Manufacturing Labor Productivity Research Articles

How Extensive are Air Pollution Spillovers? An Application to China’s Manufacturing Productivity

The economic costs of trans-boundary pollution spillovers versus local effects is a necessary input in evaluating centralized versus decentralized environmental policies. Directly estimating these for air pollution is difficult because spillovers are high-frequency and vary with distance while economic outcomes are usually measured with low-frequency and local pollution is endogenous. We develop an approach to quantify local versus spillover effects as a flexible function of distance utilizing commonly-available pollution and weather data. To correct for the endogeneity of pollution, it uses a mixed two-stage least squares method that accommodates high-frequency (daily) pollution data and low-frequency (annual) outcome data. This avoids using annual pollution data which generally yields inefficient estimates. We apply the approach to estimate spillovers of particulate matter smaller than 10 micrograms (PM10) on manufacturing labor productivity in China. A one μg/m3 annual increase in PM10 locally reduces the average firm’s annual output by CNY 45,809 while the same increase in a city 50 kilometers away decreases it by CNY 16,248. The spillovers decline quickly to CNY 2,847 at 600 kilometers and then slowly to zero at about 1,000 kilometers. The results suggest the need for supra-provincial environmental policies or Coasian prices quantified under the approach.

Agglomeration externalities and productivity growth: US cities, 1880–1930

AbstractWe investigate the role of industrial structure in labour productivity growth in manufacturing in US cities during the ‘second industrial revolution’. We find that initially greater specialization was associated with faster subsequent productivity growth but that only the very high levels of diversity which obtained in some very large cities had a positive correlation. We interpret our results as demonstrating the existence of dynamic Marshallian externalities. The impact of industrial specialization in our sample of US cities after 1890 is found to have raised the level of labour productivity in manufacturing by about 4 per cent by 1920.

Determining Whether the Chinese Services Industry Is Stagnant: An Empirical Test of Baumol’s Model

The effects of increasing employment share of services on the real GDP growth have been investigated by a series of theoretical and empirical analysis for developed countries. In contrast, there are few empirical test studies of such effects on macro economies for developing countries. Baumol predicts that the increasing employment share of services will lower real GDP growth and thus productivity growth in services. Based on the extended Baumol’s model of two-sector unbalanced growth, this study provides an empirical analysis of the causes of employment shift and the impact of rising share of services on the productivity growth in China. Though the GDP share and the employment share of services has been increasing secularly for decades in China, the growth rate of labor productivity in services is slightly higher than that in manufacturing. The results have not confirmed the Baumol’ hypothesis because of the low labor productivity in manufacturing and large number of rural labor. The external shocks of demand for services show weak effect on the employment growth in services and are not significant. Furtherly, the regression analysis shows that there is the potential possibility of cost disease in China. This study empirically tests the impact of the rising services on the overall economy and can help to develop appropriate industrial policies for developing countries.

Wages and Labour Productivity in African Manufacturing

AbstractWe examine the relationship between labour productivity and wages using a sample of manufacturing firms in 39 African countries. The analysis is based on the World Bank's enterprise survey data. Controlling for regressor endogeneity and country fixed effects, our main finding is that wages reflect labour productivity and worker skills. In addition, the adoption of management quality standards, foreign ownership, and location in the capital city are all positively associated with wages. Female workers and adverse business environments characterized by electricity outages and bribery are negatively associated with wages. These findings are robust to inclusion of control variables, alternative measures of labour productivity, and exclusion of firms located in upper middle income countries and North Africa.

Impact of Chinese, Korean and Japanese Innovation Spillover on Labour Productivity in South African Manufacturing

Open economy endogenous growth theories consider physical intermediate imports as a channel through which innovation spreads across international boundaries. We build from this literature and contribute by considering trade in services as the channel through which innovation from China, Korea and Japan influences labour productivity in South Africa’s manufacturing sector between 1995Q1 – 2017Q4. Unlike previous studies, we also compute a composite innovation index using the principal component analysis. Results from the autoregressive distributed lag model are supportive of open economy endogenous growth theories for Japan and Korea. However, for China, the effect is significantly negative adding further concerns over its predatory presence in South Africa.

The impact of temperature on manufacturing worker productivity: Evidence from personnel data

This paper presents novel evidence on the impact of temperature on daily indoor worker productivity in a non-climate-controlled manufacturing environment in China. Combining individual worker productivity data from personnel records with weather data, it documents an inverted-U shaped relationship between temperature and labor productivity. Workers do not increase avoidance behavior. The findings suggest that the economic loss from reduced manufacturing labor productivity due to ambient temperature is quantitatively important, providing new insights into the biological effects of climate factor on human labor. Further, back-of-the envelope calculations indicate that the estimated welfare gains from preventing extreme temperatures are substantial.

인천 제조업의 노동생산성 변이할당분석

인천 제조업의 노동생산성 변이할당분석

Manufacturing matters…but it’s the jobs that count

We assemble a large database of countries' manufacturing employment and output shares for 1970-2010. We ask whether increased global competition and labor-displacing technological change have made it more difficult for countries to industrialize in employment, and whether there are alternative routes to prosperity. We find that: (1) All of today's rich non- oil economies enjoyed at least 18% manufacturing employment shares in the past, and often did so before becoming rich; (2) Manufacturing employment peaks at lower incomes and shares today (typically below 18%), than in the past (often over 30%); (3) Although manufacturing labor productivity grew faster than non-manufacturing labor productivity within countries, they grew at similar rates globally, because factory jobs moved to less productive countries; and (4) Manufacturing's global employment share has not declined during the last 40 years. Industrialization has become more difficult, not because the sector has eliminated labor globally, but because of heightened international competition.

Deindustrialization? A Global Perspective

Recent studies show that, within countries, manufacturing labor productivity growth has outstripped aggregate labor productivity growth, putting significant downwards pressure on national manufacturing employment shares. We compile the first (nearly) global database of national manufacturing employment and output levels over time, and use it to document two facts seemingly at odds with these results: (1) the manufacturing sector’s share of global employment did not fall between 1970 and 2010; and (2) manufacturing and aggregate labor productivity at the global level grew at roughly the same rate. We show that this occurred because rapid within-country manufacturing productivity growth was counterbalanced by an equally rapid shift of manufacturing jobs towards lower productivity economies.

Integrated impact of highway infrastructure, labour productivity and circular material consumption on Indian manufacturing growth

PurposeManufacturing sector growth continues to be topical in the growth journey of Indian economy. The purpose of this paper is to present the modelling and analysis of the combined impact of three key driving sub-systems on the Indian manufacturing growth. It has provided relevant insights and recommendations for its sustainable growth.Design/methodology/approachThe impact of three key driving sub-systems: quality of highway-related infrastructure, manufacturing labour productivity and circular material-consumption in the growth of manufacturing has been studied. A System Dynamics (SD) based model to understand long-term implications of the policy variables on manufacturing growth has been developed. Five scenarios have been simulated for analysis.FindingsSeven policy variables have been identified which have a significant impact on Indian manufacturing growth. Some relevant insights from the analysis of SD based system-behaviour have been provided which would facilitate the manufacturing growth.Research limitations/implicationsThe paper has addressed the dynamics of only three sub-systems in the study of manufacturing growth. The other sub-systems which also have an impact on the manufacturing growth: Good governance, education quality and technology are recommended to be studied through SD based modelling.Practical implicationsSpecific recommendations for accelerating the manufacturing growth have been made in the paper which has strong practical implications for growth of Indian economy.Social implicationsManufacturing sector continues to have a significant impact on the prosperity of India. It facilitates in enhancement of employment and the micro-economic health aspects. Therefore, there is a need to understand the dynamics of the key policy variables affecting manufacturing growth which is very relevant for the society at large.Originality/valueAn application of the SD approach to analyse long-term implication of policy variables of three sub-systems that have a significant impact in manufacturing growth and five specific recommendations to the policy makers is the value-add.

Deindustrialization? A global perspective

Recent studies show that, within countries, manufacturing labor productivity growth has outstripped aggregate labor productivity growth, putting significant downwards pressure on national manufacturing employment shares. We compile the first (nearly) global database of national manufacturing employment and output levels over time, and use it to document two facts seemingly at odds with these results: (1) the manufacturing sector’s share of global employment did not fall between 1970 and 2010; and (2) manufacturing and aggregate labor productivity at the global level grew at similar rates. We show that these trends occurred because rapid within-country manufacturing productivity growth was counterbalanced by a shift of manufacturing jobs towards lower productivity economies.

A Tale of Two Tails: Establishment Size and Labour Productivity in United States and German Manufacturing at the Start of the Twentieth Century

This paper studies the importance of establishment size for the German/US labour‐productivity gap in manufacturing at the start of the twentieth century. First, we show that the left tail of the employment distribution by establishment size was larger in Germany than in the USA. Second, using US state data for 1909, we find a positive correlation between establishment size and labour productivity. Third, imposing the coefficients of these estimates on establishment‐size differences between Germany and the USA, we calculate that a redistribution of German employment to larger establishments, as in the USA, reduces the labour‐productivity gap by about 25 per cent.

Employment regulation and productivity: Is there a case for deregulation?

This article explores empirically the economic validity of the relatively limited approach to the regulation of employment protection pursued in the UK over the last three decades and within the European Union more recently. It does so by comparing the UK’s manufacturing labour productivity performance with those of three countries – France, Germany and Sweden – that possess more stringent employment protection laws. The findings reveal that while productivity growth in the UK was superior to France and Sweden, it was lower than in Germany. More generally, the study’s findings fail to support the existence of a straightforward negative relationship between regulatory stringency and productivity growth.

Output and labor productivity in organized manufacturing: A panel cointegration analysis for India

One of the policy puzzles faced in India during the last two and half decades has been the weak association between output and labor markets, particularly in the manufacturing sector. In this research, we investigate the long-run relationship between output, labor productivity and real wages in the case of organized manufacturing. We adjust the measure of labor productivity incorporating bottlenecks, such as lack of infrastructure, access to external finance, and labor regulations, which all may influence labor market outcomes. Using panel data from seventeen manufacturing industries, we establish long-run dynamics for the output-labor productivity-real wages series over a period of nearly three decades. We employ recently developed panel unit root and cointegration tests for cross-sectional dependence to incorporate heterogeneity across industries. Long-run elasticities are generally found to be low for labor productivity compared to real wages due to the changes in manufacturing output. There are variations across industries within the manufacturing sector for the effects of the labor market on manufacturing output. In some industries, lower wages are associated with higher output, and the reason for the positive relationship in other industries could be due to workers׳ bargaining power.

GREASE OR SAND THE WHEEL? THE EFFECT OF INDIVIDUAL BRIBES ON THE DRIVERS OF AGGREGATE PRODUCTIVITY GROWTH

The Asian paradox suggests a net grease-the-wheel effect of corruption. Under the assump-tion of diminishing returns to bribes, going beyond the single-representative-firm assumption,we argue that the grease and sand-the-wheel effects are likely to co-exist among a large numberof firms, and that the industrial effect of corruption depends on the productivity drivers that fuelfirm’s dynamics. We decompose Indonesian manufacturing labor productivity growth whilecontrasting and comparing the contributions of no-, low- and high-bribing firms over the period1975-94. We confirm the coexistence of grease and sand-the-wheel effects. Industrial produc-tivity gains stem first from the net entry of non-corrupted firms, evidencing a sand-the-wheeleffect. Market share reallocation from low to high productivity growth incumbents paying lowbribes is the second source of productivity growth, pointing at a grease-the-wheel effect. Intra-plant productivity growth is overall negative and largely attributable to high-corruption plants,suggesting a sand-the-wheel effect.Keywords: corruption, bribery, productivity

GREASE OR SAND THE WHEEL? THE EFFECT OF INDIVIDUAL BRIBES ON THE DRIVERS OF AGGREGATE PRODUCTIVITY GROWTH

The Asian paradox suggests a net grease-the-wheel effect of corruption. Under the assump-tion of diminishing returns to bribes, going beyond the single-representative-firm assumption,we argue that the grease and sand-the-wheel effects are likely to co-exist among a large numberof firms, and that the industrial effect of corruption depends on the productivity drivers that fuelfirm’s dynamics. We decompose Indonesian manufacturing labor productivity growth whilecontrasting and comparing the contributions of no-, low- and high-bribing firms over the period1975-94. We confirm the coexistence of grease and sand-the-wheel effects. Industrial produc-tivity gains stem first from the net entry of non-corrupted firms, evidencing a sand-the-wheeleffect. Market share reallocation from low to high productivity growth incumbents paying lowbribes is the second source of productivity growth, pointing at a grease-the-wheel effect. Intra-plant productivity growth is overall negative and largely attributable to high-corruption plants,suggesting a sand-the-wheel effect.Keywords: corruption, bribery, productivity

Output growth in German manufacturing, 1907–1936. A reinterpretation of time-series evidence

This study uses state space time series analysis to estimate output growth in German manufacturing between 1907 and 1936. In the absence of net-output data, previous research has estimated output change using proxy variables. Various proxy-based output series are available that imply either a 25% German labor-productivity lead over Britain or a parity of performance in 1907. The conventional strategy to deal with this conundrum involves a choice between the series. With the correlation between the different proxies and output unknown, such a choice is inappropriate because it results in the loss of information provided by the rejected proxies. Instead, this study makes full and efficient use of all information by estimating a common component in the various output series. The new estimate of output change implies a German lead over Britain in manufacturing labor productivity of 4.4% in 1907.

Manufacturing MatterssBut It's the Jobs that Count

We assemble a large database of countries’ manufacturing employment and output shares for 1970-2010. We ask whether increased global competition and labor-displacing technological change have made it more difficult for countries to industrialize in employment, and whether there are alternative routes to prosperity. We find that: (1) All of today’s rich nonoil economies enjoyed at least 18% manufacturing employment shares in the past, and often did so before becoming rich; (2) Manufacturing employment peaks at lower incomes and shares today (typically below 18%), than in the past (often over 30%); (3) Although manufacturing labor productivity grew faster than non-manufacturing labor productivity within countries, they grew at similar rates globally, because factory jobs moved to less productive countries; and (4) Manufacturing’s global employment share has not declined during the last 40 years. Industrialization has become more difficult, not because the sector has eliminated labor globally, but because of heightened international competition.

Wpływ wybranych czynników w Polsce na produktywność zasobów w przetwórstwie przemysłowym ze szczególnym uwzględnieniem przetwórstwa żywności

The study assesses the level of selected factors and their impact on the productivity of the food industry against the background of manufacturing in the years 1995–2011. The influence of wages, investment, innovation and technical infrastructure on labor productivity in manufacturing and food industries was observed. The impact of investment and innovation on total productivity, as well as investment in capital productivity and innovation on labor productivity in manufacturing was revealed (correlation coefficients were high and statistically significant). The coefficients of determination in most of these cases showed a good fit of regression models to empirical data. The level of productivity factors was generally lower in the food industry than in manufacturing. However, there was an increase in investment activity and innovation and technical equipment working in the food industry during the Polish accession to the EU. However, to continue productivity growth of the food industry in the long term, it will be necessary to make non-technological innovation.

An Analysis of Differences in Labour Productivity in Manufacturing: Spain and Germany, 1993-2007

L'objectiu d'aquest article es dur a terme una analisi comparativa de la productivitat del treball en el sector de les manufactures entre Espanya i Alemanya en el periode 1993-2007 amb la finalitat d'identificar els factors determinants que dificulten el creixement continu de la productivitat en la industria espanyola. La motivacio es esbrinar si les diferencies en la productivitat es deuen principalment a diferents estructures productives o si es deuen principalment a un problema intrinsec de la propia productivitat industrial o una combinacio de tots dos. Els resultats indiquen que les diferencies en l'estructura sectorial de la industria manufacturera no justifiquen en bona mesura la bretxa en la productivitat. Concloem que es mes un problema de velocitat de convergencia de les estructures de produccio, que no pas d'absencia de canvis.