Effects Of Productivity Growth Research Articles

Estimating Who Benefits from Productivity Growth: Local and Distant Effects of City Productivity Growth on Wages, Rents, and Inequality

Abstract We first estimate the direct effects on local workers’ earnings and housing costs from increases in local labor demand caused by gains in city-level manufacturing productivity. We find that local workers benefit from productivity growth, even after subtracting increases in housing costs. These gains are larger for local less educated workers, such that productivity growth reduces local inequality. We then propose and implement a new transparent method of estimating indirect effects of local productivity growth on earnings and housing costs of workers in other cities. We find that these general equilibrium effects are economically important and disproportionately benefit college-educated workers.

Productivity Growth Effects of FDI Spillovers: Evidence from the Türkiye Manufacturing Industries

This study explores the productivity growth effects of horizontal, backward, and forward FDI spillovers in the Türkiye manufacturing sector using industry-level data for the period 2008–2018. While controlling for capital intensity and human capital as proxies for the absorption capacity, we apply system GMM and bootstrapped LSDV estimator to estimate the models. Our findings reveal that backward linkages significantly hamper industrial productivity due to the rudimentary nature of the products in the downstream sector or lack of absorption capacity. While horizontal spillovers retard the productivity growth; forward linkages enhance the growth, though all insignificant. The results depict that all the interactions with capital intensity strongly promote industrial productivity growth.

Productivity and Exports: An Industry-Level Analysis of the Service Sector in India

The large share of the service sector and its status as a net exporter raise concerns about the sustainability of such growth for a developing economy like India. Given the context, the present article attempts to examine the productivity dynamics of the service sector in India at the industry level. We use the India KLEMS dataset to identify the trends in total factor productivity (TFP) growth and the growth in factor inputs. By uniquely combining the India KLEMS dataset with the trade values in the Extended Balance of Payments Services classification, we examine the dynamics between TFP growth and exports of services using panel vector autoregression technique. The trends in factor inputs show that there is capital deepening within services and the growth in employment remained comparatively lower. The results indicate a feedback effect of exports and productivity growth within the service sector. Additionally, we note that the use of more skilled labour that is better equipped to handle new technology also contributes to growth in the service sector, both in terms of productivity and exports.

Does Total Factor Productivity Growth Ameliorate Socio-Economic Stance? New Findings from Central and Eastern Europe

Abstract National income calculations may not include knowledge that directly concerns the socioeconomic stance in an economy. Knowledge plays a significant role in promoting the economic growth of a country; however, its socio-economic role has received little attention in the literature. Total factor productivity, which is the main source of long-term economic prosperity, expresses the increase in productivity in all production factors. This paper attempts to quantify the effects of total factor productivity growth on economic prosperity. The analysis is conducted for the 2007-2020 period and 18 Central Eastern Europe countries. The “Legatum Prosperity Index” is utilized in the econometric analysis, in line with the purpose of the study. Results of the study with panel ordinary least squares, panel fixed-effects, panel random effects, panel-corrected standard errors (robustness check), and system-generalized method of moments (robustness check) confirm that total factor productivity growth positively correlated with economic prosperity.

Do regional integration and trade linkages promote productivity spillovers? Evidence from the European Union

ABSTRACT This study examines the productivity and efficiency spillovers in the presence of trade linkages in 27 European Union countries from 1990 to 2019. The European Union is one of the largest trading blocs in the world and has implemented costly policies and reforms to improve productivity growth. Meanwhile, trade-induced productivity and efficiency spillovers have often been overlooked in the literature, and examining them could provide further clarity to the productivity puzzle. Using a spatial Durbin model and a bilateral trade matrix, this study estimates a spatial stochastic production frontier model using data from the Penn World Table and the World Integrated Trade Solution. We decompose production frontier estimates to obtain the spillover effects of total factor productivity growth and technical efficiency from a network of bilateral trading partners. Our results provide evidence of productivity and efficiency spillovers; however, the gains are uneven. Policy implications are discussed.

The Balassa-Samuelson model with job separations

We incorporate sectoral job separation rates in a small open economy model to examine the Balassa-Samuelson (B-S) effect. Unequal separation rates give rise to compensating wage differentials. We simulate the model for Japan and replicate a feature of its economy that the nontradeables sector has higher wages and a higher separation rate compared to the tradeables sector. With productivity growth in the tradeables sector, labour moves from the tradeables sector to the nontradeables sector if tradeables and nontradeables are complements in consumption. The B-S effect is dampened. With a higher separation rate in the nontradeables sector, higher wages in the nontradeables sector amplifies this labour movement. Nevertheless, unemployment always falls due to a positive income effect. In contrast, the effect of productivity growth in the nontradeables sector is to lower the real exchange rate and raise unemployment.

Incentive regulation, productivity growth and environmental effects: the case of electricity networks in Great Britain

We analyse the productivity growth of electricity transmission and distribution networks in Great Britain and how changes in incentive mechanism have influenced the measured total factor productivity. In doing so we are also concerned to examine the effects of quality of service and environmental targets on measured productivity growth. It is increasingly important that productivity measures adjust for the increasing regulatory pressure to reduce the wider societal impacts of the electricity sector and improve quality of service. Failure to do so, may mean that productivity growth may look slower than it actually is. We employ a Data envelopment analysis technique which considers the underlying data without a stochastic element. Our findings show that productivity growth is consistently low for the period we examine, in the region of 1% p.a. over the 29 years from 1990/1991–2018/2019. For both electricity transmission and electricity distribution we try to monetise a wider range of quality and emissions variables in order to show the difference their inclusion makes to measured productivity growth. We show that it can make a difference both positively and negatively, though often this difference is small (e.g. 0.1% p.a.). However, the impact can be much larger (c. 1% p.a.), especially with respect to improvements in quality of service in the distribution network. In the context of generally slow productivity growth, we therefore show the importance of appropriate measurement.

Industrial energy consumption and pollutant emissions: Combined decomposition of relative performance and absolute changes

AbstractCombined decomposition of relative productivity growth and absolute changes in input/output variables helps to identify the driving forces of energy conservation and emission reduction. This paper proposes a framework based on the Luenberger productivity indicator (LPI) and the logarithmic mean Divisia index (LMDI) approach to analyze the energy–economy–environment nexus. The empirical case of the China's industrial sector for 2006–2014 is analyzed. Following this approach, we present a variable‐specific decomposition framework which attributes the overall productivity change and its sources to individual input/output variables. Empirically, we examine the relationships between the productivity growth and energy consumption within the LPI–LMDI framework across China's province‐level regions. The results show important spatial variation in the productivity measures. The LPI–LMDI decomposition implies that the industrial energy consumption increased with productivity growth appearing as the only mitigating factor. As regards the industrial SO2 emission, the individual productivity growth effect and the efficiency change effect remained as suppressing factors for emission abatement. These results can be used for evidence‐based decision making.

Structural change and the skill premium in a global economy

We develop a multi-country general equilibrium model with structural change to investigate the factors affecting the global changes in the skill premium between 1997 and 2007. Trade and technological change increase the skill premium by inducing reallocations to skill-intensive sectors. We apply our three-sector framework to 37 countries, and the model accounts completely for countries’ trade, sales, consumption, and skill premium in terms of different types of fundamental shocks. Technological changes, both skill biased and Hicks neutral, account for most of the increases in the skill premium. The effects of Hicks-neutral total factor productivity growth act through structural change.

Labour markets in a Post-Keynesian growth model: the effects of endogenous productivity growth and working-time reduction*

The paper studies endogenous employment and distribution dynamics in a Post-Keynesian growth model of the Kalecki–Steindl tradition. Productivity adjustments stabilise employment and the labour share in the long run: technological change allows firms to replenish the reserve army of workers in a struggle over income shares and thereby keeps wage demands in check. Labour market dynamics follow from separate wage and price curves. The authors discuss stability conditions and the equilibrium dynamics and investigate how legal working time and its reduction affect this equilibrium.

Analisis pengaruh produktivitas tenaga kerja, ketimpangan pendapatan, dan investasi terhadap pertumbuhan ekonomi di Indonesia periode 2009-2018

This study aims to analyze the effect of labor productivity, income inequality, and investment oneconomic growth in Indonesia. The data used is panel data consisting of time series data for 2009 -2018 and a cross section of 34 provinces in Indonesia. The variables used are economic growth,labor productivity, income inequality, and investment. The analysis tool used is panel dataregression, namely the Fixed Effect Model (FEM). The results showed that labor productivity had apositive and significant effect on economic growth, income inequality had a negative andsignificant effect, while investment had no effect on economic growth in 34 provinces in 2009-2018.

Service-Led or Service-Biased Growth? Equilibrium Development Accounting Across Indian Districts

In many developing countries today, the structural transformation is a shift of employment out of agriculture into the service sector. By contrast, industrial employment is mostly stagnant. Is the service sector an engine of growth and hence growth service led? Or is its expansion a mere corollary of growth, where rising incomes stemming from productivity growth in goods-producing industries increases the demand for services? To determine whether growth is service led or service biased, we estimate a spatial equilibrium model with nonhomothetic preferences. Our methodology is in the spirit of development accounting and lends itself to a quantitative assessment of both the aggregate and the heterogenous welfare effects of sectoral productivity growth. In an application to India, we find that productivity growth in consumer services such as retail and hospitality was an important driver of rising living standards between 1987 and 2011. However, such benefits were highly skewed and accrued mostly to high-income households living in urbanized locations. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Synergetic nature of oil and gas reservoir behavior and its influence on the efficiency of opening and increase well productivity

The article continues the author’s series of works on the application of synergetic theory to understand and describe the processes and phenomena that accompany the search and development of mineral resources. The research results show that the synergetic theory is universal and allows to understand and describe a wide range of phenomena and processes that occur in geological exploration and mining: dynamic phenomena in mines (outbursts of rocks and coal), spontaneous сombustion of сoal in coal mines, emergency outbursts of oil and gas from exploration wells, destruction of high-pressure pipelines, geodynamic phenomena in quaternary deposits, sedimentary rocks, and in the geological structures of the crystalline basement. One of the signs of processes and phenomena that have a synergistic nature is the nonlinear nature of the system’s response to weak perturbations. Minor disturbances slightly change the structure of geological material, in some cases change the mechanical and physical properties of formation fiuids. This creates the conditions for disturbing the unstable equilibrium of the system at the bifurcation points and its transition to another equilibrium state with other thermodynamic parameters that characterize the new state of the system. Such transitions are characterized by kinetic and phase transitions. In particular, in the reservoir rock, in coal, micro- and macrocrack systems are formed and developed. The shape of dissipative structures is described using fractal theory. The duration of self-organization of dissipative structures and the transition of the system to a new equilibrium state depends on the type of dissipative structures, the properties of the environment in which they are formed, and the speed of physicochemical processes.
 The article considers the behavior of the system “well – rock formation” as an open thermodynamic system. The internal energy of the formation is compared with the energy of external explosive action from the well. Specific examples show that the behavior of such a system is subject to the laws of synergetics and as a result of weak action on the formation from the well there are significant nonlinear effects of productivity growth due to the internal energy of the formation. This energy is generated by reservoir and rock pressures.

Green Growth Effects of High-Speed Rail in China: The Role of Industrial Transformation

ABSTRACT This paper presents the first empirical attempt to examine the impacts of high-speed rail (HSR) and industrial transformation on China’s ecological efficiency (EE), using a data set of 251 cities during 2003–2016. Results show that instituting HSR is beneficial to green growth; a one-point increase in HSR leads to approximately 2% growth in EE. The potential mechanism test indicates that HSR significantly improved EE through industrial transformation, and did so economically. We also found that HSR strengthened impacts of static and dynamic industrial transformation on EE. However, the productivity growth effect of HSR was not statistically significant.

Extending production-theoretical decomposition analysis to environmentally sensitive growth: Case study of Belt and Road Initiative countries

Exploring the driving factors of environmentally sensitive growth in Belt and Road Initiative (BRI) countries is crucial to the green BRI and realizing sustainable development goals. This study extends the production-theoretical decomposition analysis framework to environmentally sensitive growth. Using data from 52 BRI countries from 1992 to 2014, the proposed approach decomposes environmentally sensitive growth change into productivity growth effect, input change effect, and potential output change effect. We find that the potential output change effect plays the most significant role, followed by the input change effect, while the productivity growth effect does not contribute significantly to environmentally sensitive growth. These three effects are further decomposed into seven driving factors. Within the potential output change effect, the contribution of the potential GDP change factor is greater than the contribution of the carbon dioxide emissions change factor. The energy change factor contributes most to environmentally sensitive growth among the input change effects. Additionally, the technical efficiency change factor is more significant for the productivity growth effect than the best practice gap change factor. The findings suggest that advocating low-carbon infrastructure investment, exerting the spillover effect of technology, and adopting a low carbon development national strategy are policies toward achieving the Sustainable Development Goals.

Are the most productive regions necessarily the most successful? Local effects of productivity growth on employment and earnings

AbstractEconomists typically celebrate productivity growth as the chief way to improve living standards. Productivity growth may reduce costs, improve quality, or lead to innovation and new products, but if demand is insufficiently elastic, productivity growth can lead to weakening of labor markets. We study county‐level effects of productivity growth and productivity levels on growth in employment, income, and earnings. The results suggest that productivity growth generally suppresses job growth but has boosting effects on earnings and, to a lesser degree, on per‐capita income, although there is considerable variation across geographies and specific outcomes.

The Effect of the Sectoral Composition of Economic Growth on Rural and Urban Poverty*

We examine the relationship between the sectoral composition of economic growth and the rural‐urban composition of poverty. To this end, we use a cross‐country panel dataset consisting of 146 rural and urban poverty “spells” for 70 low‐ and middle‐income countries. We find that rural (urban) poverty is highly responsive to agricultural (non‐agricultural) productivity growth. The effect of agricultural productivity growth on rural poverty is particularly strong for countries with little dependence on natural resources. We also find that growth in the share of employment in the non‐agricultural sector (i.e. structural transformation) reduces rural poverty, most notably for countries at a low initial level of development. These findings are robust to changes in key assumptions, including using alternative poverty lines. Finally, we use our estimates to examine the past contribution of different sources of economic growth to rural and urban poverty reduction across regions.

STRUCTURAL CHANGES AND AGRARIAN CRISES IN KARNATAKA: ANALYSIS OF EMERGING EVIDENCE

Agriculture is the primary occupation of most of Karnataka's rural residents. A total of 123,100 km² of land is cultivated in Karnataka, constituting 25.3% of the total geographical area of the state. Agriculture in Karnataka is heavily dependent on the southwest Monsoon since the extent of arid land in the state is second only to Rajasthan. Only 26.5% of sown area (30,900 km²) is subjected to irrigation. The state has three agricultural seasons – Kharif (April to September), Rabi (October to December) and summer (January to March). This study exploits the rapid technological improvement and development during the Green revolution to estimate the effects of agricultural productivity growth on structural change both in Karnataka and across country. The process of development requires structural change. The structural change of an economy takes place mainly along two dimensions: one is the changing sector-wise shares in GDP and the second is the changing share of the labour force, engaged in each sector. In case of Karnataka State economy, it is seen that as a first step, the agriculture sector loses its importance with a simultaneous growth of the manufacturing sector and tertiary sector. In Karnataka State, the service sector has grown by by-passing the secondary sector. Structural changes in agricultural sector it is also one type of the agrarian crises in Karnataka state. Agriculture is mainly depends upon monsoon so rural people more interested to go urban area due to getting jobs and were wages are high compared to village. Agricultural sector facing problem of agricultural labour due to agricultural labourers are shifted to urban area because of wages in agriculture sector is low compared to urban wages. In this context, this chapter is an attempt to mark out the structural change in terms of input structure, production structure and employment structure. KEY WORDS: primary sector, Secondary sector, Tertiary sector, Agriculture, Agricultural crops cropping pattern, Cropping pattern.

Macroeconomic effects of semi-subsistence agricultural productivity growth: Evidence from Benin and extension to the WAEMU countries

This paper studies the macroeconomic effects of an agricultural productivity growth in a semi-subsistence agriculture. To that end, a dynamic computable general equilibrium (CGE) model is used with the 2015 social accounting matrix (SAM) data of Benin. The results, with a few exceptions, are then extended to the West African Economic and Monetary Union (WAEMU) countries based on their SAM data. The simulation results suggest that an agricultural productivity growth could improve the overall economic growth, reduce trade deficit and enable an increase in households’ incomes as well as government revenues. In particular, the food industry and the salary earning households appear to be the main beneficiaries. Overall, these results suggest that public policies that promote growth in food crops productivity may turn out to be more effective in achieving greater economic performance and poverty reduction.

Moving off Agrarian Societies: Agricultural Productivity to Facilitate Economic Transformations and Non‐agricultural Employment Growth in Sub‐Saharan Africa

AbstractThe main objectives of this work are two‐fold: we seek first to specify the relationship between agricultural productivity and non‐agricultural employment and second to assess the effect of productivity growth on the employment of the off‐farm sector in the long run. The econometric results of our panel vector autoregressive depict a causal relationship with single direction from agricultural productivity to non‐agricultural employment. Between productivity and inequalities, causality seems to function only from productivity to inequalities. This explains the fact that productivity growth generates significant inequalities in the distribution of income, which is necessary to enhancing investments in the agricultural sector. © 2019 John Wiley & Sons, Ltd.