Decomposing differences in total factor productivity across firm size

This paper investigates the extent to which the gap in total factor productivity between small and large firms is due to differences in the endowment of factors determining productivity and to the returns associated with these factors. We place particular emphasis on the contribution of differences in the propensity to innovate and in the use of skilled labor across firms of different size. Empirical evidence from a representative sample of Spanish manufacturing firms corroborates that both differences in endowments and returns to innovation and skilled labor significantly contribute to the productivity gap between small and large firms. In addition, it is observed that the contribution of innovation to this gap is caused only by differences in quantity, while differences in returns have no effect; in the case of human capital, however, most of the effect can be attributed to increasing differences in returns between small and large firms.

Productivity growth and competition in Spanish manufacturing firms: What has happened in recent years?

This paper addresses the issue of the relationship between productivity and market competition. In comparison to the economies of other European countries, the Spanish economy has been growing, while productivity growth has stagnated. Here we provide empirical evidence about the relationship between productivity and market competition from Spanish manufacturing firms at firm level between 1994 and 2004. Correcting for selection bias, our study pays special attention to the patterns of productivity growth between openness and non-openness firms. When market competition increases the effect on firms operating in domestic markets is positive but when the level of competition is high incentives to invest in innovation and productivity gains disappear. The empirical relationship between competition and productivity is an inverted U-shape, where productivity growth is highest at intermediate levels of competition. The productivity growth of firms operating in international markets is higher than that of non-openness firms, but when market competition rises they moderate their productivity growth. Our empirical results suggest that the correct competition policy in the Spanish economy should remove the barriers to competition in internal markets in order to increase the incentives for manufacturing firms to invest in innovation and productivity growth.

Productivity, Preferences and UIP deviations in an Open Economy Business Cycle Model

We show that a flex-price two-sector open economy DSGE model can explain the poor degree of international risk sharing and exchange rate disconnect. We use a suite of model evaluation measures and examine the role of (i) traded and non-traded sectors; (ii) financial market incompleteness; (iii) preference shocks; (iv) deviations from UIP condition for the exchange rates; and (v) creditor status in net foreign assets. We find that there is a good case for both traded and non-traded productivity shocks as well as UIP deviations in explaining the puzzles.

Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?

The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In particular, energy efficiency is commonly regarded as a key element of climate policy in terms of achieving reductions in economy-wide CO2 emissions over time. However, a growing literature suggests that improvements in energy efficiency will lead to rebound (or backfire) effects that partially (or wholly) offset energy savings from efficiency improvements. Where efficiency improvements are aimed at the production side of the economy, the net impact of increased efficiency in any input to production will depend on the combination and relative strength of substitution, output/competitiveness, composition and income effects that occur in response to changes in effective and actual factor prices, as well as on the structure of the economy in question, including which sectors are targeted with the efficiency improvement. In this paper we consider whether increasing labour productivity will have a more beneficial, or more predictable, impact on CO2/GDP ratios than improvements in energy efficiency. We do this by using CGE models of the Scottish regional and UK national economies to analyse the impacts of a simple 5% exogenous (and costless) increase in energy or labour augmenting technological progress.

How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve?

The research reported here is an output of Karen Turner’s ESRC Climate Change Leadership Fellow project (Grant reference RES-066-27-0029). However, this research builds on previous work funded by the ESRC on modelling the economic and environmental impacts of technological improvement (Grant reference: RES-061-25-0010) and by the EPSRC through the SuperGen Marine Energy Research Consortium on accounting for and modeling environmental indicators (Grant reference: EP/E040136/1).

Body mass index, cigarette smoking, and alcohol consumption and cancers of the oral cavity, pharynx, and larynx: modeling odds ratios in pooled case-control data.

Odds ratios for head and neck cancer increase with greater cigarette and alcohol use and lower body mass index (BMI; weight (kg)/height(2) (m(2))). Using data from the International Head and Neck Cancer Epidemiology Consortium, the authors conducted a formal analysis of BMI as a modifier of smoking- and alcohol-related effects. Analysis of never and current smokers included 6,333 cases, while analysis of never drinkers and consumers of < or =10 drinks/day included 8,452 cases. There were 8,000 or more controls, depending on the analysis. Odds ratios for all sites increased with lower BMI, greater smoking, and greater drinking. In polytomous regression, odds ratios for BMI (P = 0.65), smoking (P = 0.52), and drinking (P = 0.73) were homogeneous for oral cavity and pharyngeal cancers. Odds ratios for BMI and drinking were greater for oral cavity/pharyngeal cancer (P < 0.01), while smoking odds ratios were greater for laryngeal cancer (P < 0.01). Lower BMI enhanced smoking- and drinking-related odds ratios for oral cavity/pharyngeal cancer (P < 0.01), while BMI did not modify smoking and drinking odds ratios for laryngeal cancer. The increased odds ratios for all sites with low BMI may suggest related carcinogenic mechanisms; however, BMI modification of smoking and drinking odds ratios for cancer of the oral cavity/pharynx but not larynx cancer suggests additional factors specific to oral cavity/pharynx cancer.

Measurement of 13CO2 in expired air as an index of compliance to a high carbohydrate diet naturally enriched in 13C.

The aim of this study was to determine whether breath 13CO2 measurements could be used to assess the compliance to a diet containing carbohydrates naturally enriched in 13C. The study was divided into two periods: Period 1 (baseline of 4 days) with low 13C/12C ratio carbohydrates. Period 2 (5 days) isocaloric diet with a high 13C/12C ratio (corn, cane sugar, pineapple, millet) carbohydrates. Measurements were made of respiratory gas exchange by indirect calorimetry, urinary nitrogen excretion and breath 13CO2 every morning in post-absorptive conditions, both in resting state and during a 45-min low intensity exercise (walking on a treadmill). The subjects were 10 healthy lean women (BMI 20.4 +/- 1.7 kg/m2, % body fat 24.4 +/- 1.3%), the 13C enrichment of oxidized carbohydrate and breath 13CO2 were compared to the enrichment of exogenous dietary carbohydrates. At rest the enrichment of oxidized carbohydrate increased significantly after one day of 13C carbohydrate enriched diet and reached a steady value (103 +/- 16%) similar to the enrichment of exogenous carbohydrates. During exercise, the 13C enrichment of oxidized carbohydrate remained significantly lower (68 +/- 17%) than that of dietary carbohydrates. The compliance to a diet with a high content of carbohydrates naturally enriched in 13C may be assessed from the measurement of breath 13CO2 enrichment combined with respiratory gas exchange in resting, postabsorptive conditions.

The Impact of Higher Education Institution-Firm Knowledge Links on Firm-level Productivity in Britain

This paper estimates whether both sourcing knowledge from and/or cooperating on innovation with HEIs (Higher Education Institutions)1 impacts on establishment-level total factor productivity (TFP) using a dataset created by merging the UK government’s Community Innovation Survey (CIS) with the Annual Respondents Database (ARD). It also considers whether higher graduate employment (as a measure of human capital) also impacts positively on TFP at the establishment-level. Many studies have investigated the relationship between university-firm knowledge links and innovation (see, for example, Mansfield, 1991; Becker, 2003; Thorn et al, 2007). Most of these studies find a positive impact. Fewer studies have investigated the impact of university-firm knowledge links on productivity. Belderbos et al. (2004), using the Dutch CIS, find that cooperation with universities has no statistically significant impact on the growth of labour productivity. Medda et al. (2005) find no statistically significant effect of collaborative research undertaken by Italian manufacturing firms and universities on the growth of TFP. Arvanitis et al. (2008), using Swiss data, show that university-firm knowledge and technology transfer has both a direct impact on labour productivity and an indirect impact through its positive impact on innovation. In sum, there is as yet no clear consensus as to the impact of university-firm knowledge links on productivity.

Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain

In this paper we examine whether variations in the level of public capital across Spain‟s Provinces affected productivity levels over the period 1996-2005. The analysis is motivated by contemporary urban economics theory, involving a production function for the competitive sector of the economy („industry‟) which includes the level of composite services derived from „service‟ firms under monopolistic competition. The outcome is potentially increasing returns to scale resulting from pecuniary externalities deriving from internal increasing returns in the monopolistic competition sector. We extend the production function by also making (log) labour efficiency a function of (log) total public capital stock and (log) human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital stock. The model is further extended to include technological externalities or spillovers across provinces. Using panel data methodology, we find significant elasticities for total capital stock and for human capital stock, and a significant impact for employment density. The finding that the effect of public capital is significantly different from zero, indicating that it has a direct effect even after controlling for employment density, is contrary to some of the earlier research findings which leave the question of the impact of public capital unresolved.

The Marginal Productivity Theory Of The Price Of Capital: An Historical Perspective On The Origins Of The Codswallop

Although it might have been expected that, by this point in time, the unacceptability of the marginal productivity theory of the return on capital would be universally agreed, that is evidently not the case. Popular textbooks still propound the dogma to the innocent. This note is presented in the hope that a succinct indication of the origins of the theory it will contribute to a more general appreciation of the unrealistic and illogical nature of this doctrine.

Fecal calprotectin more accurately reflects endoscopic activity of ulcerative colitis than the Lichtiger Index, C-reactive protein, platelets, hemoglobin, and blood leukocytes.

BACKGROUND: The correlation between noninvasive markers with endoscopic activity according to the modified Baron Index in patients with ulcerative colitis (UC) is unknown. We aimed to evaluate the correlation between endoscopic activity and fecal calprotectin (FC), C-reactive protein (CRP), hemoglobin, platelets, blood leukocytes, and the Lichtiger Index (clinical score). METHODS: UC patients undergoing complete colonoscopy were prospectively enrolled and scored clinically and endoscopically. Samples from feces and blood were analyzed in UC patients and controls. RESULTS: We enrolled 228 UC patients and 52 healthy controls. Endoscopic disease activity correlated best with FC (Spearman's rank correlation coefficient r = 0.821), followed by the Lichtiger Index (r = 0.682), CRP (r = 0.556), platelets (r = 0.488), blood leukocytes (r = 0.401), and hemoglobin (r = -0.388). FC was the only marker that could discriminate between different grades of endoscopic activity (grade 0, 16 [10-30] μg/g; grade 1, 35 [25-48] μg/g; grade 2, 102 [44-159] μg/g; grade 3, 235 [176-319] μg/g; grade 4, 611 [406-868] μg/g; P < 0.001 for discriminating the different grades). FC with a cutoff of 57 μg/g had a sensitivity of 91% and a specificity of 90% to detect endoscopically active disease (modified Baron Index ≥ 2). CONCLUSIONS: FC correlated better with endoscopic disease activity than clinical activity, CRP, platelets, hemoglobin, and blood leukocytes. The strong correlation with endoscopic disease activity suggests that FC represents a useful biomarker for noninvasive monitoring of disease activity in UC patients.

Productivity shocks and aggregate fluctuations in an estimated endogenous growth model with human capital

Employing an endogenous growth model with human capital, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate fluctuations in output, consumption, investment and hours. Given the importance of accounting for both the dynamics and the trends in the data not captured by the theoretical growth model, we introduce a vector error correction model (VECM) of the measurement errors and estimate the model’s posterior density function using Bayesian methods. To contextualize our findings with those in the literature, we also assess whether the endogenous growth model or the standard real business cycle model better explains the observed variation in these aggregates. In addressing these issues we contribute to both the methods of analysis and the ongoing debate regarding the effects of innovations to productivity on macroeconomic activity.

Reasons why emergency department providers do not rely on the pneumonia severity index to determine the initial site of treatment for patients with pneumonia.

BACKGROUND: Many emergency department (ED) providers do not follow guideline recommendations for the use of the pneumonia severity index (PSI) to determine the initial site of treatment for patients with community-acquired pneumonia (CAP). We identified the reasons why ED providers hospitalize low-risk patients or manage higher-risk patients as outpatients. METHODS: As a part of a trial to implement a PSI-based guideline for the initial site of treatment of patients with CAP, we analyzed data for patients managed at 12 EDs allocated to a high-intensity guideline implementation strategy study arm. The guideline recommended outpatient care for low-risk patients (nonhypoxemic patients with a PSI risk classification of I, II, or III) and hospitalization for higher-risk patients (hypoxemic patients or patients with a PSI risk classification of IV or V). We asked providers who made guideline-discordant decisions on site of treatment to detail the reasons for nonadherence to guideline recommendations. RESULTS: There were 1,306 patients with CAP (689 low-risk patients and 617 higher-risk patients). Among these patients, physicians admitted 258 (37.4%) of 689 low-risk patients and treated 20 (3.2%) of 617 higher-risk patients as outpatients. The most commonly reported reasons for admitting low-risk patients were the presence of a comorbid illness (178 [71.5%] of 249 patients); a laboratory value, vital sign, or symptom that precluded ED discharge (73 patients [29.3%]); or a recommendation from a primary care or a consulting physician (48 patients [19.3%]). Higher-risk patients were most often treated as outpatients because of a recommendation by a primary care or consulting physician (6 [40.0%] of 15 patients). CONCLUSION: ED providers hospitalize many low-risk patients with CAP, most frequently for a comorbid illness. Although higher-risk patients are infrequently treated as outpatients, this decision is often based on the request of an involved physician.

Still More On Why We Should Bury The Marginal Productivity Theory Of The Price Of Capital: A Supplementary Note

The purpose of this note is to supplement the author’s earlier remarks on the unsatisfactory nature of the neoclassical account of how the return on capital is determined. (See Strathclyde Discussion Paper 12-03: “The Marginal Productivity Theory of the Price of Capital: An Historical Perspective on the Origins of the Codswallop”). The point is made via a simple illustration that certain matters which are problematical in neoclassical terms are perfectly straightforward when viewed from a classical perspective. Basically, the marginalist model of the nature of an economic system is not fit for purpose in that it fails to comprehend the essential features of a surplus-producing economic system as distinct from one merely of exchange.

A New Index of Financial Conditions

We use factor augmented vector autoregressive models with time-varying coefficients to construct a financial conditions index. The time-variation in the parameters allows for the weights attached to each financial variable in the index to evolve over time. Furthermore, we develop methods for dynamic model averaging or selection which allow the financial variables entering into the FCI to change over time. We discuss why such extensions of the existing literature are important and show them to be so in an empirical application involving a wide range of financial variables.