Parallel Development? Productivity Growth Following Electrification and the ICT Revolution

This study consists of an examination of productivity growth following three major technological breakthroughs: the steam power revolution, electrification and the ICT revolution. The distinction between sectors producing and sectors using the new technology is emphasized. A major finding for all breakthroughs is that there is a long lag from the time of the original invention until a substantial increase in the rate of productivity growth can be observed. There is also strong evidence of rapid price decreases for steam engines, electricity, electric motors and ICT products. However, there is no persuasive direct evidence that the steam engine producing industry and electric machinery had particularly high productivity growth rates. For the ICT revolution the highest productivity growth rates are found in the ICT-producing industries. We suggest that one explanation could be that hedonic price indexes are not used for the steam engine and the electric motor. Still, it is likely that the rate of technological development has been much more rapid during the ICT revolution compared to any of the previous breakthroughs.

This paper investigates labor productivity growth and the contribution to labor productivity growth in Swedish manufacturing during the diffusion of electric motors and ICT. The paper distinguishes between technology-producing, intensive and less intensive technology-using industries during these technological breakthroughs. The results show that labor productivity growth and the overall contribution to labor productivity growth was considerably higher in technology-producing industries following the diffusion of ICT. Moreover, the results presented here show no evidence that industries that were early adopters of electric motors and ICT, on average, would have contributed more to productivity growth in Swedish manufacturing.

This paper examines the tendencies of Lithuanian services sector’s value added and labour productivity during 1995-2006. Comparative analysis of the average annual labour productivity growth in manufacturing and service industries reveals arguments supporting the W. Baumol’s consideration that there can be sporadic productivity increases in nonprogressive sectors. During 1995-2000, labour productivity growth in services exceeded productivity growth in manufacturing. The paper offers an interpretation of the Verdoom law for empirical regularities of the relationship between the cross-sectorial labour productivity growth rate and the value added growth rate.

Intangible Investment and the Swedish Manufacturing and Service Sector Paradox

Intangible Investment and the Swedish Manufacturing and Service Sector Paradox

Labour productivity growth in manufacturing is decomposed into technical efficiency change (movement towards or away from the frontier), technological progress (shifts in the production frontier), and capital accumulation (movement along the frontier) using a nonparametric production frontier method. The results suggest that labour productivity growth is primarily driven by capital accumulation and to a lesser extent technological progress, while technical efficiency is deteriorating over the period 1995–2014. We find that technological progress appears to be non-neutral, as the world manufacturing production frontier expands only at higher capital intensities, benefiting highly industrialized nations. We also find evidence of unconditional convergence in labour productivity for the manufacturing sector. Capital accumulation is the main driver of the observed unconditional convergence, whereas technological change is contributing to divergence rather than convergence. The findings suggest that expanding manufacturing activities through capital accumulation is essential for developing countries to catch-up with developed countries.

The Swedish ICT miracle — myth or reality?

Are price indexes biased upward because of quality change? One of the few pieces of firm evidence on this question is the study by Zvi Griliches (1961, 1964), who concluded that almost all of the recorded rise in the new automobile component of the Consumer Price Index (CPI) between 1954 and 1960 could be attributed to substantial improvement in the quality of automobiles. In view of the ubiquity of the quality problem in index number construction and the paucity of knowledge on the nature and extent of quality change, it is not surprising that Griliches' findings have been cited extensively in support of the charge that there is serious upward bias in our price indexes because of failure to make sufficient allowance for quality improvement. The present paper is devoted to further consideration of the problem. For the 1960-65 period, it is found that the Hedonic measures employed by Griliches indicate negligible quality improvement in automobiles and provide no substantiation for the belief in an upward quality bias in the CPI. However, certain biases in the Hedonic indexes themselves limit their validity as measures of quality change.

This paper is a survey of recent contributions to, and developments of, the relationship between outsourcing, efficiency and productivity growth in manufacturing and services. The objective is to provide a thorough and up–to–date survey that provides a significant discussion on data, as well as on the core methods of measuring efficiency and productivity. First, the readers are introduced to the measurement of partial and total factor productivity growth. Different parametric and non–parametric approaches to the productivity measurement in the context of static, dynamic and firm–specific modelling are discussed. Second, we survey the econometric approach to efficiency analysis. The issues of modelling, distributional assumptions and estimation methods are discussed assuming that cross–sectional or panel data are available. Third, the relationship between outsourcing and productivity growth in manufacturing and services is discussed. The correspondence between a number of hypotheses and empirical findings are examined. Examples of varieties of relevant empirical applications, their findings and implications are presented. Fourth, measurement of inputs and outputs in manufacturing and services are discussed. Finally, to promote useful research, a number of factors important to the analysis of outsourcing, efficiency and productivity growth in the service sector are summarised.

The mobility of production factors is one of the important factors influencing the growth of labor productivity, and the relationship between them can be explained by the Structural-Bonus Hypothesis. In other words, when factors of production move from a sector with a low productivity to a sector with a high productivity or from a sector with slow growth in productivity to a sector with fast growth in productivity, it will promote the increasing of productivity. In this paper, we use the shift-share method to study the impact of labor mobility among the three industries on the growth of labor productivity. It is found that labor mobility has a positive effect on the growth of productivity, that is, the Structural-Bonus Hypothesis exists, but it does not always exist. Labor mobility sometimes inhibits the growth of productivity. The growth of labor productivity in China largely depends on industry internal effect, such as the progress of technology, the promotion of laborers' quality and so on. Therefore, the more reasonable distribution of factors of production among the three industries is, the more conducive it is to the growth of labor productivity.

This paper examines the link between information and communication technology (ICT) and New Zealand's labour productivity (LP) growth in 29 industries over the period 1988-2003, and over relevant sub-periods. After deriving an ICT intensity index in order to classify industries into 'more ICT intensive' and 'less ICT intensive', we compare LP growth rates for these two industry groupings. Further, we employ dummy variable regression models, including difference-in-difference models, to more formally test the relationship between ICT intensity and LP growth. The results prove to be sensitive to the time period specified. When breaks in the data series are taken into account, there seems to be support for the view that LP growth of more ICT intensive industries has improved over time relative to that of less ICT intensive industries, even though overall LP growth was weak. To put it differently, the restrained New Zealand LP performance apparent from our data seems to have been due mainly to the decline in LP growth of less ICT intensive industries. Our results illustrate that lack of overall productivity growth per se is not necessarily evidence against the beneficial productivity impacts of ICT. Rather, the proper comparison is that between the productivity performance of more ICT intensive versus less ICT intensive industries. However, our results can only be taken as suggestive, given the fact that ICT is but one of the determinants of LP, and given the many inherent measurement problems.

In this paper, we use firm‐level data on the universe of Italian manufacturing multi‐product exporters to test whether demand shocks in export markets lead multi‐product exporters to increase their productivity. The main mechanism behind the documented productivity gains is the reallocation of resources across products within firms (American Economic Review, 104, 2014 and 495; National Bureau of Economic Research Working Paper Series No. 22433, 2016). Intuitively, the increased demand stemming from foreign markets will induce firms to adjust their product mix by moving inputs from low to high productive/profitable uses. We find that these productivity gains are significant and can explain between 1/10 and 1/2 of aggregate productivity growth in the manufacturing sector.

Productivity growth in Asian manufacturing: the structural bonus hypothesis examined

Understanding the determinants of company productivity and annual employee productivity growth is essential, especially for companies in sub-Saharan Africa. The existing literature has not differentiated the effects of skilled labor (permanent and temporary) in production from all skilled workers in the firm, which will have differential effects on annual labor productivity growth. Current literature also needs to empirically document the top management experience contributing to labor productivity growth. This paper explores the multifaceted aspects of labor productivity growth, focusing on the portion of skilled workers, years of the top manager's working experience in the firm's industry, a portion of permanent workers, and capital equipment, utilizing the micro-level data from the Enterprises Survey database (2006-2018). The findings identified the top manager's experience in the industry and permanent workers as the most significant yearly labor productivity growth contributors, followed by the firm's capital equipment. In contrast, the combination of skilled workers (temporary and permanent) in production has an insignificant relationship with annual labor productivity growth, implying that permanent workers' and top managers' experience matters in a firm's productivity growth.

This chapter provides an overview of labor and total factor productivity growth in the manufacturing sector in the United States from colonial times to the present. An introductory section defines concept and terms. This is followed by an historical survey of improvement in the eighteenth and nineteenth centuries, and sections on the manufacturing revolution of the 1920s and the sector’s contribution during the Great Depression. The remainder of the chapter provides a quantitative perspective on manufacturing productivity growth and its contribution to the overall economy from the end of World War I through the first decade of the twenty-first century.