Boosting Productivity via Innovation and Adoption of New Technologies : Any Role for Labor Market Institutions?
The authors present empirical evidence on the determinants of industry-level multifactor productivity growth. They focus on "traditional factors," including the process of technological catch up, human capital, and research and developmen...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/04/3227079/boosting-productivity-innovation-adoption-new-technologies-role-labor-market-institutions http://hdl.handle.net/10986/14748 |
| Summary: | The authors present empirical evidence
on the determinants of industry-level multifactor
productivity growth. They focus on "traditional
factors," including the process of technological catch
up, human capital, and research and development (R&D),
as well as institutional factors affecting labor adjustment
costs. Their analysis is based on harmonized data for 17
manufacturing industries in 18 industrial economies over the
past two decades. The disaggregated analysis reveals that
the process of technological convergence takes place mainly
in low-tech industries, while in high-tech industries,
country leaders tend to pull ahead of the others. The link
between R&D activity and productivity also depends on
technological characteristics of the industries: while there
is no evidence of R&D boosting productivity in low-tech
industries, the effect is strong in high-tech industries,
but the technology leaders tend to enjoy higher returns on
R&D expenditure compared with followers. There is also
evidence in the data that high labor adjustment costs
(proxied by the strictness of employment protection
legislation) can have a strong negative impact on
productivity. In particular, when institutional settings do
not allow wages or internal training to offset high hiring
and firing costs, the latter reduce incentives for
innovation and adoption of new technologies, and lead to
lower productivity performance. Albeit drawn from the
experience of industrial countries, this result may have
relevant implications for many developing economies
characterized by low relative wage flexibility and high
labor adjustment costs. |
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