Stijn Vanormelingen

The Impact of Training on Productivity and Wages: Firm Level Evidence

This paper uses firm-level panel data of on-the-job training to estimate its impact on productivity and wages. To this end, we apply and extend the control function approach for estimating production functions, which allows us to correct for the endogeneity of input factors and training. We find that the productivity premium of a trained worker is substantially higher compared to the wage premium. Our results are consistent with recent theories that explain work-related training by imperfect competition in the labor market.

Human capital, firm capabilities and productivity growth

This paper determines the relative importance of technical efficiency and reallocation for aggregate productivity growth in a small open European economy. To this end we use a dataset containing all Belgian firms active in the private sector, both services and manufacturing. We observe at the firm level a number of factors that have been shown to be drivers of productivity differences across firms. More precisely, we have information on human capital such as the level of education and the amount of on-the-job training received by the employees. Moreover we observe the international activities of the firms such as imports and exports. This allows us to make a careful analysis of the micro foundations of aggregate productivity growth by applying the decomposition introduced by Petrin and Levinsohn (2012). The outcome of this exercise will not only provide us with a better understanding of the slowdown of productivity growth in Europe over the past decades, but also give an indication on the role of different productivity drivers in this process.

Profiting from Innovation: Firm Level Evidence on Markups

While innovation is argued to create value, private incentives of firms to innovate are driven by what part of the value created firms can appropriate. In this paper we explore the relation between innovation and the markups a firm is able to extract after innovating. We estimate firm-specific price-cost margins from production data and find that both product and process innovations are positively related to these markups. Product innovations increase markups on average by 5.1% points by shifting out demand and increasing prices. Process innovation increases markups by 3.8% points due to incomplete pass-through of the cost reductions associated with process innovation. The ability of the firm to appropriate returns from innovation through higher markups is affected by the actual type of product and process innovation, the firms patenting and promotion behavior, the age of the firm and the competition it faces. Moreover, we show that sustained product innovation has a cumulative effect on the firms markup.

Prices and Network Effects in Two-Sided Markets: The Belgian Newspaper Industry

This paper investigates the two-sided nature of the newspaper industry. We explicitly take into account cross network effects that exist between advertisers and newspaper readers. On one side, advertisers demand for publicity space depends on the number of newspaper readers and their characteristics. On the other side, readers demand can be, positively or negatively, influenced by the number of advertisements. In addition, editors may own several newspapers and hence a variety of cross-market effects that result from changes in market prices exist. To estimate demand parameters for both sides of the market, a specific structural model is needed that takes into account those effects. We estimate network effects and price elasticities for Belgian newspaper publishers to assess market power and the degree of competition in the market, which experienced a large consolidation wave over the last decades. This allows us to evaluate a recent merger in the Belgian newspaper industry.