César Alonso-Borrego

Symmetrically normalized instrumental-variable estimation using panel data

The authors discuss the estimation of linear panel-data models with sequential moment restrictions using symmetrically normalized generalized method of moments (SNM) estimators and limited information maximum likelihood (LIML) analogues. These estimators are asymptotically equivalent to standard generalized method of moments (GMM) estimators but are invariant to normalization and tend to have a smaller finite-sample bias, especially when the instruments are poor. The authors study their properties in relation to ordinary GMM and minimum distance estimators for AR(l) models with individual effects by mean of simulations. Finally, as empirical illustrations, they estimate by SNM and LIML employment and wage equations using panels of U.K. and Spanish firms.

ASSESSING THE EFFECT OF PUBLIC SUBSIDIES ON FIRM R&D INVESTMENT: A SURVEY

This survey examines the empirical literature on the relationship between public R&D subsidies and private R&D investment over the past five decades. The survey reveals a considerable heterogeneity of empirical results that cannot be explained fully by methodological issues. We aim to provide further explanations of the possible causes of that heterogeneity. In particular, we emphasise a set of issues that, in our view, are critical to understanding the potential effect of public R&D subsidies on private R&D spending. Special attention is paid to the dynamic aspects and composition of firm R&D, the constraints faced by the firm (such as financial constraints), and the amount and source of public subsidies. None of these issues have been investigated in depth. We formulate a set of research assumptions to guide future empirical research in this field.

Labor Contracts and Flexibility: Evidence from a Labor Market Reform in Spain

This paper evaluates the effects on employment, job turnover and productivity of a labor market reform in Spain that eliminated dismissal costs for fixed-term or temporary contracts. Our empirical results are based on a panel of 2356 Spanish manufacturing firms for the period 1982-1993. We postulate and estimate a dynamic labor demand model with indefinite and fixed-term labor contracts, and a general structure of labor adjustment costs. Experiments using the estimated model show important positive effects of the reform on total employment (i.e., a 3.5% increase) and job turnover. There is a strong substitution of permanent by temporary workers (i.e., a 10% decline in permanent employment). The effects on labor productivity and the value of a firm are very small. These effects contrast with the ones of a counterfactual reform consisting in halving firing costs of all type of contracts. That policy implies the same increase in total employment, but much larger improvements in productivity, and the value of firms.

Occupational Structure, Technological Innovation, and Reorganization of Production

Abstract Recent studies have found evidence for the complementarity between white-collar labor and technological capital. However, the estimated elasticities appear too small to explain the observed changes in labor occupational structure. Most of the increases in the share of white-collar employment have been concentrated during recessions, but aggregate investment in technological capital seems procyclical. We examine several potential explanations for this puzzle using a panel of Spanish manufacturing firms that provides highly disaggregated information on employees by occupation. The empirical results show that the decision of adopting new technologies by new innovative firms is countercyclical, and has a much stronger effect on occupational structure than the accumulation of technological capital by old innovative firms.

Demand for labour inputs and adjustment costs: evidence from Spanish manufacturing firms

This paper examines the structure of the adjustment costs for heterogeneous labour inputs, allowing for asyrnmetries and for interaction effects in adjustment costs. To do this, an intertemporal model underlying firms employment decisions is postulated, and the resulting Euler equations for the demands of permanent nonproduction (white collar) and production (blue collar) employees are estimated using a sample of Spanish manufacturing firms. The main results confirm the heterogeneity of adjustment costs for permanent employees, and the existence of significant cross-adjustment effects. This latter result implies that marginal adjustment costs from firing permanent production employees can be reduced if temporary workers are hired at the same time. However, there is not significant evidence of asyrnmetric adjustment costs in permanent labour inputs.

Employment occupational structure, technological capital and reorganization of production

This paper analyzes the role of skill-biased technological progress on the recent changes in the occupation al structure of Spanish manufacturing employment. Our dataset consists of a panel of Spanish manufacturing firms during the period 1986-1991. We confirm a puzzle that has been found in other OECD countries: investment in capital inputs is clearly procyclical, but destruction of unskilled jobs and creation of skilled jobs have been concentrated during the recession. However, we also find that the number of firms who invest by first time in technological capital has been clearly countercyclical. Based on this evidence, we estimate a dynanllc model where firms take discrete decisions about what labor and capital inputs to use, and continuous decisions on the amount of each selected input. Afier controlling for individual heterogeneity and seIf..selection we find that these two decisions have different effects on occupational structure. In particular, we find that for new innovative firms the introduction of technological capital has significant and sizeable effects on the occupational structure ofemployment.

Firm Behavior, Market Deregulation and Productivity in Spain

The aim of this paper is to analyze the evolution of productivity and how firm behavior and institutional conditions affects productivity. For that purpose, we use a longitudinal sample of Spanish manufacturing and services companies between 1983 and 2006, as well as OECD indicators on product market regulations. The productivity measurement is based on the control function approach, to overcome the endogeneity bias. Both for manufacturing and services firms, we have found that the share of temporary employment tends to reduce productivity, the effect being stronger for services firms, which make a more intensive use of this employment type. Our results also show that increases in competition lead to productivity improvements. Besides, those manufacturing firms who keep undertaking in-house production of services tend to be more productive. The lack of competition in the services sector may be preventing firms to increase specialization while outsourcing non-manufacturing activities.

Innovation and Job Creation and Destruction. Evidence from Spain

In this paper we examine the effect of innovation on job creation and job destruction in Spanish manufacturing. Our empirical analysis is based on firm-level longitudinal data from which we have information on employment and innovation activity. The estimation approach consists of a two-step procedure that takes into account the fact that firms endogenously choose positive, negative or zero growth in employment, in which the selection mechanism is an ordered probit. Our results point out the importance of innovation variables on employment growth: innovative firms create more jobs -and destroy fewer- than non-innovative, and the degree of technological effort has a strong positive effect on net employment creation.

Wage Expectations for Higher Education Students in Spain

We use data on expected wages self-reported by college students to assess the hypothesis that the positive gap between expected and actual wages would decrease as students approach graduation. Our estimation results confirm this hypothesis. The amount and the quality of student information, used to forecast wages, improves with student experience. We find that expected wages for first-year students are affected not only by the degree type and academic performance, but also by the variables determining their degree preferences and their household environment. In the case of junior students, the degree type and length affects expected wages, though neither pre-university performance nor household environment influence their wage forecasts

The Impact of Public Research Contracts on Scientific Productivity

We analyse a competitive research-oriented public programme established in Spain, the Ramon y Cajal Programme, intended to offer contracts in public research centres to high-quality researchers. We study the effects of the programme on the ex post scientific productivity of its recipients, relative to non-granted applicants with comparable curricula at the time of application. The full sample results demonstrate that the programme has a positive and significant effect on the scientific productivity of the recipients, as measured both by the amount of published contribution and by the impact of their publications. Consequently, receiving a contract affects the quantity, but also increases the quality, of the contract recipients’ publications.