Zvi Griliches

Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures

This paper investigates the shift in demand away from unskilled and toward skilled labor in U. S. manufacturing over the 1980s. Production labor-saving technological change is the chief explanation for this shift. That conclusion is based on three facts: (1) the shift is due mostly to increased use of skilled workers within the 450 industries in U. S. manufacturing rather than to a reallocation of employment between industries, as would be implied by a shift in product demand due to trade or to a defense buildup; (2) trade- and defense-demand are associated with only small employment reallocation effects; (3) increased use of nonproduction workers is strongly correlated with investment in computers and in R&D.

Market value, R&D, and patents

Abstract A significant relationship is found between the market value of the firm and its ‘intangible’ capital, proxied by past R&D expenditures and the number of patents, based on a time-series cross-section analysis of data for large U.S. firms.

Sibling Models and Data in Economics: Beginnings of a Survey

This paper reviews a number of recent studies of the income schooling-ability nexus using sibling data and discusses the problem of identification in such studies. Special emphasis is placed on the role of errors in variables, concluding that modest error levels can account for much of the observed difference between total and within-family estimates of returns to schooling. It also suggests that the family may not contribute as much to the transmission of inequality as is commonly thought, since it is a force for equality within (among siblings).

Firm productivity in Israeli industry 1979-1988

Abstract An analysis of a large panel data set on Israeli industrial firms finds that most of the growth in aggregate productivity comes from productivity changes within firms rather than from entry, exit, or differential growth; that firms which will exit in the future have lower productivity performance several years earlier (the ‘shadow of death’ effect); and that, overall, there was little total factor productivity growth in Israeli industry during 1979–1988 (another ‘lost decade’).

The Inconsistency of Common Scale Estimators When Output Prices Are Unobserved and Endogenous

This paper explores the inconsistency of common scale estimators when output is proxied by deflated sales, based on a common output deflator across firms. The problems arise when firms operate in an imperfectly competitive environment and prices differ between firms. In particular, we show that the scale estimates will tend to be downward biased in the production function case, under a wide range of assumptions about the pattern of technology, demand and factor price shocks. The result also holds for scale estimates obtained from cost functions. The empirical part of the paper presents various estimates of scale economies for a sample of Norwegian manufacturing plants. The findings provide some support for the hypothesis that the firms face an imperfectly competitive environment. The estimates suggests that there are significant markups and scale economies to the variable factors of production in our sample. However, the estimates of markups and scale economies presented in this paper are substantially lower than the results obtained by Hall (1988, 1990) and others using industry level data.

Patents and R&D at the firm level: A first report

Abstract The U.S. Patent Office has recently computerized its data base. Thus an easily accessible rather direct indicator of the inventive output of firms is now available. We examine the sense in which the patent measure is a ‘good’ indicator of inventive activity by relating it to the R&D expenditures of a cross-section of 121 firms over an 8 year period.

Econometric Estimates of Prices Indexes for Personal Computers in the 1990s

In this paper we construct a number of quality-adjusted price indexes for personal computers in the U.S. marketplace over the 1989- 92 time period. We generalize earlier work by incorporating simultaneously the time, age and vintage effects of computer models into a fully saturated parameterization, and then develop a corresponding specification test procedure. While the simple arithmetic mean of prices of models by year reveals a price decline of about 11% per year, use of a matched model procedure similar to that commonly used by government statistical agencies generates a much larger rate of price decline -- about 20% per year. Since the matched model procedure holds quality constant, it ignores quality change embodied in new models. When data on new and surviving models are used in the estimation of hedonic price equations, a variety of quality-adjusted price indexes can be calculated, with varying interpretations. Although there are some differences, we find that on average these quality-adjusted price indexes decline at about 30% per year, with a particularly large price drop occurring in 1992. Parameters in hedonic price equations for desktop PC models differ from those for mobile PCs. Moreover, quality-adjusted prices fall at a slightly lower AAGR for mobile models (24%) than for desktops (32%). We conclude that taking quality changes into account has an enormous impact on the time pattern of price indexes for PCs.

ECONOMIC DATA ISSUES

Publisher Summary This chapter discusses a number of issues that arise during the encounter between the econometrician and economic data. Econometricians have an ambivalent attitude toward economic data. It is possible to take an alternative view for economic data issues that there are no data problems only model problems in econometrics. For any set of data, there is the right model. Much of econometrics is devoted to procedures that try to assess whether a particular model is right in this sense and to criteria for deciding when a particular model fits and is correct enough. Theorists and model builders often proceed, however, on the assumption that ideal data will be available and define variables that are unlikely to be observable, at least not in their pure form.

Characteristics of Demand for Pharmaceutical Products: An Examination of Four Cephalosporins

We model demand for four cephalosporins and compute own- and cross-price elasticities between branded and generic versions of the four drugs. We model demand as a multistage budgeting problem, and we argue that such a model is appropriate to the multistage nature of the purchase of pharmaceutical products, in particular the prescribing and dispensing stages. We find quite high elasticities between generic substitutes and also significant elasticities between some therapeutic substitutes.

R&D, Patents, and Market Value Revisited: Is There A Second (Technological Opportunity) Factor?

It is known that innovations in the market value of manufacturing firms and their R&D expenditures are related (Pakes 1985, Mairesse and Siu 1984). This could be due to shifts in the demand for the output of a particular firm, to shifts in the technological opportunities available to the firm, or to both. In this paper we use innovations in patenting activity as an additional piece of information about technological shifts in order to attempt to identify the relative importance of these two types of shocks. We build a simple two-factor model of innovations in sales, investment, R&D investment, patent applications, and the rate of return to holding a share of the firm, and estimate it using a time series-cross section of U.S. manufacturing firms (340 firms from 1973 to 1980). Except in the pharmaceutical industry. we find little evidence of a second factor which can be clearly identified with technological opportunity, although there is evidence of a long-run growth factor linking both types of investment,...