Frank R. Lichtenberg

The Output Contributions of Computer Equipment and Personnel: A Firm- Level Analysis

This paper examines the output contributions of capital and labor deployed in information systems (IS) at the firm level during the period 1988-91 throughout the business sector, using two different sources of data on these inputs. Our production function estimates suggest that there are substantial excess returns to both IS capital and IS labor, although the size and significance of the excess returns to IS capital is larger. Computer capital and labor jointly contribute, or account for, about 21 percent of output, although only about 10% of both capital and labor income accrue to IS factors. Although IS employees accounted for a very small share of total employment by 1986, IS employment growth is estimated to have made a larger contribution to 1976-86 output growth than non-IS employment, due to the very rapid growth (16% per annum) of IS employment. The estimated marginal rate of substitution (MRS) between IS and non-IS employees, evaluated at the sample mean, is 6: one IS employee can be substituted for six non-IS employees without affecting output.

Does foreign direct investment transfer technology across borders

Previous studies have found that importing goods from R&D-intensive countries raises a countrys productivity. In this paper, we investigate econometrically whether foreign direct investment (FDI) also transfers technology across borders. The data indicates that FDI transfers technology, but only in one direction: a countrys productivity is increased if it invests in R&D-intensive foreign countriesparticularly in recent yearsbut not if foreign R&D-intensive countries invest in it. Other findings of the paper are that the ratio of foreign-R&D benefits conveyed by outward FDI to foreign R&D benefits conveyed by imports is higher for large countries than it is for small ones, that failure to account for international R&D spillovers leads to upwardly biased estimates of the output elasticity of the domestic R&D capital stock, and that there are much larger transfers of technology from the United States to Japan than there are from Japan to the United States.

The Effect of Government Funding on Private Industrial Research and Development: A Re-assessment

A number of previous studies have attempted to determine the effect of federal support of research and development (R& D) performed in industry on the rate of private investment in R&D, by estimating regressions of private R & D expenditure on federal industrial R & D expenditure, controlling for total demand (sales) and in some cases other variables. This paper presents arguments and econometric evidence in support of the hypothesis that, due to misspecification of the private R&D equation (i.e., failure to distinguish government sales from other sales), previous estimates of the effect of federal industrial R & D on private R & D funding are seriously upwardly biased.

The impact of new drug launches on longevity: evidence from longitudinal disease-level data from 52 countries, 1982-2001

We perform an econometric analysis of the effect of new drug launches on longevity, using data from the IMS Health Drug Launches database and the WHO Mortality Database. Under conservative assumptions, our estimates imply that the average annual increase in life expectancy of the entire population resulting from new drug launches is about one week, and that the incremental cost effectiveness ratio (new drug expenditure per person per year divided by the increase in life-years per person per year attributable to new drug launches) is about

Corporate takeovers and productivity

6750—far lower than most estimates of the value of a statistical life-year.

Ownership Structure and Corporate Performance in Japan

The concept of relative plant productivity and its measurement using census LRD data productivity and changes in ownership of manufacturing plants, Donald Siegel takeovers and corporate overhead, with Donald Siegel leveraged buyouts, with Donald Siegel US and foreign mergers and LBOs, 1988-90 the dismantling of conglomerate firms airline mergers, with Moshe Kim.

Testing the Convergence Hypothesis

This paper develops a dynamic continuous-time model in which international risk sharing can yield substantial welfare gains through its positive effect on expected consumption growth. The mechanism linking global diversification to growth is an attendant world portfolio shift from safe, but low-yield, capital into riskier, high-yield capital. The presence of these two types of capital is meant to capture the idea that growth depends on the availability of an ever-increasing array of specialized, hence inherently risky, production inputs. A partial calibration exercise based on Penn World Table consumption data implies steady-state welfare gains from global financial integration that for some regions amount to several times initial wealth.

Managerial ownership and firm performance: A re-examination using productivity measurement

The authors show that, contrary to the beliefs of some previous analysts of international economic growth, the hypotheses of convergence and of mean-reversion are not equivalent. Under some assumptions, the rate of convergence is independent of the degree of mean-reversion; under other assumptions, mean-reversion is a necessary, but not a sufficient, condition for convergence. The authors show the relationship between the convergence test and the mean-reversion test and provide an empirical example in which the null hypothesis of no mean-reversion is rejected but the null hypothesis of no convergence is not rejected. Copyright 1994 by MIT Press.

Response to Baker and Fugh-Berman’s Critique of My Paper, 'Why Has Longevity Increased More in Some States than in Others?'

Abstract The role of productivity in firm performance is of fundamental importance to the US economy. Consistent with the corporate finance approach, this paper uses the ownership stake of a firms managers as an argument in estimating the firms production function. Accordingly, this paper brings together the corporate finance and productivity literature. Using a large sample of randomly selected manufacturing firms that does not suffer from any survivorship or large firm size biases, we find that managerial ownership changes are positively related to changes in productivity. We also find a higher sensitivity of changes in managerial ownership to changes in productivity for firms who experience greater than the median change in managerial ownership. These results are robust to including lagged estimates of production inputs, year dummies and separate dummies for each firm to control for unobservable firm characteristics. In addition, we find that the stock market rewards firms with increases in firm value when these firms increase their level of productivity.

Estimation of the Internal Adjustment Costs Model Using Longitudinal Establishment Data

Dean Baker and Adriane Fugh-Berman have published a critique of a study I performed in 2007, entitled “Why has longevity increased more in some states than in others?” One of the conclusions I drew from that study was that medical innovation accounts for a substantial portion of recent increases in U.S. life expectancy. Baker and Fugh-Berman claim that my study was subject to a number of major methodological flaws. Many of their claims pertain to the role of infant mortality; the definition of drug vintage; the issue of age adjustment; and the appropriateness of controlling for AIDS, obesity, and smoking in the analysis of longevity. In this article, I make the case that their claims about my study are largely incorrect. I show that infant mortality was not an important determinant of the growth in U.S. life expectancy during the period that I studied, and that my estimates are completely insensitive to the inclusion or exclusion of infant mortality. Controlling for the age distribution of the population also has essentially no effect on the longevity equation estimates. I argue that my definition of drug vintage, based on the initial FDA approval year of a drug’s active ingredient, is quite reasonable, and it is consistent with the FDA’s evaluation of the therapeutic potential of new drugs. I argue that controlling for AIDS, obesity, and smoking in longevity analysis is entirely appropriate and consistent with the epidemiological literature. Baker and Fugh-Berman express deep skepticism about my study’s conclusion that medical innovation has played a very important role in recent U.S. longevity growth, but they offer no explanation of why life expectancy increased by almost a year during 2000-2006, a period of increasing poverty and obesity and declining health insurance coverage.