-
The Relation among Human Capital, Productivity and Market Value: Building Up from Micro Evidence
December 2002
Working Paper Number:
tp-2002-14
This paper investigates and evaluates the direct and indirect contribution of human capital
to business productivity and shareholder value. The impact of human capital may occur in two ways:
the specific knowledge of workers at businesses may directly increase business
performance, or a skilled workforce may also indirectly act as a complement to improved
technologies, business models or organizational practices. We use newly created firm-level
measures of workforce human capital and productivity to examine links between those measures
and the market value of the employing firm. The new human capital measures come from an
integrated employer-employee data base under development at the US Census Bureau. We link
these data to financial information from Compustat at the firm level, which provides measures of
market value and tangible assets. The combination of these two sources permits examination of
the link between human capital, productivity, and market value. There is a substantial positive
relation between human capital and market value that is primarily related to the unmeasured
personal characteristics of the employees, which are captured by the new measures.
View Full
Paper PDF
-
Productivity, Investment in ICT and Market Experimentation: Micro Evidence from Germany and the U.S.
February 2003
Working Paper Number:
CES-03-06
In this paper, we examine the relationship between the use of advanced technologies, such as information and communications technologies (ICT), and related business practices and outcomes such as productivity, employment, the skill mix of the workforce and wages using micro data for the U.S. and Germany. . We find support to the idea that U.S. businesses engage in experimentation in a variety of ways not matched by their German counterparts. In particular, there is greater experimentation amongst young US businesses and there is greater experimentation among those actively changing their technology. This experimentation is evidenced in a greater dispersion in productivity and in related key business choices, like the skill mix and Internet access for workers. We also find that the mean impact of adopting new technology is greater in U.S. than in Germany. Putting the pieces together suggests that U.S. businesses choose a higher mean, higher variance strategy in adopting new technology.
View Full
Paper PDF
-
Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects
February 2020
Working Paper Number:
CES-20-08
We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom.
View Full
Paper PDF
-
Technology and Jobs: Secular Changes and Cyclical Dynamics
September 1996
Working Paper Number:
CES-96-07
In this paper, we exploit plant-level data for U.S. manufacturing for the 1970s and 1980s to explore the connections between changes in technology and the structure of employment and wages. We focus on the nonproduction labor share (measured alternatively by employment and wages) as the variable of interest. Our main findings are summarized as follows: (i) aggregate changes in the nonproduction labor share at annual and longer frequencies are dominated by within plant changes; (ii) the distribution of annual within plant changes exhibits a spike at zero, tremendous heterogeneity and fat left and right tails; (iii) within plant secular changes are concentrated in recessions; and (iv) while observable indicators of changes in technology account for a significant fraction of the secular increase in the average nonproduction labor share, unobservable factors account for most of the secular increase, most of the cyclical variation and most of the cross sectional heterogeneity.
View Full
Paper PDF
-
The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade
August 2002
Working Paper Number:
CES-02-18
Understanding the nature and magnitude of resource reallocation, particularly as it relates to productivity growth, is important both because it affects how we model and interpret aggregate productivity dynamics, and also because market structure and institutions may affect the reallocation's magnitude and efficiency. Most evidence to date on the connection between reallocation and productivity dynamics for the U.S. and other countries comes from a single industry: manufacturing. Building upon a unique establishment-level data set of U.S. retail trade businesses, we provide some of the first evidence on the connection between reallocation and productivity dynamics in a non-manufacturing sector. Retail trade is a particularly appropriate subject for such a study since this large industry lies at the heart of many recent technological advances, such as E-commerce and advanced inventory controls. Our results show that virtually all of the productivity growth in the U.S. retail trade sector over the 1990s is accounted for by more productive entering establishments displacing much less productive exiting establishments. Interestingly, much of the between-establishment reallocation is a within, rather than betweenfirm phenomenon.
View Full
Paper PDF
-
Rising Markups or Changing Technology?
September 2022
Working Paper Number:
CES-22-38R
Recent evidence suggests the U.S. business environment is changing, with rising market concentration and markups. The most prominent and extensive evidence backs out firm-level markups from the first-order conditions for variable factors. The markup is identified as the ratio of the variable factor's output elasticity to its cost share of revenue. Our analysis starts from this indirect approach, but we exploit a long panel of manufacturing establishments to permit output elasticities to vary to a much greater extent - relative to the existing literature - across establishments within the same industry over time. With our more detailed estimates of output elasticities, the measured increase in markups is substantially dampened, if not eliminated, for U.S. manufacturing. As supporting evidence, we relate differences in the markups' patterns to observable changes in technology (e.g., computer investment per worker, capital intensity, diversification to non-manufacturing) and find patterns in support of changing technology as the driver of those differences.
View Full
Paper PDF
-
Twisting the Demand Curve: Digitalization and the Older Workforce
November 2020
Working Paper Number:
CES-20-37
This paper uses U.S. Census Bureau panel data that link firm software investment to worker earnings. We regress the log of earnings of workers by age group on the software investment by their employing firm. To unpack the potential causal factors for differential software effects by age group we extend the AKM framework by including job-spell fixed effects that allow for a correlation between the worker-firm match and age and by including time-varying firm effects that allow for a correlation between wage-enhancing productivity shocks and software investments. Within job-spell, software capital raises earnings at a rate that declines post age 50 to about zero after age 65. By contrast, the effects of non-IT equipment investment on earnings increase for workers post age 50. The difference between the software and non-IT equipment effects suggests that our results are attributable to the technology rather than to age-related bargaining power. Our data further show that software capital increases the earnings of high-wage workers relative to low-wage workers and the earnings in high-wage firms relative to low-wage firms, and may thus widen earnings inequality within and across firms.
View Full
Paper PDF
-
Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation
September 2010
Working Paper Number:
CES-10-32
This paper uses matched employer-employee data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in wage inequality within and across industries between 1992 and 2003. We find that the entry and exit of firms and the sorting of workers and firms based on underlying worker skills are important sources of changes in earnings distributions over time. Our results suggest that the underlying dynamics driving changes in earnings inequality are complex and are due to factors that cannot be measured in standard cross-sectional data.
View Full
Paper PDF
-
How Workers Fare When Employers Innovate
May 2003
Working Paper Number:
CES-03-11
Complementing existing work on firm organizational structure and productivity, this paper examines the impact of organizational change on workers. We find evidence that employers do appear to compensate at least some of their workers for engaging in high performance workplace practices. We also find a significant association between high performance workplace practices and increased wage inequality. Finally, we examine the relationship between organizational structure and employment changes and find that some practices, such as self-managed teams, are associated with greater employment reductions, while other practices, such as the percentage of workers involved in job rotation, are associated with lower employment reductions.
View Full
Paper PDF
-
The Micro-Dynamics of Skill Mix Changes in a Dual Labor Market: The Spanish Manufacturing Experience
May 2009
Working Paper Number:
CES-09-12
As in many other developed countries, the share of skilled workers in Spain's labor force dramatically increased during the 1990s. This paper decomposes the aggregate skill mix change by a set of key firm characteristics and in the context of Spain's dual labor market. We find that continuing firms were the major drivers of skill mix growth and that expanding firms in particular increased their ratio of skilled workers. Net entry played a smaller but positive role due to higher-skilled entrants and lower-skilled exiters. Finally, we find that although firms with higher concentrations of temporary workers make bigger employment changes overall, firms' low-skilled employment is more strongly pro-cyclical than is high skilled employment.
View Full
Paper PDF
