Michela Vecchi

Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach

Using industry data for the United States and the United Kingdom, we provide new evidence on the impact of information and communications technology (ICT) capital on real output growth. The traditional industry panel data analysis fails to find a positive contribution. We argue that this is due to heterogeneity across industries, particularly in the time dimension. Pooling the data for the two countries and using a dynamic panel data estimation method yield a positive and significant effect of ICT on output growth. Individual country estimates suggest a strong impact in the United States, while results are less conclusive in the United Kingdom.

Labour force participation and the business cycle: a comparative analysis of France, Japan, Sweden and the United States

This paper investigates the cyclical responsiveness of participation in the labour force. We examine systems of equations, disaggregated by age and gender, for France, Japan, Sweden and the US, using data from the OECD Labour Force Statistics, 1970–1995. We use measures of country specific business cycles following Harvey and Jaeger (1993) and test for asymmetric responses of participation to expansionary and contractionary phases of the cycle. Our results show that discouraged worker effects are prevalent. These effects are strongest in the downward phase of the cycle and are essentially a female phenomenon, with a particular concentration among 45–54 year olds.

Increasing Returns, Labour Utilization and Externalities: Procyclical Productivity in the United States and Japan

This paper investigates procyclical productivity and attempts to discriminate among several competing explanations. The study focuses on the United States and Japan, since the different industrial relations in these two economies serve to cast a sharper light on the procyclical productivity debate. Labour hoarding, evaluated through the introduction of a labour utilization proxy, proves to be an important influence. The interpretation of the role of external economies remains an open issue.

The Electricity Supply Industry: A Study of an Industry in Transition

In 1989 the UK began a process of transferring an almost wholly state-owned electricity supply industry (ESI) into a collection of privately-owned generation, transmission and distribution utilities. Using data from 1960-97, this paper aims to evaluate how the performance of the UK ESI has changed over time and to compare the UK performance with France, Germany and the United States in order to assess the impact of the liberalisation process. The study takes a whole-industry approach, combining the four aspects of electricity production - generation, transmission, distribution and supply. The computation of labour and total factor productivity and the impact on consumer prices are used to shed light on how successful the various industry structures have been in raising performance.

Off-shoring, specialization and R&D*

This paper investigates whether off-shoring promotes technological specialization by reallocating resources towards high-tech industries and/or stimulating within industry R&D. Using data for the US, Japan and Europe, our results show that material off-shoring promotes high-tech specialization through input reallocation between sectors, while service off-shoring favours technologically advanced production by increasing within-industry productivity, mainly via its positive impact on R&D. Conversely, we find that the increasing fragmentation of core production tasks, captured by narrow off-shoring, has adverse effects on technological specialisation, which suggests that this type of off-shoring is mainly pursued for cost-reduction motives.

Does labour productivity flow across industries? Estimation robust to panel heterogeneity and cross sectional correlation

We consider labour productivity convergence between the United States and the United Kingdom and France, using industry level data. We find evidence of panel heterogeneity, cross sectional correlation and weak evidence of productivity convergence at the industry level.

Wages, work intensity and unemployment in Japan, UK and USA

This paper focuses on the impact of excess labour supply on wage inflation in Japan, the US and the UK. Excess labour supply is not simply measured as officially registered unemployed persons but includes a measure of excess supply within the firm, i.e. work intensity. The empirical analysis confirms the importance of broadening the unemployment definition. Interesting differences arise in the cross-country comparison. Our key conclusions are that work intensity is an important factor in determining wage inflation, and that results based on recorded unemployment rates alone seriously underestimate the flexibility of real wages.

Real business cycle: a critical review

Provides an overview of the real business cycle research agenda, tackling the main theoretical and empirical issues. Concludes that although this methodological approach has been popular in terms of the number of papers published, it has not been completely convincing in providing a theory of the business cycle.

Tangible and Intangible Capital and the Pattern of Specialisation in the EU

This paper investigates the determinants of specialisation in 7 European countries and 4 major industrial sectors in the last 20 years. Next to the impact of traditional factors such as productivity and the endowment of labour and capital, we look at the importance of accounting for capital heterogeneity, by distinguishing between ICT and non-ICT assets, and for intangible capital such as skills and R&D. Our results show that intangible capital and innovation play an important part in increasing the value added shares of the Manufacturing sector while increasing investments in ICT have driven resources away from Manufacturing and towards the Service industry. JEL classification: F11, F14, D24

The impact of companies’ websites on competitiveness and productivity performance

We investigate the role of the Internet in inducing market competition and firm productivity performance using a sample of UK and Spanish firms over the 1995-2010 period. For each firm we collect unique information on its online status (website) and the number of years of Internet activity. Our results show that the Internet is associated with reduced market concentration in both countries. Using a semiparametric estimation algorithm we find that firms’ Internet presence is positively associated with the level of TFP but not with its rate of growth. This suggests that selection is likely to drive website adoption and that the Internet by itself cannot replace traditional sources of competitive and productivity advantage.