Productivity and Innovation

Pehr-Johan Norbäck, Lars Persson, Roger Svensson, 03 November 2018

Most OECD countries provide subsidies to stimulate the entry and growth of small entrepreneurial firms. This column argues that a better policy would be to combine these subsidy schemes with policies that improve the merger and acquisition market for small entrepreneurial firms, because the best strategy for such firms is to make an early entry to market to signal innovation quality and overcome asymmetry problems. Entrepreneurs would be able to create bidding competition among incumbents and receive a higher acquisition price, incentivising them to develop breakthrough innovations that will raise welfare.   

John Van Reenen, 02 November 2018

Firms are becoming more unequal in every country and sector. Is the rise of a few superstar firms good or bad for the economy, and should we do anything about it? Tim Phillips asks John Van Reenen of MIT to be policymaker for a day.

James Heckman, Sidharth Moktan, 01 November 2018

Anecdotal evidence suggests that the ‘Top Five’ economics journals have a strong influence on tenure and promotion decisions, but actual evidence on their influence is sparse. This column uses data on employment and publication histories for tenure-track faculty hired by the top US economics departments between 1996 and 2010 to show that the impact of the Top Five on tenure decisions dwarfs that of non-Top Five journals. A survey of US economics department faculties confirms the Top Five’s outsized influence.

William Kerr, 26 October 2018

The US has held a very special place in terms of absorbing global talent. This column brings together various data sources to demonstrate how high-skilled immigration has transformed US innovation over the past five decades. Among the trends identified are rates of international migration rising by skill level, a huge share of skilled immigration going to the US, and a disproportionate immigration impact on the US at higher skill levels. Not surprisingly, these changes have had enormous economic impact.

Harald Hau, Difei Ouyang, 26 October 2018

In the new century, China’s large economy features many local real estate booms originating in insufficient land supply. Using a panel of 900,000 Chinese manufacturing firm-year observations with matched firm locations, this column quantifies the causal effects of local real estate booms on local firms. It demonstrates how the diversion of local savings into the real estate sector in cities with real estate booms exerts a large toll on other local industries through higher costs of capital, underinvestment, real wage decreases, and industrial decline.

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