On the Employment Consequences of Automation and Offshoring: A Labor Market Sorting View
Ester Faia, Sébastien Laffitte, Maximilian Mayer, Gianmarco Ottaviano
Lili Yan Ing, Gene M. Grossman (eds), Robots and AI: A New Economic Era. Routledge: London,
2022
Abstract
We argue that automation may make workers and firms more selective in matching their specialized skills and tasks. We call this phenomenon “core-biased technological change”, and wonder whether something similar could be relevant also for offshoring. Looking for evidence in occupational data for European industries, we find that automation increases workers’ and firms’ selectivity as captured by longer unemployment duration, less skill-task mismatch, and more concentration of specialized knowledge in specific tasks. This does not happen in the case of offshoring, though offshoring reinforces the effects of automation. We show that a labor market model with two-sided heterogeneity and search frictions can rationalize these empirical findings if automation strengthens while offshoring weakens the assortativity between workers’ skills and firms’ tasks in the production process, and automation and offshoring complement each other. Under these conditions, automation decreases employment and increases wage inequality whereas offshoring has opposite effects.
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Offshoring, Domestic Employment and Production. Evidence from the German International Sourcing Survey
Wolfhard Kaus, Markus Zimmermann
IWH Discussion Papers,
Nr. 14,
2022
Abstract
This paper analyses the effect of offshoring (i.e., the relocation of activities previously performed in-house to foreign countries) on various firm outcomes (domestic employment, production, and productivity). It uses data from the International Sourcing Survey (ISS) 2017 for Germany, linked to other firm level data such as business register and ITGS data. First, we find that offshoring is a rare event: In the sample of firms with 50 or more persons employed, only about 3% of manufacturing firms and 1% of business service firms have performed offshoring in the period 2014-2016. Second, difference-in-differences propensity score matching estimates reveal a negative effect of offshoring on domestic employment and production. Most of this negative effect is not because the offshoring firms shrink, but rather because they don’t grow as fast as the non-offshoring firms. We further decompose the underlying employment dynamics by using direct survey evidence on how many jobs the firms destroyed/created due to offshoring. Moreover, we do not find an effect on labour productivity, since the negative effect on domestic employment and production are more or less of the same size. Third, the German data confirm previous findings for Denmark that offshoring is associated with an increase in the share of ‘produced goods imports’, i.e. offshoring firms increase their imports for the same goods they continue to produce domestically. In contrast, it is not the case that offshoring firms increase the share of intermediate goods imports (a commonly used proxy for offshoring), as defined by the BEC Rev. 5 classification.
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Micro-mechanisms behind Declining Labor Shares: Rising Market Power and Changing Modes of Production
Matthias Mertens
International Journal of Industrial Organization,
March
2022
Abstract
I derive a micro-founded framework showing how rising firm market power on product and labor markets and falling aggregate labor output elasticities provide three competing explanations for falling labor shares. I apply my framework to 20 years of German manufacturing sector micro data containing firm-specific price information to study these three distinct drivers of declining labor shares. I document a severe increase in firms’ labor market power, whereas firms’ product market power stayed comparably low. Changes in firm market power and a falling aggregate labor output elasticity each account for one half of the decline in labor's share.
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Stock Liquidity and Corporate Labor Investment
Mong Shan Ee, Iftekhar Hasan, He Huang
Journal of Corporate Finance,
February
2022
Abstract
Labor is among the most crucial factors of production that maintain a firm's competitiveness. Given its economic importance, drivers of firms' labor investment policy have gained increasing attention in the financial economics literature. This study investigates the relation between stock liquidity and labor investment efficiency. We establish a causal relation between the two phenomena using an exogenous shock to liquidity: the 2001 decimalization of stock trading. We find that labor investment efficiency improves following an increase in stock liquidity, and the effect is prevalent in firms experiencing overinvestment in labor. Our findings further support the argument that stock liquidity improves the efficiency of labor investment by enhancing governance through shareholder exit threat.
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Introduction to "Measuring and Accounting for Innovation in the Twenty-First Century"
Javier Miranda
Measuring and Accounting for Innovation in the Twenty-First Century,
NBER Studies in Income and Wealth, Vol 78 /
2021
Abstract
Measuring innovation is challenging both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growing importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies. This volume examines how to measure innovation, track its effects on economic activity and prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to, and data sources for, measurement—such as collecting data for a particular innovation as opposed to a firm, and the use of trademarks for tracking innovation. They also consider the connections between university-based R&D and business startups, and the potential impacts of innovation on income distribution. The research suggests potential strategies for expanding current measurement frameworks to better capture innovative activity, such as more detailed tracking of global value chains to identify innovation across time and space, and expanding the measurement of the GDP impacts of innovation in fields such as consumer content delivery and cloud computing.
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Measuring and Accounting for Innovation in the Twenty-First Century
Carol Corrado, Jonathan Haskel, Javier Miranda, Daniel Sichel
NBER Studies in Income and Wealth,
2021
Abstract
Measuring innovation is challenging both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growing importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies.
This volume examines how to measure innovation, track its effects on economic activity and prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to, and data sources for, measurement—such as collecting data for a particular innovation as opposed to a firm, and the use of trademarks for tracking innovation. They also consider the connections between university-based R&D and business startups, and the potential impacts of innovation on income distribution.
The research suggests potential strategies for expanding current measurement frameworks to better capture innovative activity, such as more detailed tracking of global value chains to identify innovation across time and space, and expanding the measurement of the GDP impacts of innovation in fields such as consumer content delivery and cloud computing.
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Organised Labour, Labour Market Imperfections, and Employer Wage Premia
Sabien Dobbelaer, Boris Hirsch, Steffen Müller, Georg Neuschäffer
CESifo Working Paper,
Nr. 8739,
2020
publiziert in: ILR Review
Abstract
This paper examines how collective bargaining through unions and workplace co-determination through works councils shape labour market imperfections and how labourmarket imperfections matter for employer wage premia. Based on representative Germanplant data for the years 1999{2016, we document that labour market imperfections arethe norm rather than the exception. Wage mark-downs, that is wages below the marginalrevenue product of labour rooted in employers' monopsony power, are the most prevalentoutcome. We further nd that both types of organised labour are accompanied by asmaller prevalence and intensity of wage mark-downs whereas the opposite holds for wagemark-ups, that is wages above the marginal revenue product of labour rooted in workers'monopoly power. Finally, we document a close link between our production-based labourmarket imperfection measures and employer wage premia. The prevalence and intensityof wage mark-downs are associated with a smaller level and larger dispersion of premiawhereas wage mark-ups are only accompanied by a higher premium level.
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Organised Labour, Labour Market Imperfections, and Employer Wage Premia
Sabien Dobbelaer, Boris Hirsch, Steffen Müller, Georg Neuschäffer
Tinbergen Institute Discussion Paper,
Nr. 81,
2020
publiziert in: ILR Review
Abstract
This paper examines how collective bargaining through unions and workplace co-determination through works councils shape labour market imperfections and how labourmarket imperfections matter for employer wage premia. Based on representative Germanplant data for the years 1999{2016, we document that labour market imperfections arethe norm rather than the exception. Wage mark-downs, that is wages below the marginalrevenue product of labour rooted in employers' monopsony power, are the most prevalentoutcome. We further nd that both types of organised labour are accompanied by asmaller prevalence and intensity of wage mark-downs whereas the opposite holds for wagemark-ups, that is wages above the marginal revenue product of labour rooted in workers'monopoly power. Finally, we document a close link between our production-based labourmarket imperfection measures and employer wage premia. The prevalence and intensityof wage mark-downs are associated with a smaller level and larger dispersion of premiawhereas wage mark-ups are only accompanied by a higher premium level.
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Organised Labour, Labour Market Imperfections, and Employer Wage Premia
Sabien Dobbelaer, Boris Hirsch, Steffen Müller, Georg Neuschäffer
IZA Discussion Paper,
Nr. 13909,
2020
publiziert in: ILR Review
Abstract
This paper examines how collective bargaining through unions and workplace co-determination through works councils shape labour market imperfections and how labourmarket imperfections matter for employer wage premia. Based on representative Germanplant data for the years 1999{2016, we document that labour market imperfections arethe norm rather than the exception. Wage mark-downs, that is wages below the marginalrevenue product of labour rooted in employers' monopsony power, are the most prevalentoutcome. We further nd that both types of organised labour are accompanied by asmaller prevalence and intensity of wage mark-downs whereas the opposite holds for wagemark-ups, that is wages above the marginal revenue product of labour rooted in workers'monopoly power. Finally, we document a close link between our production-based labourmarket imperfection measures and employer wage premia. The prevalence and intensityof wage mark-downs are associated with a smaller level and larger dispersion of premiawhereas wage mark-ups are only accompanied by a higher premium level.
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Is there an Information Channel of Monetary Policy?
Oliver Holtemöller, Alexander Kriwoluzky, Boreum Kwak
IWH Discussion Papers,
Nr. 17,
2020
Abstract
Exploiting the heteroscedasticity of the changes in short-term and long-term interest rates and exchange rates around the FOMC announcement, we identify three structural monetary policy shocks. We eliminate the predictable part of the shocks and study their effects on financial variables and macro variables. The first shock resembles a conventional monetary policy shock, and the second resembles an unconventional monetary shock. The third shock leads to an increase in interest rates, stock prices, industrial production, consumer prices, and commodity prices. At the same time, the excess bond premium and uncertainty decrease, and the U.S. dollar depreciates. Therefore, this third shock combines all the characteristics of a central bank information shock.
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