Productivity and Innovation

Morris Davis, Andra Ghent, Jesse Gregory, 18 April 2021

The COVID-19 pandemic has prompted a radical shift in how much people work from home. This column argues that, through learning and technology adoption effects, this enforced shift has boosted the productivity of working from home, which will lead to higher lifetime incomes for the working population. While these productivity gains would likely have happened eventually, the pandemic accelerated this process.

Matthias Breuer, Christian Leuz, Steven Vanhaverbeke, 08 April 2021

Firms often argue that disclosure and reporting regulations such as the EU Accounting Directive require them to reveal proprietary information, which discourages innovation. This column explores the effects of disclosure requirements on corporate innovation in the EU, and finds that forcing firms to publicly disclose their financial statements does indeed discourage innovative activities. At the industry level, positive information spillovers to competitors, suppliers, and customers appear insufficient to compensate for the negative direct effect on innovation. Indeed, the spillovers seem to concentrate innovation within a few large firms in a given industry.

Gaurav Khanna, Wenquan Liang, Ahmed Mushfiq Mobarak, Ran Song, 08 April 2021

Why do workers remain in low-productivity areas when they could experience wage gains elsewhere? While the literature has proposed a few explanations, including the high cost and risky nature of migration, this column uses the case of China to examine instead the role that pollution plays. It finds that severe pollution can induce workers to relocate from productive to unproductive regions, suggesting that pollution control, coupled with policies facilitating migration, has the potential to bring about extra economic gains in developing countries.

Stephen Broadberry, Alexandra de Pleijt, 04 April 2021

Little is known about the role of capital in economic growth before the late 19th century. This column provides the first estimates of investment and the capital stock in Britain as far back as 1270. Although important changes did occur in the role of capital, such as the growing importance of fixed capital relative to working capital and a substantial increase in the investment share of GDP, growth accounting analysis shows that productivity growth was more important than capital deepening in explaining the growth of output per head.

Douglas Gollin, Casper Worm Hansen, Asger Mose Wingender, 20 March 2021

The Green Revolution was a crucial episode of agricultural innovation based on the application of modern crop-breeding techniques and high-yielding crop varieties. This column studies the economic effects of agricultural productivity growth in the context of the Green Revolution across the developing world. It finds positive but unevenly distributed effects of agricultural productivity on food crop yields, GDP per capita, schooling, and life expectancy across different countries. In the face of climate change, further investments in agricultural science targeting the developing world may have the potential to sustain these gains in the decades ahead. 

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