Technical progress,factor substitutability and models of production: II

Summary This paper is the concluding installment of a series which surveys a number of fundamental production tenets. This examines and hence compares the properties of several production models which result from alternative pairings of the progress and substitutability assumptions discussed in part 1. Part I appeared in a recent issue ofDe Economist.I again thank E. Ray Canterbery, Simon K. Kuipers, T. Krishma Kumar, and Th. van de Klundert for their comments. I also thank Chiu-Yeung Chan, Franklin M. Fisher, and William F. James for their help with a few specifies. The responsibility for errors is mine alone.     

Employment by level of education and production factor substitutability

Summary Several types of elasticities of substitution and complementarity among three labour force aggregates (lower, intermediate, and higher educated) and capital are calculated, based on estimation of demand equations with cross-sectional data by industry groups over two years. Factor substitutability appears to be rather weak. Higher educated labour and capital are complements, as are lower and intermediate educated labour. Employment of unskilled labour is worsened by a reduction of the price of capital. Upgrading the educational level of labour requires the diminishing of the gap between wages of different labour force aggregates; especially the wages of higher educated labour have to decrease.This paper is based on part I.1 of The Elasticity of Substitution between Lower Educated Labour and Other Factors of Production. Research for this paper was supported by OSA (Organization for Labour Market Research). I wish to thank D.P. Broer for numerous and valuable suggestions, J.M.M. Ritzen for the original set-up of sections 2–4 in a preliminary draft and B. van Bunnik for skillful research assistance. I also benefited from comments and suggestions by P.C. Allaart, J.C. Siebrand, O.H. Swank, and a referee.     

Returns to scale and factor substitutability in the Spanish industry

Zusammenfassung Skalenertr?ge und M?glichkeiten der Faktorsubstitution in der spanischen Industrie.— Mit diesem Beitrag wird versucht, eine wichtige Infonnationslücke hinsichtlich der Produktionsbedingungen in der verarbeitenden Industrie Spaniens schlie\en zu helfen. Zu diesem Zweck wurden Cobb-Douglas- und CES-Funktionen für 20 Branchen mit Hilfe von Querschnittsregressionen für das Jahr 1968 gesch?tzt. Angesichts der v?llig unzureichenden Industriestatistiken in Spanien mu\ten die ben?tigten Daten von Unternehmern direkt erfragt werden. Die erzielten Ergebnisse zeigen (1) da\ sich die relative Bedeutung von zunehmenden, konstanten und abnehmenden Skalenertr?gen ziemlich die Waage h?lt und (2) da\ die Substitutionselastizit?ten zwischen Arbeit und Kapital für die Mehrheit der Branchen recht hoch zu sein scheinen. Da nur sehr einfache Modelle angewandt wurden und Verzerrungen in den Sch?tzergebnissen m?glich sind, k?nnen die numerischen Werte, vorl?ufig, nichts mehr als Orientierungshilfen für die Anwendung einer exportorientierten Industrialisierungsstrategie sein.

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Résumé Rendements d’échelle et possibilités de substitution des facteurs de production dans l’industrie espagnole.— Cet article veut aider à remplir une lacune importante dans l’information disponible sur les conditions de production dans l’industrie espagnole de transformation. A cet effet, on a estimé — à l’aide de régressions transversales — les fonctions Cobb-Douglas et CES pour vingt branches industrielles en 1968. Vu l’insuffisance absolue des statistiques industrielles pour l’Espagne, il fallait demander les données nécessaires directement aux entrepreneurs. Les résultats obtenus démontrent (1) que l’importance relative des rendements d’échelle augmentants, constants et diminuants est assez équilibrée et (2) que les élases ticitde substitution entre la main-d’∄uvre et le capital paraissent être relativement hautes pour la majorité des branches. Puisqu’on n’a employé que des modèles très simples, et puisqu’il peut y avoir des inexactitudes dans les résultats d’estimation, les valeurs numériques ne peuvent, en attendant, représenter que des points d’orientation pour l’élaboration d’une stratégie d’industrialisation, qui vise l’exportation.

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Resumen Rendimientos de escala y grado de substituibilidad de los factores de productión en la industria espa?ola.— El objetivo de este estudio es contribuir al mejoramiento de la información sobre las relaciones de producción existentes en la industria manufacturera espa?ola. Para ello se estimaron, mediante regressiones de corte transversal para el a?o 1968, funciones de productión del tipo CobbDouglas y CES para 20 sectores. En vista del estado deficiente de las estadísticas industriales en Espa?a, tuvieron que utilizarse datos facilitados directamente por empresas. Los resultados obtenidos parecen indicar que (1) la importancia relativa de rendimientos de escala crecientes, constantes y decrecientes es bastante equilibrada y que (2) las elasticidades de sustitución entre los factores trabajo y capital son relativamente altas para la mayoría de los sectores. Debido a que se utilizaron modelos muy simples y a que no cabe descartar la posibilidad de sesgos en las estimaciones, los valores numéricos no pueden, de momento, ser más que puntos de orientatión para la elaboratión de una estrategia de industrializatión hacia afuera.

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Riassunto Rendimenti di scala e possibilità della sostituzione di fattori nell’industria spagnola.— In questo articolo si cerca di contribuire a colmare una lacuna di informazione riguardante le condizioni di produzione nell’industria manifatturiera spagnola. Per questo scopo funzioni Cobb-Douglas e CES furono valutate per 20 settori con l’aiuto di regressioni trasversali per l’anno 1968. In vista delle statistiche industriali del tutto insufficienti in Spagna, i dati occorrenti furono direttamente richiesti agli impresari. I risultati ottenuti mostrano (1) che l’importanza relativa di rendimenti di scala crescente, costante e decrescente è abbastanza equilibrata e (2) che le elasticità di sostituzione tra lavoro e capitale sembrano essere relativamente alte per la maggioranza dei settori. Dal momento che furono utilizzati soltanto modelli assai semplici e deformazioni nei risultati valutati sono possibili, i valori numerici non possono essere più punti di orientamento per l’impiego di una strategia d’industrializzazione orientata verso l’esportazione.

     

Economic effects of immigrants on native and foreign-born workers: complementarity,substitutability, and other channels of influence

The authors use Standard Metropolitan Statistical Area (SMSA) data constructed from 1980 census microdata files and other sources to estimate a structural model of native/foreign-born labor demand and labor supply which distinguishes the effects upon real wages of each type of labor and on the employment of natives. The authors specify, econometrically estimate, and simulate the structural model which incorporates not only a production structure channel through which immigrants influence area real wages and employment, but also demand and native labor supply channels. It is noted that while these are not the only channels through which immigrants may affect native workers, the model nonetheless constitutes a step in the direction of a general equilibrium approach. In the production structure channel, immigrants and natives are found to be substitutes in production. Immigration lowers foreign-born wage rates and leads to lower wages for natives. The negative effects of the production channel usually are ameliorated through the demand channel. Further, immigrants add to local demand through their earnings and potentially through non-labor income, while also lowering unit costs and local prices which enhances real incomes and potentially net exports, and thus the demands for local output and area labor. The author discusses findings of interest from the simulation results based upon an analysis of all areas.     

Forecasting fertilizer consumption and production: Long- and short-run models

The aims of this paper are two-fold. First, we present a survey of recent extrapolative long-run forecasts of world fertilizer production and consumption to the year 2000, including our own forecasts for this period. Second, we examine critically the various approaches that have been suggested in the study of short-run fluctuations in demand and supply for individual countries which have a great bearing on short-run economic policy. In particular, the models due to Griliches and Timmer are discussed and evaluated, and an alternative approach is suggested.     

日本的能源风险、技术应用与技术进步机制

分散原油进口的国别结构对于保障一国能源安全具有重要战略意义.本文在“成本驱动型技术进步机制”理论的基础上,提出了短期“成本驱动型技术应用机制”和长期“风险驱动型技术进步机制”假说,并构建了一个包含能源进口的经济增长决定模型.利用日本1988年1月～2010年10月的月度数据,对工业总产值、原油进口的价格与数量以及原油进口地理集中度共4个变量进行了短期和长期Granger因果关系检验.经验性证据表明:日本同时存在着上述两种机制,无论在短期还是在长期内都足以抵消石油价格冲击的负效应,促进经济增长.茈外,日本调整原油进口地理集中度主要是控制原油进口数量的不确定性,而非原油进口价格波动的风险.本研究从一个崭新的视角解释了能源安全与经济效率的关系.     

Affiliates and parent employment through foreign direct investment: a study case of substitutability or complementarity

How does outward foreign direct investment (FDI) affect employment of multinationals in the home country? Does the impact of outward investment differ among manufacturing and service sectors? Using data on Italian MNEs, this paper examines the impact of Italian outward FDI on local employment between 1998 and 2006. In particular, we investigate the relationship existing between employment in the parent company and employment in foreign affiliates by distinguishing according to host-country location and sector of activity. The results suggest that the effects of Italian outward FDI on domestic employment differ according to the sector and the country of destination. In the manufacturing sector, a weak but significant relationship of labour substitutability is found for Italian MNEs producing low-technology products in foreign affiliates localized in high-wage countries. On the other hand, a significant North–south complementarity relationship in labour demands appears in the High and Medium-high- technology sectors. In the service sector, we find strong complementarity between employment in the parent firm and employment in foreign affiliates: in particular, this regards Italian MNEs producing knowledge-intensive services both in Western affiliates and CEEC locations. These results are robust when we control for endogeneity of output and parent wages.     

Total factor productivity, the east Asian miracle, and the world production frontier

Total Factor Productivity, the East Asian Miracle, and the World Production Frontier. — The post WWII growth of the East Asian Tiger states has stimulated the discussion about its determinants. Young and Krugman hold that high capital accumulation rather than gains in efficiency or technological progress has spurred growth. Nelson and Pack, however, have recently criticized the methods of measuring technological progress. Applying the nonparametric approach to frontier production function determination and the Malmquist index of total factor productivity change, the authors take up this criticism. They calculate productivity indicators for a sample of 18 American, Asian, and European countries. For the Tiger states, their results confirm that capital accumulation was the main source of growth in 1960-1973, whereas they find evidence for an increasing importance of efficiency improvements for the growth in 1973-1990.     

Technical progress and the growth of the Japanese economy - past and future

This paper considers technical progress and the growth of theJapanese economy. Many economists are pessimistic about theeconomy's future because of the rapid ageing of the population.However, capital and total factor productivity (TFP) are muchmore important than labour in determining economic growth. Duringthe high-growth era of the 1950s and 1960s, TFP contributedalmost 4 percentage points to the 10 per cent annual growthrate. Since then, however, TFP growth has fallen significantly.During the 1970s, Japan's machinery industries became worldleaders and made possible the export-led growth of the period1975 85. I argue that the stagnation of the 1990s was causedby demand deficiency, and that demand creation by technicalprogress is the key to economic growth.     

Macroeconomic forecasting using factor models and machine learning: an application to Japan

We perform a thorough comparative analysis of factor models and machine learning to forecast Japanese macroeconomic time series. Our main results can be summarized as follows. First, in many instances, factor models and machine learning perform better than the conventional AR model. Second, predictions made by machine learning methods perform particularly well for medium to long forecast horizons. Third, the success of machine learning mainly comes from the nonlinearity and interaction of variables, which suggests the importance of nonlinear structure in predicting the Japanese macroeconomic series. Fourth, the composite forecast of factor models and machine learning performs better than factor models or machine learning alone; and machine learning methods applied to common factors are found to be useful in the composite forecast.     

Real factor prices and German manufacturing employment: A time series analysis, 1960I–1979IV

Zusammenfassung Reale Faktorpreise und Besch?ftigung in der Verarbeitenden Industrie der Bundesrepublik Deutschland: Eine Zeitreihenanalyse vom I.Quartal 1960 bis zum 4. Quartal 1979. — In diesem Aufsatz wird die Beziehung zwischen den realen Faktorpreisen (d. h. Reall?hnen und realen Preisen für Rohstoffe und Zwischenprodukte)und der Besch?ftigung in der Verarbeitenden Industrie der Bundesrepublik in der Zeit zwischen dem 1. Quartal 1960 und dem 4. Quartal 1979 untersucht. Die wichtigsten Ergebnisse sind : (a) Die Struktur der gesch?tzten Beziehung hat sich zwischen den 6oer und den 70er Jahren erheblich verschoben, so da\ Regressionen, die für die ganze Periode vorgenommen werden, irreführend sind; (b) von 1970 bis 1979 hatten die Reall?hne einen negativen Einflu\ auf die Besch?ftigung; (c) jede Untersuchung mu\ aber die Entwicklung der Preise von Rohstoffen und Zwischenprodukten berücksichtigen, denn diese waren quantitativ bedeutsamer als die Reall?hne. Als ?konometrische Technik wurde durchweg die Zeitreihenanalyse benutzt. Im besonderen wurde die Vektor-Autoregressions-Technik von Sims angewandt, die auch im Sinne einer Grangerschen Ursachenanalyse interpretiert werden kann.

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Résumé Les prix réels des facteurs et l’emploi en secteur manufacturier allemand: Une analyse des séries chronologiques, 1960.I-1979.IV. — Dans cet article on a analysé la relation entre les prix réels des facteurs (c.-à.-d. les salaires réels et les prix réels pour les biens intermédiaires et les matières premières) et l’emploi dans le secteur manufacturier allemand pour la période 1960.I-1979.1V. Les résultats essentiels sont : (a) La relation a changé entre les années soixante et les années soixantedix de telle sorte que des régressions pour la période entière sont égarantes; (b) pour la période 1970.1-1979.IV les salaires réels avaient une influence négative sur l’emploi; (c) chaque analyse doit tenir compte du développement des prix pour les matières premières et les biens intermédiaires qui étaient quantitativement plus importants que les salaires réels. Comme technique économétrique on a largement appliqué l’analyse des séries chronologiques. Particulièrement on a appliqué la technique d’autoregression de vecteur de Sims qui aussi permet une interprétation de causalité de Granger.

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Resumen Precios reales de factores y el empleo manufacturero alemán: Un análisis de series de tiempo 1960.I-1979.IV. — En este artículo investigamos la relación entre precios reaies de factores (p. ej., salarios reaies y precios reaies productos intermedios/materias primas) y el empleo manufacturero alemán en el período 1960.I-1979.IV. Nuestros principales resultados son: (a) que ha habido un desplazamiento importante en la naturaleza de nuestra relación estimada entre los a?os 1960 y 1970 de tal manera que las regresiones para todo el periodo son bastante enga?osas; (b) que para el periodo 1970.I-1979.IV los salarios reales ejercieron una influencia negativa sobre el empleo pero que (c) cualquier investigación debe tomar en cuenta el desarrollo de los precios de las materias primas/productos intermedios que han sido cuantitativamente más importantes que los salarios reaies. La técnica econométrica utilizada es la del análisis de series de tiempo. En particular, hemos utilizado la técnica de vector de autoregresión de Sims que también tiene una interpretación de causalidad de Granger.

     

Empirical models of criminal behavior: How significant a factor is race?

Empirical models of the supply of criminal offenses in the United States have shown a positive relationship between the proportion of the population that is non-white (RACE) and crime rates. Though non-whites in the United States possess more “criminal capital” than the average person, such studies do not take into consideration this excess criminal capital. Since RACE and the omitted excess criminal capital are correlated, it will pick up the influence of the excess criminal capital. Using cross-sectional data from Florida’s municipalities, we show that after adjusting for excess criminal capital, RACE has no significant relationship with crime.     

Technological progress and technical efficiency in Chinese industrial growth: A frontier production function approach

We estimate a frontier production function for Chinese industry for the period 1953–1985. Contrary to prior studies based on OLS estimates, we find that Chinese industry has been characterized by a rate of growth of technological progress between 1.8 and 3.6 percent per year. We also find that the capital-saving nature of technological progress has adversely affected Chinese productivity growth because of increases in the capital-labor ratio. The utilization of industrial resources has been quite suboptimal for much of the sample period, with industrial production well off the production frontier. These deviations from efficient resource use reflect well-known political and economic developments that disrupted economic activity. Finally, both technical efficiency and total factor productivity increased appreciably in the period 1978–1985, suggesting that the reforms have had some positive impact on industrial performance.     

Institutions,Freedom, and Technical Efficiency

The impact of institutions on economic performance is currently the subject of much research. In this study we use panel data to estimate a stochastic production frontier and the sources of inefficiency for a broad set of countries. A maximum-likelihood procedure is used to estimate the parameters for the stochastic production frontier and the determinants of inefficiency simultaneously. Our results show that institutions that promote greater economic freedom in turn promote efficiency.     

技术壁垒与技术创新激励——贸易壁垒制度安排的国别差异

中国企业面对贸易壁垒时表现出明显的技术创新意愿,即中国企业具有显著外向需求型技术创新特征,但这种技术创新的激励受到技术壁垒设置国所占市场份额的约束。进、出口国双边产业结构的替代或互补会对技术创新产生不同激励,进而发现外国企业通过技术垄断抑制中国企业技术创新。最后,在贸易壁垒下的中国技术进步效应表现出明显的国别差异性。     

Inforum models: Origin,evolution and byways avoided

Inforum models have been built and used in a number of countries including the USA, Russia, Germany, Poland, Latvia, Austria, Italy, Spain, the United Kingdom², South Africa, Mexico, Colombia, China, Japan, Taiwan, Thailand, and Vietnam and perhaps others. They make extensive use of econometrics and input-output analysis to describe the functioning of an economy not only at a macroeconomic level but also at the level of individual products and industries. I want to record–somewhat autobiographically—the beginnings of these models, outline their evolution, defend them and other econometric models against the sweeping Lucas critique, and mention some of the fads in economics and modeling which have been avoided for good reason.     

Total factor productivity of Korean manufacturing industries: Comparison of competing models with firm-level data

This paper presents the parametric estimation of the rates of technical change and total factor productivity (TFP) growth of 7462 Korean manufacturing firms over the period 1987–2007. Two alternative formulations of technical change measured by the time trend and the general index approaches are estimated with panel data models assuming flexible functional forms. Several extensions of each approach are also considered and their benefits and limitations are discussed. In addition to making estimates of the TFP growth and its decomposition, the paper compares the parametric TFP growth measure with the non-parametric Solow residual serving as a benchmark. Several hypotheses related to technology level, firm sizes, industrial sectors, skill biased technological change and macroeconomic and industrial policies are tested to explain the growth patterns and heterogeneity in technical change, input biases and TFP growth rates. Using second regression analysis, the paper explores the determinants of TFP growth and their policy implications.