Barbara Biasi, Song Ma, 23 May 2022

Higher education programmes are essential for innovation and economic growth. This column introduces the education–innovation gap, a metric that captures the distance between education content and the knowledge frontier. Among US higher education institutions, the education–innovation gap is significantly lower for courses taught by instructors who are more active in producing research. The gap is higher in schools with students from lower socioeconomic status. On average, exposure to frontier knowledge is associated with better student outcomes.

Shujiro Urata, Youngmin Baek, 20 May 2022

Participation in global value chains is commonly seen as an important driver of productivity growth. This column uses Japanese firm-level data to estimate the productivity-enhancing impacts of participation. On average, firms that form part of global value chains are found to exhibit higher productivity than non-participating firms. In addition, longer participation strengthens the productivity-enhancing effects. Policymakers should support firms by protecting intellectual property rights, ensuring competition, and lowering costs and risks associated with global value chain participation. 

Federico Rossi, 12 May 2022

How does the productivity of different types of workers vary across countries? This column uses micro data from countries at different levels of development to document that highly educated workers are relatively more productive in rich countries. Exploiting variation in the skill premia of foreign-educated migrants, the author concludes that this is mostly due to the technological environment in rich countries being more complementary to high-skill labour.   

Luca Coraggio, Marco Pagano, Annalisa Scognamiglio, Joacim Tåg, 09 May 2022

Recent research has highlighted the contribution that managerial decisions make to firms’ productivity. This column uses a novel measure of job-worker allocation quality to document how firms that match their employees to their most suitable jobs are more productive, and their ability to do so depends on the quality and experience of their management. The measure is helpful for uncovering a hitherto neglected dimension of managerial practices, and could be particularly valuable at times when the need to cope with technological innovation, pandemics, climate change, or wars requires widespread firm restructuring and workers’ reallocation.

Carl Benedikt Frey, Giorgio Presidente, 06 May 2022

Face-to-face interactions are critical for the cross-fertilisation of ideas. Yet, the share of geographically distributed teams in scientific research has steadily risen since the 1960s and accelerated with the ICT revolution of the 1990s. This column explores how the rise of remote collaboration has shaped disruptive discoveries in science between 1961 and 2020. Remote collaboration negatively impacted breakthrough discoveries, but the effect reversed after 2010, likely due to improvements in technologies that support effective remote collaboration at distance. 

Balázs Égert, Christine de La Maisonneuve, David Turner, 28 April 2022

Investing in education and human capital is an important ingredient for economic growth. This column constructs a new aggregate stock measure of human capital data using OECD data on adult skills, quality of education, and mean years of schooling. The relative weights of quality and quantity are estimated rather than imposed, as they are in the existing literature. Improvements in human capital are estimated to boost productivity significantly, but only with long lags. Furthermore, simulating the impact of pre-primary education on human capital and productivity demonstrates the usefulness of the new measure for policy analysis.

Harry X. Wu, Janet X. Hao, 17 April 2022

China expects its service sector to play an important role in helping the economy restructure. This column measures China’s investment in intangibles as a good indicator of an economy’s future creativity. China’s services sector does not invest sufficiently in intangibles. The Chinese wholesale and retail sector, for example, spends only 1.21% of its value added on intangible assets, compared to 5.7% in the US. Chinese wholesale and retail services would have to invest heavily in building strong brands to catch up with their US counterparts.

Paul Brandily, Camille Hémet, Clément Malgouyres, 02 April 2022

Research consistently shows displaced workers suffer long-run earnings losses, but is this compounded with productivity enhancing reallocation? This column uses data from France to study the wage policy and productive performance of the firms in which displaced workers are re-employed. The authors find that wage and productivity ladders are not always collinear – workers can fall from one while climbing the other. Rather than slowing down the process of reallocation, the authors suggest exploring ways to mitigate the private cost they impose on workers. Alternatively, policy could focus on enhancing workers’ bargaining power in destination firms.

Eddy Bekkers, Carlos Góes, 29 March 2022

The war in Ukraine and the sanctions imposed on Russia have intensified the debate on the economic repercussions of a shift in global trade policy focus from mutual economic benefits of open trade policies to geopolitical considerations limiting interdependence. This column finds that a potential decoupling of the global trading system into two blocs – a US-centric and a China-centric bloc – would reduce global welfare in 2040 compared to a baseline by about 5%. Losses would be largest (more than 10%) in low-income regions that benefit most from positive technology spillovers from trade.

Masayuki Morikawa, 22 March 2022

Since the onset of the COVID-19 pandemic, the number of people working from home has increased rapidly. However, the productivity of working from home is not yet well understood. This column explores the changes in prevalence, frequency, and productivity of working from home in Japan over a year of the pandemic. Fewer workers were working from home in 2021 compared to 2020. While the productivity of working from home has improved, it is still lower than the productivity of working at the office.

Pawel Adrjan, Gabriele Ciminelli, Chiara Criscuolo, Peter Gal, Alexandre Judes, Giuseppe Nicoletti, Michael Koelle, Timo Leidecker, Francesco Losma, Cyrille Schwellnus, Tara Sinclair, 10 February 2022

The COVID-19 pandemic triggered a surge in teleworking, raising questions about its persistence as well as its impact on firm performance and worker wellbeing. Leveraging real-time online job postings data from Indeed and a recent OECD survey of managers and workers, this column argues that teleworking is here to stay – for most workers in a hybrid mode with two or three working days per week at home. A majority of managers and workers value teleworking positively but emphasise the need for adaptive measures, such as the coordination of schedules and investment in ICT hardware, software, and skills.

Romesh Vaitilingam, 04 February 2022

The pandemic has led to a big shift to working from home in occupations where the jobs, or some part of them, can be done remotely. The IGM Forum at Chicago Booth asked its panels of leading US and European economists about the potential impact of this continuing over the longer term. As this column reports, a majority of the experts consider that staff who work two days a week from home are, on average, likely to report higher levels of job satisfaction over the longer term. The respondents are more uncertain about the long-term impact on productivity and women’s career progression relative to their male counterparts.

Chiara Criscuolo, Peter Gal, Timo Leidecker, Giuseppe Nicoletti, 23 December 2021

Rising dispersion in productivity across firms has focused attention on the drivers of superior performances of a minority of firms at the ‘productivity frontier’ and disappointing performances of the remaining ‘productivity laggards’. This column brings together data from ten countries to explore how differences in productivity outcomes of frontier and laggard firms depend on the composition, diversity, and competencies of their managers and their workers. Overall, this ‘human side’ explains about a third of the observed differences in productivity across firms, more than is accounted for by differences in capital intensity.

Lucile Crumpton, Ethan Ilzetzki, 09 December 2021

Many commentators have understood the UK government’s proposed ‘high-wage, high-productivity’ model as suggesting that wage increases will themselves lead to innovation and higher productivity. In the November 2021 CfM survey, the panel of UK experts is nearly unanimous that that wage increases generally do not increase productivity in the long run; the consensus is that productivity drives wage increases. A minority thinks that government intervention in wages could lead to higher productivity, but even this minority argues that such policies should be complemented with investments in skills and other productivity-enhancing measures.

Xavier Giroud, Simone Lenzu, Quinn Maingi, Holger Mueller, 01 December 2021

It is widely believed that the productivity gains from place-based policies are geographically highly localised. This column argues instead that productivity spillovers from local place-based policies may propagate far beyond the initial target region to the entire economy, through the plant-level networks of multi-region firms. But while these productivity spillovers amplify the aggregate welfare gains from local place-based policies, they widen economic disparities between individual workers and regions in the economy. 

Lena Anayi, Nicholas Bloom, Philip Bunn, Paul Mizen, Gregory Thwaites, Chris Young, 28 October 2021

Covid-19 has had a sizeable impact on where people work and how they shop. This column uses data from the Decision Maker Panel business survey of 3,000 UK firms to assess the longer-run impact. The pandemic is expected to increase hours worked from home and sales made online. Firms will invest less in land and buildings but more in IT and software. The pandemic is also expected to reduce medium-term employment and sales, with some shift away from large urban areas towards more rural areas.

Lilas Demmou, Guido Franco, 05 October 2021

Intangible assets are at the heart of firms’ competitiveness, but financing them is complex for many firms. This column examines the extent to which financing barriers affect productivity outcomes in intangible-intensive sectors, using sector- and firm-level data. The authors demonstrate the existence of a ‘financing gap’ which depresses aggregate productivity growth and resilience, and propose a set of policy options to make each source of external finance – government support, equity financing, and bank credit – more supportive of intangible investment.

Dan Andrews, Elif Bahar, Jonathan Hambur, 30 September 2021

Job retention schemes during the pandemic prioritised preservation over reallocation, but evidence on their allocative and productivity consequences is scarce. Using tax data for Australia, this column shows that job reallocation and firm exit remained connected to firm productivity over the course of the pandemic. Australia’s job retention scheme, JobKeeper, initially shielded productive and financially fragile firms, contributing positively to aggregate productivity. But as the economy recovered, the scheme grew more distortive, justifying its timely withdrawal – on productivity grounds at least.

Minho Kim, Munseob Lee, Yongseok Shin, 25 October 2021

Industrial policy has divided economists for decades. This column evaluates Korean government's policy of promoting heavy and chemical industries in the 1970s, using plant-level output and productivity data. It shows that output and input use of targeted industries/regions grew significantly faster than those of non-targeted ones. However, total factor productivity did not increase because the misallocation of resources across plants within targeted industries/regions got significantly worse. 

Dan Andrews, Andrew Charlton, Angus Moore, 22 September 2021

Covid-19 has been characterised as a reallocation shock, but the debate has so far lacked a clear link with productivity. This column uses real-time data to show that job reallocation remained connected to firm productivity even while labour turnover fell in response to the pandemic. High (low) productivity firms were more likely to expand (contract), although the strength of this effect varied across countries, consistent with differences in job retention schemes. While policy partly hindered creative destruction, the nature of the pandemic shock favoured high-productivity and tech-savvy firms, resulting in a reallocation of labour to these firms. 

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