibrium) marginal productivity of labor is decreasing in employment.     

A Study on the Productivities of IT Capital and Computer Labor: Firm-level Evidence from Taiwan’s Banking Industry

The current paper extends the non-neutral stochastic frontier production function—which belongs to the class of a one-step procedure as defined by Wang and Schmidt (2002) and developed by Huang and Liu (1994)—from a cross-sectional setting to a panel data modeling. Using a newly-surveyed dataset from Taiwan’s commercial banks on their investments in information and communication technologies (IT), I find that IT capital and computer labor tend to exhibit higher productivities than their non-IT and non-computer counterparts, that IT capital has positive impacts on the marginal productivities of computer labor and borrowed funds, and that the mean technical efficiency is around 87.7%. Evidence is found that the total factor productivity of the banking sector grew at an average rate of 0.28% per annum, albeit fluctuating, for the past 8 years.     

人口老龄化对劳动供给和人力资本投资时间的影响

参照贝克尔的时间分配理论和海克曼的生命周期理论,运用动态世代交叠均衡模型,研究人口老龄化对劳动供给和人力资本投资时间分配的影响,并进一步考察人口老龄化对生产能力的间接影响。结果显示：在短期内,人口老龄化会导致人力资本投资时间的增加和劳动供给的减少,进而引发社会生产能力的下降,增加了人口老龄化的经济成本;在长期内,人口老龄化使得年轻人能够为社会提供更多的熟练劳动力,进而提高了社会劳动生产率,降低了人口老龄化的经济成本。     

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。     

The organization and relative productivity of Japanese and American industry

This paper compares the structure and productivity of Japanese and American firms. We construct a simple model of labor shares in which the ratio of labor payments to sales is the product of labor's share in take added and the degree of integration. According to Japanese and United States census data, labor shares in value added are fairly similar for Japanese and American firms, whereas the average degree of integration, and therefore the average ratio of payroll to sales of Japanese firms, is distinctly lower than that of their American counterparts, particularly in the machinery and equipment industries. From survey data on Japanese firms in California, we observed payroll-sales ratios that generally lie between values reported for Japan and the United Slates for the machinery and equipment industries. Assuming that Japanese firms in California employ the same technology as their US counterparts, we conclude that the average degree of integration of Japanese firms in California is at least 10% lower. As a result, even though the gross labor productivity of typical Japanese firms in the United States generally, and California in particular, is slightly higher, the former may well be less productive than the latter in terms of net lalmr productivity, measured by value added. While further corroboration is needed, it appears that differences in the extent of integration are an important factor that accounts for reported productivity difference between the two countries.     

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.     

Optimal Growth with Public Capital and Public Services

We characterize optimal economic growth in an endogenous growth model in which production requires public capital (a stock) and public services (a flow) in addition to private capital and labor. We analyze the comparative static effects of changes in the fundamental technological and preference parameters of the model on the optimal values of several variables, such as the optimal rate of growth and the optimal allocation of resources among consumption, the provision of public services, and investment in public and private capital. We show that the general optimal path converges in finite time to the balanced growth optimal path. We relate our paper to important contributions to the existing literature by obtaining them as special cases of our model.     

Capital,labor, and derived demand for information: Evidence from China

In this paper, information capital is considered as a separate input of production along with noninformation capital and labor. The substitution possibility among information capital, noninformation capital and labor has been estimated by nonlinear iterative algorithm using Chinese data for 1995–2017. The empirical results from the study imply that estimates of Chinese input substitution degree and productivity are underestimated without including information capital as an input separate from noninformation capital. When information capital and labor are combined, the contribution ratio of labor force may increase. Information capital interacts with noninformation capital and labor to promote economic development and production efficiency.     

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.     

外资企业技术授权与劳动力技能结构升级——来自世界银行中国企业调查数据的经验证据

在中国高技能劳动力供给不断增加的背景下,引进国外先进生产技术能够促进本土企业实现技术进步,进而扩大企业对高技能劳动力的相对需求。作为技术引进的途径之一,本土企业使用外资企业授权的生产技术与企业内高技能劳动力就业的关系却较少受到关注。本文利用世界银行2012年中国企业调查数据对这一问题进行初步探索。研究结果表明,获得外资企业技术授权能够显著提升劳动力技能结构,影响途径包括生产规模扩张、研发投入增加和资本深化。其中,生产规模和研发投入为正向途径,资本深化为反向途径。此外,外资企业技术授权作为本土企业扩大对高技能劳动力的相对需求的途径之一,对避免技能层面的要素错配和结构性失业具有重要意义。     

THE RELATIVE PERFORMANCE OF FORMAL AND INFORMAL SECTORS IN INDIA

We evaluate the relative performance of formal and informal sectors in India by looking into their productivity difference. Recognizing the intersectoral linkages in the economy, the competitive general equilibrium prices are computed; these signal the productivities. Our model synthesizes frontier analysis with the general equilibrium approach to generate shadow prices. The formal activities are found to be more productive than the informal. However, the informal services sector is as efficient as the formal one. There would be an overall productivity gain of 22% to the economy if factors were allocated to productive activities. The shadow prices from the model indicate that the formal capital and informal capital are scarce factors, while it has been the opposite for formal (regular) and informal (casual) labour. Formal labour is more productive than its informal counterpart; formal capital and informal capital are equally productive.     

Understanding skilled migrants’ employment in the host country: a multidisciplinary review and a conceptual model

Abstract

Globalization has led to an increase in international mobility in many occupational fields. Therefore, scholars from a variety of disciplines have studied the topic of skilled migration. The purpose of this study is to review and synthesize the empirical research on skilled migrants’ qualification-matched employment across multiple disciplines. Skilled migrants are people on the move who possess university degrees or extensive work experience in professional fields when they leave their countries of origin to seek employment elsewhere. This review synthesizes findings of 106 empirical studies published from 1990 to mid-2017 on skilled migrants’ employment. We develop a conceptual model that includes antecedent conditions associated with skilled migrant qualification-matched employment in their host country and its outcomes. We also highlight the role of multilevel factors and moderating variables associated with skilled migrants’ possibility of obtaining qualification-matched employment. Our review has implications for human resource scholars and practitioners concerned with skilled migrants’ employment and labor market.     

A microfoundation for normalized CES production functions with factor-augmenting technical change

Based on a tractable “endogeneous technology choice” framework, we provide a microfoundation for aggregate normalized constant elasticity of substitution (CES) production functions with non-neutral, factor-augmenting technical change. In this framework, firms are allowed to choose unit productivities of capital and labor optimally from a technology menu constructed under the assumption that unit factor productivities (UFPs) are independently Weibull-distributed. The Weibull distribution itself is also microfounded here: based on extreme value theory, it is found to be an accurate and robust approximation of the true UFP distribution if technologies consist of a large number of complementary components.     

The influence of industry concentration on merger motives—empirical evidence from machinery industry mergers

By linking industrial organization theory and capital market research, we provide empirical evidence that merger motives of firms are influenced by underlying industry concentration. Analyzing wealth effects on target, acquirer and rival firms in the machinery industry, we observe significant different capital market reactions among merger announcements in dependence of underlying industry concentration. suggesting that different takeover motives prevail in fragmented and concentrated industries. In contrast to previous studies, we find besides efficiency motives evidence for monopolistic collusion motives in fragmented industries. Mergers in concentrated industries are primarily motivated to achieve productive efficiency gains. The absence of collusion motives may be an indication for a successful enforcement of antitrust legislation. Our results suggest that the magnitude of the influence of industry concentration in empirical merger motive research may have been previously under-estimated leading to a potential distortion of results.     

Voting over selective immigration policies with immigration aversion

Selective immigration policies set lower barriers to entry for skilled workers. However, simple economic intuition suggests that skilled majorities should welcome unskilled immigrants and protect skilled natives. This paper studies the voting over a selective policy in a two-country, three-factor model with skilled and unskilled labor, endogenous migration decisions, costly border enforcement and aversion to immigration. Results show that heterogeneity in capital distribution forces skilled voters to form a coalition with unskilled voters, who become pivotal. The voting outcome is therefore biased towards the preferences of the latter, and consists in a selective protectionism. Finally, immigration aversion helps to explain why skilled majorities do not bring down entry barriers against unskilled workers.