What factors determine the outsourcing intensity? A dynamic panel data approach for manufacturing industries

The present article investigates the determinants of outsourcing production using a panel of 93 Spanish manufacturing industries for the period 1993 to 2002. Outsourcing is measured as production tasks which are contracting out to external suppliers, a more direct and suitable indicator. After controlling for unobserved heterogeneity and simultaneity, our results show a high persistence of the outsourcing intensity. Moreover, outsourcing of production is positively related to unit labour costs, skills requirements, national ownership and orientation to international markets. We also find evidence for a negative link between the outsourcing intensity and the share of small firms.     

Urban–rural income polarization and economic growth in China: evidence from the analysis of a dynamic panel data model

Using a dynamic panel data model and the system GMM, this article examines the relationship between urban–rural income polarization and economic growth at the provincial level in the period 1995 to 2010 in China. The estimated results and significant tests indicate that a certain degree of urban–rural income polarization is beneficial to economic growth at the provincial level in both stages for China as a whole, though the contribution of urban–rural income polarization to economic growth is relatively small. Aggravating urban–rural income polarization has a negative impact on economic growth in China. Based on a cluster analysis of regional economic growth at the provincial level, the authors carried out the same analysis separately for two categories of regions too. The results for those two categories of regions show that positive correlations also exist between urban–rural income polarization and economic growth in both stages, which are very similar to the analysis for the whole of China. In addition, a meaningful finding can be derived that the contribution of consumption growth rate to economic growth rate in the second stage is smaller than that in the first stage obviously.     

Do hours worked contain a unit root? Evidence from panel data

The aim of the present paper is to provide cross country evidence of the non-stationarity of hours worked for OECD countries. For this purpose, panel unit root tests are employed to improve power against univariate counterparts. Since cross section correlation is a distinct feature of the underlying panel data, results are based on various second generation panel unit root tests, which account for cross section dependence among units. If an unobserved common factor model is assumed for generating the observations, there is indication for both a common factor and idiosyncratic components driving the non-stationarity of hours worked. In addition, taking these results together, there is no indication of cointegration among the individual time series of hours worked.     

Has the Feldstein-Horioka puzzle waned? Evidence from time series and dynamic panel data analysis

This objective of this paper is to examine the Feldstein-Harioka puzzle by using both time series analysis that accommodates structural breaks, and dynamic panel error-correction method. Our sample consists of 118 countries over the period 1981–2013. Results from ARDL model suggest that long-run capital is highly mobile in high-income countries (HIC), moderately mobile for both middle- and low-income countries. Our finding of the low long-run saving coefficient for HICs shows that failure to account for a structural break may overstate the long-run saving coefficient. Findings from the pooled mean group estimators suggest that capital is moderately mobile in the middle-income countries, and highly immobile in the high- and low-income countries in the long run. Our findings highlight that ignoring structural break, the type of data (time series/panel), and econometric method used can affect the conclusion about capital mobility. The adjustment coefficient in the time series analysis is comparatively higher than the panel data analysis. We also test whether country size and openness affect the saving–investment correlation. While the effect of country size on the saving coefficient is mixed, the saving estimate is found to be a function of the degree of openness. We also discuss policy implications of our findings on the current account sustainability.     

Firms’ productivity growth and R&D spillovers: An analysis of alternative technological proximity measures

This paper aim at assessing the impact of R&D spillovers on firms’ economic performance as measured by productivity growth. The construction of R&D spillovers is based on Jaffe's methodology (1988, 1996) which associates econometrics and data analysis. The main objective of the paper is to extend Jaffe's methodology by examining alternative methods for measuring R&D spillovers and to test their impacts in terms of the robustness of results. In particular, the method used to classify firms into technological clusters as well as the metrics implemented to appreciate firms’ technological proximities which enter the construction of spillovers are further investigated. In addition to R&D spillovers, firms’ own R&D capital, labour and physical capital are estimated by means of a Cobb–Douglas production function. The data set consists of a representative sample of 625 worldwide R&D intensive firms over the period 1987–1994.     

What shapes player performance in soccer? Empirical findings from a panel analysis

In this article, we investigate the pay–performance relationship of soccer players using individual data from eight seasons of the German soccer league Bundesliga. We find a nonlinear pay–performance relationship, indicating that salary does indeed affect individual performance. The results further show that player performance is affected not only by absolute income level but also by relative income position. An additional analysis of the performance impact of team effects provides evidence of a direct impact of team-mate attributes on individual player performance.     

Innovation dynamics in the EU: convergence or divergence? A cross-country panel data analysis

This paper investigates whether a convergence or divergence of national innovation capabilities of the 15 EU countries occurs in the course of time. An answer to this question permits immediate conclusions with regard to the success prospects of a convergence of per capita incomes and labor productivities within the EU. For the empirical analysis based on patents granted at the US-Patent and Trademark Office, unit root tests for time series and panel data are used to scrutinize the convergence hypothesis. Taking all results together, evidence points to the fact that an absolute convergence of innovation capabilities is an exception. However, for a number of countries the results suggest either conditional convergence or convergence to their own growth paths.

Do stock market returns predict changes to output? Evidence from a nonlinear panel data model

Recent empirical work suggests a predictive relationship between stock returns and output growth. We employ quarterly data from a panel of 27 countries to test whether stock returns as useful in predicting growth. Unlike previous research, our approach allows for the possible non-linear effect of recessions on the growth-return relationship. There is strong evidence to suggest that a linear model would be misspecified and provide potentially misleading inference. Using a switching regression approach, we find evidence that returns are most useful in predicting growth when the economy is in recession.First version received: November 2002/Final version received: April 2003This paper benefited greatly from discussions with Kalvinder Shields, Mark Harris, Pete Summers, and Vance Martin. Two anonymous referees provided useful comments on an earlier version of the paper for which we are grateful. The usual disclaimer applies to any errors and omissions. Funding from The University of Melbourne greatly assisted in the completion of this paper.     

That elusive elasticity and the ubiquitous bias: Is panel data a panacea?

There is often assumed to be a unit elasticity of substitution between capital and labour. But estimates based on neoclassical capital demand equations frequently find a smaller value. Recent time-series work for the United States and Canada has suggested that, once the biases inherent in estimating cointegrating vectors are properly accounted for, the elasticity could indeed be close to 1. We investigate this possibility for the United Kingdom. First we use aggregate data and find that the estimated elasticity is in the neighbourhood of 0.4. We then exploit a unique industry-level dataset for the United Kingdom to try and further pinpoint our estimates. Estimates using dynamic panel data methods are close to our benchmark estimate using aggregate data, providing a robust statistical rejection of a unit elasticity in UK data.     

Saving,investment and capital mobility in EU member countries: a panel data analysis of the Feldstein–Horioka puzzle

ABSTRACT

In this paper, we reexamine the long-standing and puzzling correlation between national saving and investment in 14 European Union (EU) countries. We employ a panel data set for the period 1970–2015 and we apply recently developed maximum likelihood panel cointegration methodologies. We find that there exists a long-run relationship between savings and investment for this panel of EU member countries, with the savings retention coefficient being low in magnitude but statistically different than zero. Therefore, we argue that there is weak evidence in favour of the Feldstein–Horioka puzzle and that the long-run international solvency condition is maintained in most of these countries. This evidence implies a moderate degree of capital mobility which is consistent with the macroeconomic experience of these countries during the period under investigation.     

China's patterns of international technological collaboration 1976–2010: a patent analysis study

This study focuses on the trajectories and patterns of China's international collaborations over the period 1976–2010, using patent statistics and association analysis methods. The results identify those government policies that have significantly encouraged changes in the scale and scope of China's collaborations since 1997. The USA and Taiwan are major international collaborators with China, and the top cooperative entities are large-scale multi-national firms, which specialise in production, sales research and development of information or electronics technology; in contrast, universities and research institutions have a negligible presence in international collaborative patenting. This study finds that although China has developed significant international collaborative networks since the 1990s, it still needs to extend these ties to an even greater range of international partners and establish a broader scope of research interests.     

Road tax interactions among local governments: a spatial panel data analysis of the French case over the period 1984–2000

This article contributes to the literature on local tax interactions. Its novelty lies in its focus on the interactions of local governments via an indirect local tax on vehicles such as the road tax sticker and its analysis of interactions between direct and indirect local taxation. The main purpose of this article is to provide an empirical analysis of the reaction of road tax policy in a given French ‘department’ to changes in road tax policy in other ‘departments’. The analysis uses a novel panel data set covering the 96 French metropolitan ‘departments’ for the period from 1984 to 2000. First, the results confirm the presence of significant spatial interactions between French ‘departments’ due to the road tax sticker. Second, the estimation results also show that the business tax rate and/or the property tax rate on developed land are complements to the road tax sticker, whereas the residence tax rate and/or the property tax rate on undeveloped land are substitutes to the road tax instrument. Finally, I find that ‘departments’ with a larger, younger and older population set higher rates for the road tax sticker. The results are robust regarding alternative weight matrices.     

Is real GDP stationary? Evidence from a panel unit root test with cross-sectional dependence and historical data

We use historical data that cover more than one century on real GDP for industrial countries and employ the Pesaran panel unit root test that allows for cross-sectional dependence to test for a unit root on real GDP. At first, we find strong evidence against the unit root null. Our results seem to be robust to the chosen group of countries and, in most cases, the sample period. However, the sequential panel selection method reveals that the rejection of the unit root null is due to the stationarity of real GDP in a few countries only. Real GDP is less stationary mostly in fixed exchange rate regimes like the Gold Standard and the Bretton Woods system.     

Is the natural resource production a blessing or curse for China's urbanization? Evidence from a space–time panel data model

This paper provides an analytical framework to evaluate under what conditions the natural resource production could promote or hinder urbanization process, focusing on factors mostly relevant for China. Considering both structure breaks and cross-sectional dependence as well as spatial spillovers, the study deploys a comprehensive approach to rigorously prove the validity of the proposed space–time panel data model that includes the second generation panel unit root test and panel cointegration, panel threshold regression and spatial panel Durbin model. The results not only offer strong evidences that the natural resource production non-linearly impacts on urbanization process, but also show that there exists a dynamic response over time and space as well as space–time diffusion impact, in which these percentages are different from each other confirming an asymmetric effect of the natural resource production on urbanization process.     

How well do individuals predict their future life satisfaction? Evidence from panel data following a nationwide exogenous shock

Abstract .  Using German panel data, we investigate how well individuals predict their own future life satisfaction. The context is the decade following the 1990 reunification of Germany, which provided a large shock to the future prospects of the inhabitants of the former East Germany. We find that the majority of East Germans significantly overestimated the satisfaction gains from reunification in the years immediately after transition, but by 1994 had converged on correct aggregate expectations. Some evidence of micro-heterogeneity in the prediction errors is found by age and education. For West Germans, we find some initial over-optimism, although less than for East Germans.     

Is there a unit root in the inflation rate? New evidence from panel data models with multiple structural breaks

In this article, we examine whether or not the inflation rate for 17 OECD countries can be modelled as a stationary process. We find that (1) conventional univariate unit root tests without any structural breaks generally reveal that the inflation rate contains a unit root; (2) the KPSS univariate test with multiple structural breaks reveals that for 10 out of 17 countries inflation is stationary; and (3) the KPSS panel unit root test reveals strong evidence for stationarity of the inflation rate for panels consisting of countries which were declared nonstationary by univariate tests.     

Innovation and skills from a sectoral perspective: a linked employer–employee analysis

Science and engineering skills as well as management and leadership skills are often referred to as sources of innovative activities within companies. Broken down into sectoral innovation patterns, this article examines the role of formal education, actual occupation and work experience in the innovation performance in manufacturing firms within a probit model. It uses unique micro data for Germany (LIAB) that contain information about corporate innovation activities and the qualification of employees in terms of formal education, actual professional status and work experience. We find clear differences in the human capital endowment between sectors according to the Pavitt classification. Sectors with a high share of highly skilled employees engage in above average product innovation (specialised suppliers and science-based industries). However, according to our estimation results, across as well as within these sectors a large share of highly skilled employees does not substantially increase the probability of a firm being innovative.     

Urban–rural income disparities and development in a panel data set of China for the period from 1978 to 2006

We examine the relationship between urban–rural income disparities and development in a panel data set of 30 provinces and regional subsets of China during the period of 1978 to 2006. There is an inverted-U relationship between the urban–rural income gap and per capita Gross Domestic Product (GDP). Financial development by scale widens the urban–rural income gap in all regional samples, while financial sector efficiency and rural bank loans may reduce it in some regions. Government spending raises the urban–rural income gap as well. We also examine the effects of urbanization, openness and education.