Edward N. Wolff

Multinational Corporations and Productivity Convergence in Mexico

This paper examines the impact of the operations of foreign-owned multinational firms on the productivity growth of Mexican manufacturing industries, 1965-1984. It investigates both the extent to which the penetration of a sector by foreign-owned firms affects the productivity of local firms in that sector and whether there is any evidence of convergence between that industrys productivity level and that of the United States. The main results can be summarized as follows: First, productivity levels of locally-owned firms in Mexico have converged to those of foreign-owned firms. Second, both the rate of productivity growth of local firms and their rate of catch-up to the multinationals are positively related to the degree of foreign ownership of an industry. Third, the productivity gap between Mexico and U.S. manufacturing has diminished between the mid-1960s and the mid-1980s. Fourth, the rate of productivity growth of Mexican industries and its rate of convergence to the United States are higher in industries with a greater presence of multinationals. We conclude that multinational firms have contributed to a geographical diffusion of technology and acted as a bridge between advanced and less advanced countries.

Convergence of productivity: Cross-national studies and historical evidence

This book is a collection of original articles that view the current state of knowledge about the convergence hypothesis.

Racial Differences in Patterns of Wealth Accumulation

Making use of PSID data for 1984, 1989, and 1994, we examine race differences in patterns of asset accumulation. Our results indicate, as expected, that inheritances raise the rate of wealth accumulation of whites relative to that of African Americans. But, while whites devote a greater share of their income to saving, racial differences in saving rates are not significant, once we control for income. Though our results may be period-specific, we also do not find evidence that the rate of return to capital is greater for whites than for African Americans. Simulations suggest that African Americans would have gained significant ground relative to whites during the period if they had inherited similar amounts, saved at the same rate, had comparable income levels and, more speculatively, had portfolios closer in composition to those of whites.

Convergence Of Industry Labor Productivity Among Advanced Economies: 1963-1982

Data are used for thirteen industrialized countries to investigate convergence of labor productivity levels in individual manufacturing industries over the 1963-82 period. The authors find convergence in virtually every manufacturing industry. Among these countries, the co efficient of variation of industry labor productivity declined in all but one of twenty-eight industries. However, productivity convergenc e is stronger for all manufacturing than within individual industries, especially heavy and high-technology industries. Also, variation in employment mix among countries plays little role in explaining cross-country differences i n aggregate manufacturing productivity, nor have changes in employment mixes been an important source of convergence. Copyright 1988 by MIT Press.

Outsourcing of Services and the Productivity Recovery in U.S. Manufacturing in the 1980s and 1990s

Manufacturing productivity growth recovered during the 1980s and 1990s, while other sectors, particularly services, did not. In the same period U.S. manufacturing has engaged in the “outsourcing” or “contracting-out” of service functions. Has the recovery of manufacturing been accomplished by industrial reorganization--sloughing off sluggish services--rather than technical progress? We analyze this question by reducing service inputs to their consituent elements of material inputs. Service productivity growth is thus imputed to the goods sectors, reducing the recovery of manufacturing productivity growth in the 1980s by one fifth. The recovery lasted through the 1990s, when high productivity performers in manufacturing have been relatively successful at outsourcing sluggishservices.

Trends in the Growth and Distribution of Skills in the U.S. Workplace, 1960–1985

Using new measures of job skills and standard measures of education and earnings, the authors examine the effects of changing occupational and industry employment patterns on the skill composition of work between 1960 and 1985. The results show a strong upgrading of cognitive and interactive skills—combined, however, with a substantial slowdown in the rates of growth of those skills—and a declining demand for motor skills. The earnings mix of jobs did not show the same high correlation with employment growth as skill and education levels, because high-wage, low-skill jobs declined in the goods industries while low-wage jobs requiring at least moderate skill levels grew rapidly in the services.

The concept and measurement of asset poverty: Levels, trends and composition for the U.S., 1983–2001

Abstract American prosperity in the second half of the 1980s together with the booming economy of the 1990s created the impression that American households have done well, particularly in terms of wealth acquisition. In this paper, we develop the concept of “asset poverty” as a measure of economic hardship, distinct from and complementary to the more commonly used concept of “income poverty.” We define a household with insufficient assets to enable it to meet basic needs (as measured by the income poverty line) for a period of three months to be asset poor. The results reveal that in the face of the large growth in overall assets in the U.S. and a fall in standard income poverty over the period from 1983 to 2001, the level of asset poverty increased from 22.4 to 24.5 percent. We also find that asset poverty rates for blacks and Hispanics are over twice those for whites; that asset poverty rates fall monotonically with both age and education; that they are much higher for renters than homeowners; and that by family type they range from a low of 5 percent for elderly couples to 71 percent for female single parents.

Spillover effects, linkage structure, and research and development

Abstract We use US input-output data for the 1947–1977 period to analyse the relations among research and development (R&D), technical change, and intersectoral linkages. Our most novel finding is that among manufacturing industries, an industrys rate of technological progress is positively and significantly related to that of its supplying sectors. Another new finding is that among all sectors of the economy, a sectors R&D intensity and rate of technological progress positively affect its degree of linkage with other sectors. We also find significant spillovers from R&D embodied in new investment.

Recent Trends in Wealth Ownership, 1983-1998

Using data from the Survey of Consumer Finances, I find that wealth inequality continued to rise in the United States after 1989, though at a reduced rate. The share of the wealthiest 1 percent of households rose by 3.6 percentage points from 1983 to 1989 and by another 0.7 percentage points from 1989 to 1998. Between 1983 and 1998, 53 percent of the total growth in net worth accrued to the top 1 percent of households and 91 percent to the top 20 percent. Another disturbing trend is that median net worth (in constant dollars), after growing by 7 percent from 1983 to 1989, increased by only another 4 percent by 1998. Indeed, the average wealth of the poorest 40 percent fell by 76 percent between 1983 and 1998 and by 1998 was only

Human capital investment and economic growth: exploring the cross-country evidence

1,100. Moreover, the financial resources accumulated by families in the bottom three income quintiles were very meager and dwindled between 1989 and 1998. The new figures also point to the growing indebtedness of the American family, with the overall debt-equity ratio climbing from 0.151 in 1983 to 0.176 in 1998. The ownership of investment assets was still highly concentrated in the hands of the rich in 1998. About 90 percent of the total value of stocks, bonds, trusts, and business equity were held by the top 10 percent. Despite the widening ownership of stock (48 percent of households owned stock shares either directly or indirectly in 1998), the richest 10 percent still accounted for 78 percent of their total value. With regard to racial and ethnic differences, the results show that over the period 1983 to 1998 non-Hispanic African-American households made some gains relative to whites in median net worth and home ownership but remained the same in terms of mean net worth. Hispanic households made significant gains on non-Hispanic white households in terms of mean net worth and home ownership but not in terms of median wealth.