R&D and Absorptive Capacity: Theory and Empirical Evidence*

This paper presents a single unified framework that integrates the theoretical literature on Schumpeterian endogenous growth and major strands of the empirical literature on R&D, productivity growth and productivity convergence. Starting from a structural model of endogenous growth following Aghion and Howitt (1992, 1998) , we provide microeconomic foundations for the reduced‐form equations for total factor productivity (TFP) growth frequently estimated empirically using industry‐level data. R&D affects both innovation and the assimilation of others’ discoveries (“absorptive capacity”). Long‐run cross‐country differences in productivity emerge endogenously, and the analysis implies that many existing studies underestimate R&D's social rate of return by neglecting absorptive capacity.     

Some notes on the non-central negative binomial distribution

Summary In this paper we shall record some facts and further examine certain properties of the non-central negative binomial (NNB) distribution (Laguerre series distribution of Gurland, Chen and Hernandez 1983). We consider, among others, a stochastic formulation (birth-and-death process), the series expansion of the probability distribution and the corresponding series expansion of a generalized exponential distribution (Ong/Lee 1986), and the connection of the NNB distribution with the non-central beta, gamma and non-central gamma distributions. A four-parameter version of the NNB distribution is also presented.     

Industrial Relations Climate in the Manufacturing Sector in Singapore

The objective of this study is to assess the state of workplace industrial relations climate in the manufacturing sector in Singapore. Based on a survey of 73 manufacturing companies in Singapore and subsequent intensive study of eight of them, it was found that the overall labor-management relations in the industry were good and had improved over the past few years. Union membership was reported to have increased and this was accompanied by a perceived increase in union role and influence on labor-management relations. The findings also highlighted the need to strengthen the communication processes among the three parties—workers, unionists and management.     

Annual Review Article 1993: British Public Sector Industrial Relations

Abstract : Developments in public-sector industrial relations during 1993 have raised questions about unions, pay determination and conflict resolution. This review explores some of the tensions in these areas created by new restrictions on pay increases, changes in reward structures and further market-testing across services. Where the different forms of pay determination buy industrial peace, the price may be too high in terms of the productivity and efficiency requirements gains now being demanded. But co-operation is needed too, and the dilution of the Whitley system of collective bargaining may be more likely to produce the very co-operation embodied in its philosophy, but not always present in its practice. The new 'superunion' UNISON will play a role here, as single-table bargaining and even single-union deals develop. These institutional developments will also be affected by pay flexibility measures which endeavour to improve individual performance at the front line of services, while in practice increasingly giving the rewards to management.     

The bivariate non-central negative binomial distributions

Summary Four bivariate generalisations (Type I–IV) of the non-central negative binomial distribution (Ong/Lee) are considered. The Type I generalisation is constructed using the latent structure model scheme (Goodman) while the Type II generalisation arises from a variation of this scheme. The Type III generalisation is formed by using the method of random elements in common (Mardia). The Type IV is an extension of the Type I generalisation. Properties of these bivariate distributions including joint central and factorial moments are discussed; several recurrence formulae of the probabilities are given. An application to the childhood accident data of Mellinger et al. is considered with the precision of the Type I maximum likelihood estimates computed.     

Optimal Portfolio Choices, House Risk Hedging and the Pricing of Forward House Transactions

This paper develops a utility indifference model for evaluating various prices associated with forward transactions in the housing market, based on the equivalent principle of expected wealth utility derived from the forward and spot real estate markets. Our model results show that forward transactions in the housing market are probably not due to house sellers?? and buyers?? heterogeneity, but to their demand for hedging against house price risk. When the imperfections of real estate markets and the risk preferences of market participants are taken into consideration, we are able to show that the idiosyncratic risk premium, which mainly depends on the participants?? risk preferences and the correlation between the traded asset and the real estate, is a remarkable determinant of house sellers?? and buyers?? forward reservation prices. In addition, we also find that the market clearing forward price usually will not converge toward the expected risk-neutral forward price. The sellers?? or buyers?? risk aversion degrees and market powers are also identified to play crucial roles in determining the clearing forward price.     

Repeat‐Sales Indexes: Estimation without Assuming that Errors in Asset Returns Are Independently Distributed

This article proposes an alternative specification for the second stage of the Case‐Shiller repeat‐sales method. This specification is based on serial correlation in the deviations from the mean one‐period returns on the underlying individual assets, whereas the original Case‐Shiller method assumes that the deviations from mean returns by the underlying individual assets are i.i.d. The methodology proposed in this article is easy to implement and provides more accurate estimates of the standard errors of returns under serial correlation. The repeat‐sales methodology is generally used to construct an index of prices or returns for unique, infrequently traded assets such as houses, art and musical instruments, which are likely to be prone to exhibit serial correlation in returns. We demonstrate our methodology on a data set of art prices and on a data set of real estate prices from the city of Amsterdam.     

Why is Productivity so Dispersed?

Many papers have documented wide variations in productivityeven in narrowly defined industries. Some have argued that thisprimarily reflects measurement problems due, for example, tocomparing across different products. Others argue that thisreflects persistent differences in performance due, for example,to management. This paper looks at productivity differencesnot within an industry but within a firm. We use data on productivityof different branches within lines of business of a major UK-basedwholesaler. Using these productivity data for comparisons is,we argue, more likely to compare like with like than comparingbetween firms. We document sustained differences in productivityeven between branches within the same line of business. We alsodiscuss the extent to which they are correlated with differencesin management and find that such differences ‘account’for around 40 per cent of the difference in productivity. Footnotes ¹ E-mail addresses: r.griffith{at}ifs.org.uk; j.e.haskel{at}qmul.ac.uk;a.neely{at}cranfield.ac.uk