Masayuki Morikawa, 26 August 2014

Headquarters play important strategic roles in modern companies, but downsizing of headquarters is often advocated as a cost-cutting measure. This column presents evidence from Japanese firm-level data that headquarters size is positively associated with firms’ overall productivity. Moreover, the benefits of ICT are greater for companies with relatively large headquarters. Downsizing headquarters to cut costs may thus be harmful for long-term company performance.

Filippo di Mauro, Francesco Pappadà, 02 June 2014

Trade imbalances in the Eurozone require relative price adjustments. This column argues that the traditional ‘elasticity’ approach is lacking when thinking about the adjustment magnitude. Exports adjust when exporting firms sell more (intensive margin) and new firms start exporting (extensive margin). The extensive-margin reaction depends upon the fatness of firm-level productivity distributions. Surplus-country distributions have fatter tails than deficit countries, suggesting that the price adjustment magnitude may be larger than traditional calculations suggest.

Giovanni Peri, Kevin Shih, Chad Sparber, 29 May 2014

Immigrants to the US are drawn from both ends of the education spectrum. This column looks at the effect of highly educated immigrants – in particular, those with degrees in Science, Technology, Engineering, or Mathematics – on total factor productivity growth. The authors find that foreign STEM workers can explain 30% to 60% of US TFP growth between 1990 and 2010.

David Autor, 02 May 2014

David Autor talks to Viv Davies about his recent research that analyses the differential effects of trade and technology on employment patterns in US local labour markets between 1990 and 2007. While the effect of trade competition is growing over time, the effect of technology has shifted from automation of production activities in the manufacturing sector towards computerisation of information-processing tasks in the service sector. The interview was recorded in April 2014 at the annual conference of the Royal Economic Society.

Paolo Manasse, Thomas Manfredi, 19 April 2014

Italy’s labour market productivity has been stagnating in the past decade despite numerous reforms. This column gives an explanation why this is so. By focusing exclusively on flexibility, past labour market reforms have completely neglected incentives. There is severe allocative malfunctioning in the Italian labour market. Wages do not reflect sector productivity in the short run, while in the long run they rise in sectors in which productivity falls. Thus, a comprehensive reform of the collective bargaining system is crucial.

Marc Melitz, Stephen Redding, 10 March 2014

Recent research has sought to quantify the magnitude of the welfare gains from trade. One of the main findings from this literature is that the gains from trade are relatively modest. This column suggests a channel that the standard approach typically abstracts from. It argues that trade induces changes in domestic productivity through a more efficient organisation of production within the supply chain.

Theodore Moran, Lindsay Oldenski, 04 March 2014

The US has once again ranked among the top two recipient countries for foreign direct investment. This column examines the effects of these large FDI inflows on the US domestic economy. Foreign multinationals are – alongside US-headquartered American multinationals – the most productive and highest-paying segment of the US economy. In addition, they provide positive spillovers to US firms. About 12% of the total productivity growth in the US from 1987 to 2007 can be attributed to productivity spillovers from inward FDI.

Jennifer Castle, David Hendry, 13 January 2014

During the Great Recession, UK real wages have fallen rather than the usual unemployment reaction. Nevertheless, this column argues that a structural break in the wage inflation/unemployment trade-off has not occurred. There has been a constant relationship between real wages and productivity since 1860. The key to the constancy is to the joint modelling of dynamics, location shifts, relevant variables and non-linearities.

Angus Deaton, 10 January 2014

Angus Deaton talks to Viv Davies about his recent book ‘The Great Escape: health, wealth and the origins of inequality’, that explains how inequality is the catalyst for the great escape from poverty and how the world is better because of it. They discuss the state of inequality in the US, economic growth in China and India and the ineffectiveness of international aid. Deaton stresses the importance of understanding that human well being will be achieved only through a holistic approach. The interview was recorded on 17 October 2013.

Fabrizio Zilibotti, 23 December 2013

Fabrizio Zilibotti talks to Viv Davies about his award-winning paper ‘Growing Like China’ (co-authored with Zheng Song, Kjetil Storesletten and Yikai Wang) that addresses the puzzle of the combination of high growth and high return to capital in China with a growing foreign surplus. They also discuss pensions and demographic transition in China, factors that are driving the country’s growth and the country’s future role in the global economy. The interview was recorded on 17 September 2013.

Stan Liebowitz, 06 December 2013

Academic economists – especially in the US – are continuously evaluated, with salaries and promotions hanging on outcomes. This column argues that the methods – identified from a survey of economics department chairs – are likely to reduce the amount of research created, perpetuate inefficiently sized research teams, promote false authorship, and penalise honest researchers. They also provide departments with excessive leeway to engage in potentially capricious behaviour.

Fadi Hassan, Gianmarco Ottaviano, 30 November 2013

The long-lasting stagnation in Italy has often been explained by the country’s lost of competitiveness, but focus on total factor productivity has been scarce. This column discusses the effect of capital and labour misallocation on the productivity slowdown. Such misallocation could not result from labour rigidity, but could be due to limited ICT investment and penetration. Rigid non-meritocratic management practices can greatly affect ICT exploitation, and subsequently – overall productivity growth.

Isabella Baldini, Paolo Manasse, 04 November 2013

Unlike the US, Europe is struggling to recover from the crisis. This is especially the case in certain European countries. This column discusses why the process of convergence in the Eurozone has slowed down. It proposes a way for European institutions to cope with the structural problems-- by individual country-level reforms and a federal budget. Otherwise, the alternative could be a disintegration of the Eurozone.

Isabella Baldini, Paolo Manasse, 04 November 2013

Unlike the US, Europe is struggling to recover from the crisis. This is especially the case in certain European countries. This column discusses why the process of convergence in the Eurozone has slowed down. It proposes a way for European institutions to cope with the structural problems – with individual country-level reforms and a federal budget. Otherwise, the alternative could be a disintegration of the Eurozone.

Aaron Flaaen, Ejaz Ghani, Saurabh Mishra, 22 July 2013

Many developing countries are stuck in the middle-income gap. Focusing on Malaysia, this column argues that countries trapped in the middle-income conundrum will need to expand their ‘modern’ sectors. Traditional sectors with low productivity must shed labour, and high-productivity modern sectors (be they in goods or services) must hire more labour if they want to grow.

Sebnem Kalemli-Ozcan, Christian Fons-Rosen, Bent Sørensen, Carolina Villegas-Sanchez, Vadym Volosovych, 04 June 2013

During the decades of globalisation, flows of foreign direct investment have surged in parallel with extensive policy momentum. This column examines whether the net aggregate gain from FDI is positive using a large panel of firms from 30 European countries. It turns out that even very large increases in FDI are not important for country-level productivity growth.

Laurence Boone, Céline Renucci, Ruben Segura-Cayuela, 25 March 2013

What happens after the crisis ends? This column estimates the long-term effects of the current cyclical downturn on Eurozone economies. In the absence of any real impetus for bold reform, estimates show that the damage will indeed be long lasting, permanently impairing growth for an ageing population that requires higher growth capacity more than ever before.

Allan Collard-Wexler, Jan De Loecker, 03 February 2013

This paper measures the impact of the minimill, a drastic new technology for producing steel. The authors find that the sharp increase in the industry's productivity is linked to this new technology, and operates through two distinct mechanisms. First, minimills displaced the older technology, called vertically integrated production, and this reallocation of output was responsible for a third of the increase in the industry's productivity. Second, increased competition, due to the expansion of minimills, drove a substantial reallocation process within the group of vertically integrated producers, driving a resurgence in their productivity, and consequently of the industry's productivity as a whole.

Amit Khandelwal, Shang-Jin Wei, Peter Schott, 02 December 2012

If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. This paper examines Chinese textile and clothing exports before and after the removal of externally imposed quotas. Both the surge in export volumes and the decline in prices after the quota removal are driven by net entry, implying that the pre-liberalisation quota allocation is not based on firm productivity. Removing this misallocation accounts for a substantial share of the overall productivity gains associated with the quota removal.

Abigail Hughes, Jumana Saleheen, 19 August 2012

Worker productivity in the UK and a number of other countries has been persistently weak since the onset of the global crisis. This column argues that, in the UK at least, the weakness in service sector productivity is the biggest puzzle. In most other countries the weakness is more obvious in manufacturing.



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