Substitution between energy,capital and labour within industrial companies: A micro panel data analysis

Based on micro panel data for industrial companies, we estimate factor demand models with electricity, other energy, labour and machine capital as flexible inputs using both the translog and the linear logit specification. As opposed to the few previous micro (cross-section) data studies we find that both electricity and other energy are complements with capital. Substitution between electricity and other energy is limited. The own-price elasticity for electricity is −0.21 in the translog model and −0.19 in the linear logit model. The corresponding own-price elasticities are −0.45 and −0.23 for other energy, −0.08 and −0.05 for labour and −0.45 and −0.34 for capital.     

A structural model of human capital and manufacturing sector change

The relationship between manufacturing job losses per capita, changes in manufacturing earnings per worker, and human capital investment is examined empirically at the level of nearly 3,000 U.S. counties over the period 1980–90. Hypotheses tested address the questions of whether the sectoral composition of the local economy (in this case with an emphasis on manufacturing) affects per worker earnings growth and investment in human capital, and whether investment in human capital in turn affects the economy's sectoral composition and earnings growth. The simultaneous equations estimation reveals direct and indirect effects of initial levels of the endogenous variables on their change during the 1980s. These effects are compared with comprehensive effects obtained using a reduced form regression.Research underlying this paper was funded in part under the National Research Initiative, Competitive Grants Program of USDA/ERS (Grant no. 93-37401-9367). Neither this agency nor the University of Kentucky is responsible for views expressed here.     

International trade,technological shocks and spillovers in the labour market: a GVAR analysis of the US manufacturing sector

We empirically analyse the response of labour market related variables in the US manufacturing sector to various shocks, notably to trade openness and technology, as well as examining spillovers from industry-specific labour market shocks. The econometric approach involves an application of the recently developed Global Vector Autoregression methodology of Dées et al. (2007 Helbling, T, Jaumotte, F and Sommer, M. 2006. How has globalization affected inflation?. IMF World Economic Outlook, April: 97–134.  [Google Scholar]) to 12 manufacturing industries over the period 1977–2003. The framework allows us to analyse the response of a standard set of labour-market related variables (employment, real compensation, productivity and capital stock) to exogenous factors (a sector-specific measure of trade openness, a common technology and oil price shock), along with industry spillovers using specific measures of manufacturing-wide variables for each sector. Generalized impulse responses indicate that increased trade openness negatively affects real compensation, has negligible employment effects and leads to higher labour productivity. These impacts, however, are relatively weaker than those induced by technology shocks, with the latter positively and significantly affecting both real compensation and employment. There is also evidence of positive spillovers across industries from sector-specific employment and productivity shocks. Impact elasticities suggest strong intra-sectoral linkages for employment and capital stock formation, contrasting with weak linkages for what concerns real compensation and productivity.     

The impact of trade liberalization on employment,capital, and productivity dynamics: evidence from the uruguayan manufacturing sector

This paper studies the impact of trade liberalization on labor and capital gross flows and productivity in the Uruguayan Manufacturing Sector. Higher international exposure implied a slightly higher job creation, an important increase in job and capital destruction, and an increase in productivity. Unions dampened these effects. Although not associated with higher creation rates, unions were effective in reducing job and capital destruction but they also reduced productivity growth. Industry concentration mitigated the destruction of jobs but had no effects on job creation or in capital and productivity dynamics.     

Assessing the contribution of public capital to private production: Evidence from the German manufacturing sector

Using time-series cross-section data from the manufacturing sector of the 11 West German 'Bundesländer' (Federal States) from 1970 to 1996, I examine the impact of public capital on private production. My econometric analysis explicitly takes into account four of the most frequent specification issues in the context of time-series crosssection data analysis: serial correlation, groupwise heteroscedasticity, cross-sectional correlation and non-stationarity of data. For all approaches and tested specifications, I find that public capital is a significant input for production in the manufacturing sector. Moreover, I find that differences in public capital endowment can explain long-term differences in productivity across the Bundesländer. One tentative conclusion that can be drawn from this finding is that differences in public capital endowment might also explain a part of the still-existing productivity gap between manufacturing in East and West Germany. However, I emphasise that the existence of positive effects of public capital on private production is a necessary, but not a sufficient condition for concluding that public investments should be boosted in the future.     

Unproductive labour,capital accumulation and profitability crisis in the Greek economy

The focus of this paper is on the evolution of the major macroeconomic variables of classical political economy and the contrast with their orthodox counterparts in the quest to identify the causes of the current crisis in the Greek economy. Our analysis shows that declining profitability past a certain point leads to a stagnant mass of real net profits that discourage investment and increase unemployment. More specifically, for the period 1970–2007 for which we have detailed data, we identify the so-called silent depression of the 1970s and early 1980s, the new golden age of accumulation during which the capitalization of the production process led to a rapidly growing productivity and with stagnant or slowly rising real wages increased the rate of surplus value to new heights. As a consequence, the rate of profit from the mid-1980s onwards displayed a mildly rising trend and remained at a much lower level than that of the early 1970s. The rate of profit starts to fall after 2007, the year of the onset of the (world) economic crisis, and this continues up to 2014. Our econometric analysis based on an ARDL model further shows that the incremental rate of return, a variable derived from, and therefore strictly related to the average rate of profit, constitutes a by far more concrete measure of profitability and, in combination with the real interest rate, shapes the process of capital accumulation.     

Shadow pricing of labour and capital in an economy with unemployed labour

This paper derives the shadow prices of labour and capital to be used in the public sector in a situation of unemployment. The setting considered is that of a three-good, two-period general equilibrium model. Then shadow prices are compared to their corresponding market prices and shown to closely depend on own and cross-elasticities of supply and demand for labour and investment. In the first part, a rigid wage rate is the sole source of distortion; then, a tax on capital income is introduced so that our formula for the social rate of discount can be contrasted with that of Harberger, Sandmo and Drèze.     

Foreign capital,return to education and child labour

The paper attempts to identify the different channels through which economic reforms can affect the incidence of child labour in a developing economy using a three-sector general equilibrium framework with child labour. We show that reduction in poverty is not a necessary condition for the problem of child labour to improve in the developing economies. Economic reforms like an inflow of foreign capital can mitigate the incidence of child labour by raising the return to education and lowering the earning opportunities of children.     

Ageing,human capital and demographic dividends with endogenous growth,labour supply and foreign capital

Portuguese Economic Journal - We add endogenous labour supply to exogenous population growth in an Uzawa-Lucas endogenous growth model with international capital movements. Under non-linearity from...     

Advanced technology,innovation, wages and productivity in the Canadian manufacturing sector

In this article, we used a two-step estimation procedure, where in the first stage, the number of advanced manufacturing technologies used in the firm was estimated using a negative binomial regression, and the expenditure on process and product innovation was estimated using a type II Tobit procedure. In the second stage, we used the predicted values from the first stage in wage and labour productivity equations. The data were from the 2009 Survey of Innovation and Business Strategy which was linked to the General Index of Financial Information (2004–2009) and the Longitudinal Employment Analysis Program (2004–2009). The implications for policy are that we should not expect large aggregate effects of innovation on productivity and employment. We should expect wage increases and productivity increases, with process innovation. We should also expect moderate wage increases with product innovation, and contrary to process innovation, the effect on productivity of product innovation was negative.     

FDI spillovers in the Chinese manufacturing sector

This paper uses a new longitudinal dataset of more than 15,000 manufacturing firms to analyse the heterogeneous responses of firms to foreign direct investment in China. Domestic firms operating in sectors where foreign firms are also active have higher total factor productivity. However, the magnitude of such horizontal spillovers depends on the structure and origin of foreign ownership, the export status of firms and the characteristics of the special economic zones firms are operating in.     

Variable labour supply, specialisation-based external economies, and capital inflow

This paper examines the impact of exogenous capital inflow on prices, production, labour supply, and welfare in the presence of specialisation-based externalities. The paper utilises a simple model of an economy that produces one-final good by means of capital, labour, and a large number of varieties of an intermediate good. The intermediate good is produced by means of capital and labour. The supply of capital is exogenous but the supply of labour is endogenous. The presence of internal economies of scale in the intermediate good industry gives rise to specialisation-based external economies in the production of the final good. Perfect competition prevails in the final good industry whereas the intermediate good industry operates under Chamberlinian monopolistic competition. It is shown that exogenous capital inflow decreases labour supply and increases welfare only if the elasticity of substitution between leisure and the final good is equal to or less than unity. The paper also shows that, if trade opens up between two otherwise similar economies, a capital rich country would be a net importer of varieties of the intermediate good.     

Agglomeration economies in the finnish manufacturing sector

Regional concentration of population and economic activity is a common phenomenon both in Finland and the other most developed countries, which refers to the existence of agglomeration economies. Two types of economies are usually recognized to be important: specialization (Marshall externalities) and diversity (Jacobs externalities) economies. The former refer to the geographical concentration of a specific industry and the latter to the industrial diversity of the local system. This study examines the relationship between agglomeration economies and regional productivity in the manufacturing sector in Finland. A distinction is made between the effects of urbanization and localization economies. The production function method is applied to the manufacturing sub-sectors in the 83 NUTS 4-level regions in 1995 and 1999. The results support the regional specialization more than diversification even if some differences can be seen between the manufacturing sub-sectors.     

Profits in the long-term for the manufacturing sector

It is foreseeable that the integration of domestic economies into a single market (globalization) will have a direct consequence on firm profits. Firms will see their returns converge in the long-term towards an equilibrium value that is identical to that of diverse firms coming from other economies. The authors' objective is to test the existence of a process of convergence between economies. Thus, they analyze the evolution of the competitive process of the manufacturing sector in eight countries. The results suggest that even though the competitive forces that operate at an international level will result in the convergence of the respective returns of firms in the long-term, the convergence process is only partial. (JEL 16)This research has been financed by the MCYT-FEDER Research Project SEC 2002-00835     

Capital structure,asset utilization,profitability and growth in the Greek manufacturing sector

Greece's accession to the European Union (EU) has affected its economy and its manufacturing sector. Large-size enterprises (LSEs) form a small but vital part of Greek manufacturing and constitute a major component of the country's stock market. According to finance theory, the capital structure of a firm affects its capital cost and market value. This paper, by using dynamic panel data techniques, investigates the determinants of capital structure of LSEs in the Greek manufacturing sector. The findings suggest that asset utilization, gross and net profitability and total assets growth have a significant effect on the capital structure of LSEs. This has straightforward policy implications. Following recent economic developments, Greek firms are exposed to a stronger competition in the EU and global markets, but also to new opportunities. In order to improve their capital structure, Greek manufacturing LSEs need to achieve higher asset utilization and profit margins through economies of scale attained mainly by higher exports. Moreover, governmental measures aiming to support LSEs' efforts should focus their impact on alleviating taxation, reducing bureaucratic burdens, minimizing market imperfections and subsidizing applications of new technology.     

Wage fiexibility and rigidity in the Austrian manufacturing sector

Zusammenfassung Löhne in verschiedenen Industriesparten scheinen nicht in gleicher Weise auf Änderungen im Arbeitsmarkt und in den Gütermärkten zu reagieren. Die vorliegende Studie liefert eine eingehende Analyse der Entwicklung der relativen Löhne in 18 Branchen der Industrie Österreichs. Aus theoretischen Überlegungen ergeben sich drei Bestimmungsgründe: Verschiebungen der Nachfrage auf den Gütermärkten, die Anspannung auf dem Arbeitsmarkt und die Fremdarbeiterquote in der österreichischen Wirtschaft. Die empirischen Ergebnisse für die Lohngleichungen lassen erkennen, daß unterschiedliche Wachstumsraten in den einzelnen Industrien keinen meßbaren Einfluß auf die Lohndifferentiale ausüben und somit nur geringe Bedeutung für die Allokation von Arbeitskräften zwischen den einzelnen Branchen haben können. Dagegen läßt sich der Einfluß der beiden Arbeitsmarktvariablen sehr gut dokumentieren. Ausgehend vom Vorzeichen und der Größe der Koeffizienten dieser Variablen kann die gesamte Industrie in Branchen mit relativ flexiblen bzw. starren Löhnen eingeteilt werden. Diese Einteilung wiederum bietet den Ansatzpunkt für einige Schluß-folgerungen über den Sinn und die Effektivität einkommenspolitischer Maßnahmen.     

On the capital intensity of the public sector

Summary This paper investigates the endowment of the public sector with capital goods and the intensity of its use, a question rather neglected until now. Following a discussion of some methodological problems using the example of the federal government of Austria, an attempt is made to answer this question.Despite the remaining data and valuation problems, there is enough evidence to conclude that the government sector is remarkably capital intensive, not only as a producer of the physical infrastructure, but also as a service enterprise fulfilling government functions, in comparison with Austrian business firms and stock corporations. The high values of capital intensity, however, are not due to a large stock of machinery, but are the result of the high proportion of real property in the physical capital stock of the public sector.Furthermore, an attempt is made to critically evaluate the empirical results and to draw some theoretical conclusions.

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Zusammenfassung Die Arbeit stellt die bisher vernachlässigte Frage nach der Sachkapitalausstattung und der Intensität der Kapitalnutzung in der öffentlichen Verwaltung. Es wird versucht, diese Frage nach einer Erörterung methodischer Probleme für Österreich am Beispiel der Hoheitsverwaltung des Bundes zu beantworten.Trotz der nur teilweise gelösten Daten- und Bewertungsprobleme zeigen die empirischen Befunde, daß die Hoheitsverwaltung, am Maßstab der österreichischen Industrieunternehmen und Aktiengesellschaften gemessen, nicht nur als Produzent der materiellen Infrastruktur, sondern auch als Dienstleistungsbetrieb, der öffentliche Aufgaben erfüllt, bemerkenswert kapitalintensiv arbeitet. Die hohen Werte der Kapitalintensität sind allerdings nicht auf die maschinelle Ausstattung zurückzuführen, sondern resultieren aus dem großen Anteil der Liegenschaften am Sachkapital der Verwaltung.Es wird weiters versucht, die Aussagekraft und Grenzen der empirischen Ergebnisse kritisch abzuschätzen und erste theoretische Schlußfolgerungen zu ziehen.

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I am thankful to G. Fink and the anonymous referees of the journal for valuable comments on an earlier version.