Achyuta Adhvaryu, Sadish D, Anant Nyshadham, Jorge Tamayo, 19 August 2019

Managerial quality remains low in firms in developing countries. In the context of the Indian garment industry, this column shows that manager characteristics matter for productivity. It argues that firms might not know what constitutes good management or how valuable it is, and that they could benefit from screening and training management in these qualities.

Çağatay Bircan, Ralph De Haas, 10 August 2019

Recent debates about the global productivity slowdown point to a large and increasing productivity gap between firms operating at the global technological frontier and those trailing behind. This column analyses whether better access to bank credit can accelerate technological diffusion and narrow the productivity gap between leading and lagging firms. Using data from a large emerging market – Russia – it shows that while bank loans can encourage firms to adopt new technologies and become more productive, long-run benefits vary substantially across industries and regions.

Benjamin Friedrich, Lisa Laun, Costas Meghir, Luigi Pistaferri, 08 August 2019

We know little about how much fluctuations in a firm’s fortunes are passed on in wages. The column uses Swedish data from 1997 to 2008 that identifies individual workers to show that shocks to firm productivity are passed on as variation in worker wages. The variation is high for high-skilled workers. Unskilled workers, perhaps due to union or minimum wage protection, experience smaller fluctuations.

Agnès Bénassy-Quéré, Olivier Blanchard, Laurence Boone, Gilbert Cette, Chiara Criscuolo, Anne Epaulard, Sébastien Jean, Margaret Kyle, Philippe Martin, Xavier Ragot, Alexandra Roulet, David Thesmar, 24 July 2019

In September 2016, the European Council invited all euro area members to set up a National Productivity Board to focus on productivity and competitiveness. This column summarises the main findings of the first report of the Conseil National de Productivité, which analyses the causes of the French productivity slowdown that are common to other OECD countries and those that are specific to France. It also proposes a definition of competitiveness that should be useful for euro area macroeconomic policy debates and explains why current account imbalances in the euro area are both a sign of deficient adjustment mechanisms and a cause of concern.

Lene Kromann, Anders Sørensen, 15 July 2019

The automation of production processes is an important topic on the policy agenda in high-wage countries, but evidence of the economic effects of automation at the firm level is limited. This column presents insights on automation from new survey data for Denmark. The findings reveal that variation in the adoption of automation technologies is high, the change in adoption over time is slow, and almost half of Danish manufacturing firms relied greatly on manual production processes in 2010. Increasing international competition from China is a driver for investments in automation.

Maarten de Ridder, 02 July 2019

The slowdown of productivity growth, the decline of business dynamism, and the rise of market power and firm concentration are three trends that have attracted a lot of attention in academic and policy debates. This column points to the rising use of intangible inputs as a unified explanation for these trends. Firms with high intangible adoption disrupt sectors and initially boost productivity, but negatively affect the entry of new firms and suppress the effect of R&D on innovation and growth in the long run.

Alberto Bailin Rivares, Peter Gal, Valentine Millot, Stéphane Sorbe, 19 June 2019

While the innovative features of online platforms offer the potential to improve the performance of service sectors, they raise many new challenges for policymakers. Using Google search data on service industries in ten OECD countries, this column shows that platforms generally stimulate the productivity of incumbent service firms, but the impact crucially depends on the type of platform considered. Productivity gains tend to be lower when a platform is persistently dominant on its market, suggesting that the contestability of platform markets should be promoted in order to maximise their economic benefits.

Łukasz Rachel, 24 May 2019

How we spend our time is changing rapidly. This column argues that an important driver is leisure-enhancing innovation, aimed at capturing our time, attention, and data. Leisure-enhancing technologies can help account for both the rise in leisure hours and the decline in productivity observed across the industrialised world. Their nature carries important implications for the long-run viability of the platforms’ business models, for measurement of economic activity, and for welfare. 

Leonardo Baccini, Giammario Impullitti, Edmund Malesky, 17 May 2019

The recent success of China and Vietnam over the past three decades has triggered a debate over ‘state capitalism’ as a viable growth and development model. This column studies the effect of the 2007 WTO accession on the productivity, profitability, and survival rates of state-owned and private Vietnamese firms. The findings reveal that state-owned enterprises have hampered the efficiency gains brought about by globalisation. An analysis suggests that productivity gains from trade five years after WTO entry might have been 66% higher in the absence of state-owned firms.

Richard Freeman, Wei Huang, Teng Li, 07 May 2019

Incentive systems that pay workers bonuses based on performance targets are widely used to increase productivity, but they can incur costs to firms from workers gaming the system. This column studies the introduction of one such non-linear incentive system by a major Chinese insurance firm. It finds that the system increased productivity and lowered turnover rates sufficiently to outweigh the gaming costs, and appears to have benefitted both workers and the firm.

Diane Coyle, 03 May 2019

The reliance on GDP as a measure of economics fails to take into account the shift to a service economy. Diane Coyle of Cambridge University proposes a better metric built around how people use their time.

Cheng Chen, Claudia Steinwender, 30 April 2019

Firms around the world are facing increased import competition, especially from low-wage countries like China, but the effect on the productivity of impacted firms remains unclear. Using data from Spain, this column studies how firms under different types of management respond to an increase in competition, and shows that less-productive firms that are both family owned and managed see the greatest improvement in productivity. Their managers care more about the long-term survival of their firm, prompting additional effort when faced with an increased bankruptcy risk.

Alan Benson, Danielle Li, Kelly Shue, 24 April 2019

The Peter Principle states that organisations promote people who are good at their jobs until they reach their ‘level of incompetence’, implying that all managers are incompetent. This column examines data on worker- and manager-level performance for almost 40,000 sales workers across 131 firms and finds evidence that firms systematically promote the best salespeople, even though these workers end up becoming worse managers, and even though there are other observable dimensions of sales worker performance that better predict managerial quality. 

Christian Krekel, George Ward, Jan-Emmanuel De Neve, 21 April 2019

A growing number of companies place a high priority on the wellbeing of their workers, assuming that happier workers will lead to improved productivity. This column examines this link based on a meta-analysis of independent studies accumulated by Gallup, covering the wellbeing and productivity of nearly 2 million employees and the performance of over 80,000 business units, originating from 230 independent organisations across 49 industries in 73 countries. The results suggest a strong positive correlation between employee wellbeing, productivity, and firm performance.

Tadashi Ito, Yukiko Saito, 16 April 2019

Small and medium-sized firms can enjoy the benefits of trade liberalisation by exporting their goods or importing inputs through intermediaries. Using firm-level data from Japan, this column finds that firms in regional areas are smaller than those in metropolitan areas and are less likely to participate in indirect or direct trade. Direct and indirect exports and imports represent a large share of regional economies, and indirect exporters in regional areas are likely to become direct exporters. In addition, both newly started direct export/import firms and newly started indirect export/import firms tend to grow faster.

Tito Boeri, Andrea Ichino, Enrico Moretti, Johanna Posch, 13 April 2019

In many European countries, wages are determined by collective bargaining agreements intended to improve wages and reduce inequality. This column compares the impact of different wage bargaining models in Italy, which has limited geographical wage differences in nominal terms and almost no relationship between local productivity and local nominal wages, and Germany, which has a tighter link between local wages and local productivity. The Italian system is successful at reducing nominal wage inequality, but creates costly geographic imbalances. If Italy were to adopt the German system, aggregate employment and earnings would increase by 11.04% and 7.45%, respectively. 

Ann Harrison, Marshall W. Meyer, Will Wang, Linda Zhao, Minyuan Zhao, 07 April 2019

The conventional wisdom that privatisation of state-owned enterprises reduces their dependence on the state and yields positive economic benefits has not always been borne out by empirical work. Using a comprehensive dataset from China, this column shows that privatised SOEs continue to benefit from government support in the form of low-interest loans and subsidies relative to private enterprises that have never been state-owned. Although there are clear improvements in performance post-privatisation, privatised SOEs continue to significantly under-perform compared to private firms.

Dan Andrews, Filippos Petroulakis, 04 April 2019

Europe’s productivity problem is partly due to the rise of zombie firms that crowd out growth opportunities for others. This column explores the tendency for weak banks to evergreen loans to zombie firms to avoid realising losses on their balance sheet. Measures to strengthen bank balance sheets will be enhanced by insolvency regimes that encourage corporate restructuring.

Bruno Merlevede, Victoria Purice, 29 March 2019

Supplying inputs to multinational firms has been shown to increase the productivity of domestic firms, while borders have been shown to substantially reduce trade activities. This column investigates whether spillover effects from multinationals on local firms occur when firms are separated by a national border. Using data for seven Central and Eastern European countries and their neighbours, it finds that cross-border spillovers only occur after EU integration, and that participation in the Schengen Area magnifies these effects. The results bear testimony to successful EU integration and warn about potential productivity costs to local firms should border controls be reinstated.

Pages

Events

CEPR Policy Research