Technological change,efficiency gains and capital accumulation in labour productivity growth and convergence: an application to the Spanish regions

The main objective of this article is to analyse labour productivity growth and convergence in the Spanish regions between 1965 and 1995, decomposing total factor productivity gains into technological progress and efficiency change by means of Malmquist productivity indices. On the basis of this decomposition, labour productivity growth is broken down into components attributable to technological change (shifts in the frontier), efficiency gains (movements toward the frontier) and capital accumulation (movements along the frontier). The approach followed in this study is based on work initiated by Färe et al., where a link between the economic growth and convergence literature and the production frontier approach was established. Furthermore, in the spirit of Quah's approach, the evolution of the whole distribution is considered. Thus, the analysis of the dynamics of the entire distribution of labour productivity and the factors behind it – technological progress, efficiency gains and capital accumulation – combine both approaches, yielding new insights into the process of productivity growth and convergence experienced by the Spanish regions over the last 30 years.     

Efficiency change,technological change and capital accumulation in Italian regions: a sectoral study

This paper examines the sources of labour productivity in the Italian regions during the period 1980–2004. Five economic sectors are investigated using data envelopment analysis (DEA) and taking into account productive specialisation and sector inefficiencies. Labour productivity change is decomposed into five components by means of Malmquist productivity indices: intra-sector efficiency change, composition efficiency change, input-biased technical change, magnitude component technical change and capital accumulation. Using bootstrap procedure, the components of labour productivity changes are statistically tested. Efficiency analysis shows that productive specialisation is not a source of inefficiency and efficiency gains can be obtained by sector-specific policies. Thus, it is possible to obtain improvements in efficiency in each sector of activity rather than reallocating resources among sectors. The results of the decomposition by sectors reveal heterogeneous sources of growth. The total economy has shown evidence of non-neutral technical change and, it has been found that agriculture, industry and construction experienced capital using technical change. The analysis of the decomposition of the labour productivity growth is complemented by an analysis of β-convergence.     

Convergence in OECD countries: technical change,efficiency and productivity

The aim of this study is to analyse labour productivity convergence in the OECD countries over the period 1975-90. A nonparametric frontier approach is used to calculate the Malmquist productivity index. By breaking it down, the contribution in the growth of labour productivity of technical progress, of changes in efficiency, and of the accumulation of inputs per worker are quantified. Unlike other studies, the results obtained show that technical change has worked against labour productivity convergence, since it has always been greater in the countries with higher labour productivity.     

What determines productivity performance of telecommunications services industry? A cross-country analysis

This article investigates the key factors that determine the productivity performance of telecommunications services industry. A simple theoretical model is used to illustrate that the Total Factor Productivity (TFP) growth is attributable to the effects of scale economies, market competition and technical change. We then examine empirically the effect of various factors on the TFP growth in the industry using panel data in 12 Organization for Economic Co-operation and Development (OECD) countries for the period 1983 through 2003. The empirical results are consistent with the theoretical prediction. A new finding in this article is that higher machinery and equipment (M&E) capital intensity and human capital contribute to higher TFP growth in the telecommunications services industry. The decomposition analysis also suggests that technical change induced by changes in M&E capital intensity and human capital are important sources of productivity performance in the industry across the OECD countries, contributing to about 20–50% and 2–7% of TFP growth, respectively. These findings highlight the importance of improving the conditions for M&E capital investment and the quality of human capital, which in turn could facilitate the adoption of new technologies and enhance the productivity in the industry.     

人力资本与区域全要素生产率分析

本文采用Malmquist指数分析了我国30个省级行政区1996—2003年的全要素生产率(TFP)增长,并将其分解为技术进步指数和效率变化指数。为了减少计算偏差,我们在使用承认无效率项存在的生产前沿技术的同时,引入了人力资本要素。本文的分析结果表明我国的人力资本水平增长迅速,30个省区的经济增长效率差距逐年扩大。同时我们发现在引入人力资本要素后,1996—2003年区域全要素生产率的增长得益于技术进步;如果不考虑人力资本存量,则低估了同期的效率提高程度,而高估了期间的技术进步指数。     

Decomposition of total factor productivity in world health production: a stochastic frontier approach

While countries around the globe have increased spending on health care, economists and policy makers have raised concerns over the productivity and efficiency of health care. This article applies a stochastic frontier approach to address this issue using data from 141 countries for the period 1993 to 1997. From the perspective of productivity change, our results suggest that gains in population health will be greater provided that more resources are allocated to investment in human capital. We also show that the scale component accounts for 65–70% of the productivity change. That is, omitting the scale component in our case will result in a significant underestimation of the decline in the productivity of world health production. We do not find evidence supporting the hypothesis that production frontiers differ between Organization for Economic Cooperation and Development (OECD) and non-OECD countries. However, the change in productivity and scale elasticity do vary significantly between these countries.     

Productivity growth and catching up: a technology gap explanation

This paper seeks to explain why some countries have managed to catch up in terms of labor productivity over the period 1993–2007 in 76 countries. By integrating the technology gap research within the standard growth-accounting approach, we introduce a methodology which allows us to split total factor productivity (TFP) change into two components: conditional technical inefficiency and the magnitude of the technology gap. We find that labor productivity growth depends both on investment in fixed capital and TFP. Fast emerging economies exhibit patterns of growth based in particular on the reduction of the technology gap, confirming the role of investment in technological capabilities to spur productivity catch-up. Looking at change in the distribution of labor productivity, emerging countries managed to shift from low productivity toward a medium level of productivity thanks to technology accumulation. Less advanced countries cannot rely only on technology diffusion and learning by doing, policies for technological capabilities accumulation are necessary.     

Determinants of labour productivity: Comparison between developing and developed countries of Asia‐Pacific

The current study investigates the trends in labour productivity of the major developing and developed economies of the Asia‐Pacific region and examines its determinants over the period 1980–2014. The study analyses capital deepening, human capital, technology, share of agriculture in GDP, financial development, institutional quality, inflation as well as macroeconomic variables as potential determinants of productivity, and identifies the differences in the impact of these factors on the productivity of developing and developed countries. Using panel cointegration and group‐mean fully modified ordinary least squares estimation, the study finds that capital deepening, human capital, technology, institutional quality and macroeconomic variables (i.e. government size and openness) are significant determinants of labour productivity of both developing and developed economies of the Asia‐Pacific region. The study further finds that while both trade openness and foreign direct investment affect productivity of developing economies positively, only trade openness has a positive and significant impact on the productivity of developed economies. The share of agriculture in GDP affects the labour productivity of developing Asia‐Pacific economies significantly but not that of developed economies. Furthermore, capital deepening has a much higher impact on the productivity of developing Asia‐Pacific economies than that of developed economies.     

Productivity growth and biased technical change in French higher education

This paper analyses the nature of technical change in the French labour market. Data Envelopment Analysis (DEA) is adopted to investigate productivity change in a sample of higher education leavers over the period 1999 and 2004. In a first step, the Luenberger Productivity Indicator (LPI) is used to estimate and to decompose productivity change. Following LPI, a better productivity is found for the workers in Paris and the well-qualified occupations in France. In analysing the nature of the technical change by the concept of parallel neutrality, technical progress seems to have influenced all professions. In particular, biased inputs of human capital component benefit more for the well qualified professions with an upper increase of the efficiency scores for executives and teachers. Furthermore, some evidences show the key role of “learning by doing” in the worker's adaptation to technical change. Policy implications are then derived from our results.     

Cross-base tax elasticity of capital gains

This paper studies the cross-base tax elasticity of capital gains realizations to labour income taxes when capital gains are taxed at a separate proportional tax rate. Using a longitudinal panel of over 265 000 individuals in Sweden, this paper shows in a regression kink design that labour income taxes affect capital gains realizations in two ways. An increase in the marginal labour income tax rate increases the likelihood of realizing capital gains and the amount of realized capital gains. One implication of this result is that labour income taxes have a lock-out effect but that the magnitude of this effect is smaller than the lock-in effect of the actual capital gains tax.     

Three levels of education and the economic growth

The aim of this article is to solve the question how the three main stages of education contribute to the labour productivity growth in selected 125 countries in the period 1999–2014. The model is based on the neoclassical production function enhanced with human capital. The authors draw on the Penn World Tables 9.0 and UNESCO databases. The key benefit of this article is that human capital is characterized according to the returns to education from average number of years of formal schooling at the primary, secondary and tertiary level. Based on the panel data analysis, the contributions of capital and of the three levels of education to the growth of labour productivity are estimated. At the same time, the model allows to estimate the contribution of total factor productivity. The results of the analysis show that tertiary education has the strongest impact on labour productivity across the considered economies. At the same time, the breakdown of aggregate human capital by level of education leads to better clarification of the effects of human capital and physical capital on labour productivity. The conclusions also indicate a tendency towards rising returns to scale induced by the secondary and tertiary education.     

Research and development and labour productivity: do high-tech firms exhibit labour- or capital-saving technical change?

Employment and output in the advanced technology sectors have generally exhibited above-average growth for more than two decades. While this industry accounts for a relatively small share of total employment, the majority of private sector research and development (R&D) expenditures in the US is concentrated within seven sub-sectors. However, little attention has been paid as to whether high-tech productivity exhibits Hicksian capital or labour ‘savings’ bias or tendency to displace either factor input over time. Biased technical change can occur as economies transition between growth regimes. An augmented production function is employed to analyse the additional impact of R&D activity on firm-level labour productivity. A panel data set comprised of high-tech firms located across the advanced economies, China and India from 1990 to 2013 is used in the analysis. Labour-saving technical change was present across the advanced technology sectors and most countries. The expanded models of labour productivity that used fixed effects with lagged regressors confirmed the prior results as well as finding that R&D per employee, relative R&D intensity and firm market share contribute to firm-level labour productivity growth across countries and sectors. Additional support was found for diminishing returns to scale but not for R&D spillover effects.     

The Impact of Technical Change and Profit on Investment in Australian Manufacturing

This paper combines W.E.G. Salter's analysis of capital-embodied technical change with Kalecki's analysis of financing investment from retained profits to provide a Post Keynesian model of investment with process innovation, which is applied to data from Australian manufacturing industries. The approach to process innovation taken in this study is to identify new capital stock introduced through physical investment, which results in the older vintage stock being decommissioned as technologically obsolete. In the estimated model, the profit factor is used as a measure of the ability to invest, and the rate of labour productivity growth factor reveals the inducement to invest as this rate acts as a proxy for technical change in the Kaleckian investment-ordering model. The two factors combine to explain the accumulation process, both level and variability, and its link to technical change. In conclusion, this paper demonstrates that investment, incorporating technical change, enables industries to become sustainable into the uncertain future with varying states of investment instability.

…technical progress cannot be regarded as automatic and independent of accumulation. (Salter, 1966, p. 72)     

International trade and technical progress: the role of capital good imports in Portugal>

This paper develops an empirical analysis of the relationship between sectoral openness to capital good imports and technological sophistication. Input-output data from Portugal are used to demonstrate a strong relation between capital imports and sectoral technological levels as measured by vertically integrated labour coefficients. Both regression and non-parametric analyses are used. Such a relationship demonstrates the necessity of breaking out of the long-held focus on one-time exchange gains by trade theorists. It is argued that productivity gains from trade resulting from transfers of technology are primary gains of great importance and must be incorporated into theoretical work on trade. The paper also demonstrates a strong connection between a sector's capital imports and the technical training of the workforce of the sector. This suggests a relation between a sector's level of technology and its ability to make further advances through capital imports embodying advanced foreign technology. Sectors (countries) need technically trained workers in order to achieve a successful transfer. Interestingly, it is found that while Portugal clearly utilized trade with its more developed trading partners to augment its technology, this was not enough to avoid a technological divergence from its more developed neighbours. Several reasons for this are posited.     

The impact of foreign direct investment on productivity: New evidence for developing countries

We provide new empirical evidence on the relationship between inward foreign direct investment (FDI) and total factor productivity (TFP) growth using cross-country data for 51 developing countries over the period 1984–2010. Our results suggest a weak direct effect of FDI on TFP growth but, after accounting for the roles of human capital and institutions as contingencies in the FDI-TFP growth relationship, we find a robust FDI-induced productivity growth response dependent on these ‘absorptive capacities’. However, the relevance of the human capital contingency effect diminishes when the effect of institutions is also considered, which suggests that improving institutions is relatively more important than human capital development for developing countries to realise productivity gains from FDI.     

On the impact of trade openness on growth: further evidence from OECD countries

This study attempts to examine empirically the implications of the degree of openness for total and individual factor productivity growth in a group of 19 OECD countries over the last three decades. The study combines both time series and cross-sectional data. The model employed is a generalization of the commonly used, growth-accounting model based on the concept of an aggregate production function in which the rate of economic growth is a function of capital and labour accumulation and total factor productivity. It is explicitly assumed that total factor productivity depends, in turn, upon the rate of export expansion. The model is then estimated using the random coefficients approach. While results generally indicate that the relative importance of trade openness on economic growth varies significantly across countries, they also indicate that the role of capital and labour accumulation in fostering economic growth varies with the degree of openness, cross-sectionally as well as across time.     

Wage formation during economic transformation: macroeconomic facts and firm survey evidence from Slovenia

This article provides macroeconomic stylised facts on wage comparisons and microeconomic evidence on how institutional changes, competitive pressures in firms' output markets, human capital and efficiency wage payment affect wage formation during the early stages of transformation. Wages in Slovenia are higher than in other transition Central and Eastern European countries and higher than labour productivity. We use a firm survey panel dataset of Slovenian enterprises to investigate labour cost adjustment and its policy relevance. The results reveal that transformation was not a uniform process as it has induced different labour cost adjustments and wage responses to transformation shocks over time. The hypothesis that labour productivity and competitive pressures in firms' output markets were important for wage formation was not supported. We confirm that rent seeking increased wages in insider, management and employee-owned enterprises in anticipation of privatisation. The effect of human capital was modest and efficiency wage payment was found not to be significant. The hypothesis of unionisation in Slovenian enterprises was not supported.     

Tradable and nontradable directed technical change

ABSTRACT

We wish to reconcile the major trends in wages and the terms of trade using a directed technical change approach in which: (i) tradable and nontradable goods can be substitutes or complements; and (ii) scale effects can be present or can be partially or totally removed. With a lower skilled labour ratio and a higher relative wage in the tradable sector, the price (real exchange rate or terms of trade) mechanism is crucial in determining sectoral productivity differences and thus wage inequality. Along the balanced growth path, the real exchange rate can be negatively related with the relative productivities in horizontal innovation (the Balassa-Samuelson effect) and with the relative labour level, depending on scale effects. The wage premium increases due to an increase in the relative labour level in the nontradable sector under substitutability with scale effects or under complementarity without scale effects. A calibrated version of the model indicates that the model closely replicates the data for Germany. Moreover, while the Balassa-Samuelson effect is quantified, an increase in the relative supply of labour in the tradable sector decreases both terms of trade and inequality.     

Real exchange rate and productivity in a specific-factor model with skilled and unskilled labour

The present study develops a two-sector specific factor model in which capital is mobile between sectors. We assume that the traded (non-traded) sector uses skilled (unskilled) labour for production. The theoretical model reveals that the real exchange rate (RER) response to a productivity shock depends on the countries’ relative abundance of skilled labour: a rise in traded productivity leads to a higher RER appreciation in a country whose relative skilled labour rate is high. Using panel data, structural break tests confirm that the skilled versus unskilled labour ratio may be a significant splitting variable. In the long run, the relationship between productivity and RER may be positive or negative, as suggested by the theoretical model, depending on the country’s relative abundance of skilled labour.     

Age dependency and labour productivity divergence

This study finds strong empirical evidence in favour of the hypothesis that the age composition of population matters for labour productivity growth. We applied the fixed effects panel model using data on a large number of countries over the period 1980–2010. Our results suggest that higher age dependency not only directly impacts negatively on labour productivity but also modifies the impact of other determinants of labour productivity. Child dependency has a more adverse effect on labour productivity than old age dependency. We specifically find that the marginal effects of gross capital formation, information and communication improvement, and labour market reforms are significant at lower levels of age dependency. However, the marginal effect of savings on labour productivity is high at a high level of age dependency. The impact of age dependency varies between developed and developing economies. Diversity in the size and nature of age dependency across regions and different income groups help to explain the labour productivity differential across them.