Creative destruction, productivity dispersion and management quality

Transcription

1 Creatve destructon, productvty dsperson and management qualty Mka Malranta (ETLA & Unversty of Jyväskylä) Educaton, Employment and Productvty; evdence from the North OECD, Pars

2 Structure of talk Mcro-level dynamcs of productvty growth Internal restructurng: productvty growth wthn frms and convergence n productvty levels between stayng frms External restructurng: productvty-enhancng restructurng (entres, exts and reallocaton of resources between frms) Productvty dsperson. Role n external restructurng (necessary condton) nternal restructurng (convergence; productvty growth of low productvty frms) Aggregate labour productvty and aggregate management qualty

3 Some background Innovaton-based growth theores Product varety model (Romer 1990) No role for smultaneous entry, ext and reallocaton Vertcal nnovatons Struggle for profts, wth wnners and loosers Development nvolves smultaneous entry, ext and reallocaton Innovaton productvty dsperson (Foster, L., Grm, C., Haltwanger, J. C. & Wolf, Z., 2018) varaton n frm growth rates (Klette, T. J. & Grlches, Z., 2000; Comn & Mulan 2009) (top ncome) nequalty (Aghon et al 2015)

4 Some background Emprcal analyss on (re)allocaton of resources between frms and productvty (growth) Dynamc: Baly, Hulten & Campbell 1992; Grlches & Regev 1995; Foster, Haltwanger & Krzan 2001; Böckerman & Malranta 2007; Hyytnen & Malranta 2013; Meltz & Polanec 2015; Malranta & Määttänen 2015; Rley, Rosazza-Bondbene & Young 2015 etc. Statc: Olley & Pakes 1996 Measurement ssues (Dewert & Fox 2009; Bartelsman & Wolf 2017; Balk, 2016). Index-theory approach: Balk, B. M. (2016). The dynamcs of productvty change: A revew of the bottom-up approach. In W. H. Greene, L. Khalaf, C., R. Sckles, M. Veall & M.-C. Voa (edted.), Productvty and effcency analyss (s ). Sprnger.

5 Measurement ssues n productvty decompostons 1) Measurement of aggregate growth rate: Use of geometrc or arthmetc mean? Employment-weghted arthmetc mean s consstent wth the Natonal Accounts The dsadvantage s that, as an aggregate level measure, a geometrc mean [] s less easy to understand than an arthmetc mean [] (Balk 2016, p. 40) 2) Dstncton between nternal and external restructurng there s a large number of [] decompostons avalable. Because of ts symmetry and ts natural benchmarks for extng and enterng producton unts we prefer the Dewert-Fox decomposton (Balk 2016, p. 47) 3) Productvty dsperson between frms and mcro-level sources of productvty growth Dsperson refers to the levels and whch should be measured n nomnal terms Economsts appear to have a preference for workng wth levels; e.g. wth concepts such as real value added. [] a level actually s a long-term ndex

6 Measurement of aggregate growth rate Measurement of aggregate productvty growth rate (logs of weghted arthmetc mean); Arthmetc aggregate growth rate (Natonal Accounts) 1 ln Z Z 0, where Z 1 Y 1 = L 1 Foster-Haltwanger-Krzan (1997), Grlches-Regve (1995), Hyytnen- Malranta (2013) etc. (aggregate of logs): Geometrc aggregate growth rate Z 1 1 Z Z = ln 1 0 ( ) 1 Z1 Z0, where 0 1 L L Y L 1 1 ln Z = Bas n geometrc mean decomposton method Z

7 Measurement of aggregate growth, % Decomposton n the Fnnsh manufacturng

8 Growth rate of weghted arthmetc average (for mcro-level decompostons) Z = = = sz 1 L 1 L 1 L 1 Z Z 1 0 Z Symmetrc: Y L Y Close approxmato of Natonal Accounts growth rate: = (Labour nput share) Z (Labour productvty) = L L Can be decomposed n an deal manner (advocated by Balk): see below s L Growth rate of aggregate labour productvty (wth an deal decomposton) Z Z Z Z = Z Z ln Z Z 1 0 Z Y Z Z 1 0

9 Comparson of geometrc and deal decompostons, % Ths bas wll shown to be related to changes n productvty dsperson! Source: Computaton wth Fnnsh frm-level data, manufacturng sector

10 DISTINCTION BETWEEN INTERNAL AND EXTERNAL RESTRUCTURING

11 Productvty growth n ndustry, wthn frms & creatve destructon Productvty Cumulatve creatve destructon t-5 t t+5 t+10 11

12 Z s Modfed deal decomposton wth arthmetc means Y = L L = L (Labour nput share) (Labour productvty) Z = s z Arthmetc mean Symmetrc dstncton between nternal and externa restructurng Converngence between low- and hghproductvty frms Source: Kauhanen & Malranta 2018 dz C ( Z Z ) 1 0 = = xc, ( z z ),, ( s1 s 0 ) C N X C x 1 x 0 xc, C ( z 1 Z1 ) C ( Z0 z0) ( ),, ( s1 s 0 ) C N X s s s s s s 1 0 Z 1 0 z C 1 C 0 C z Z 1+ Z Z C ( ) C z Z + Z x C x C C Z Z z 1 z0 z Z z Z x C x C C + z Z Z 1+ C x C Z1 Z C Z x ( 0 z C 0 ) Z0 C Z0 Z (aggregate productvty growth rate) (weghted average productvty growth rate) 1 (between component among contnung frms) (entry effect) (ext effect) ( convergence term, cross term of wthn component) (other cross terms)

13 Productvty wthn frms, 1995=100 Wthn manufacturng ndustres (normalzed ndustry structures) C s z z ( ) xc, 1 0 z Source: Malranta (2016)

14 Creatve destructon between frms, 1995=100 Wthn manufacturng ndustres (normalzed ndustry structures) C C z Z Z (,, s ) 1 s 0 x C x C C Source: Malranta (2016)

15 PRODUCTIVITY DISPERSION

16 Productvty dsperson It s about comparsons of productvty levels between frms => nomnal terms Varaton n productvty levels between jobs s of nterest from the standpont of aggregate development Employment-weghted measure of dsperson between frms We use employment-weghted dsperson of log nomnal labour productvty

17 Productvty dsperson and mcro-levels sources of productvty growth Productvty dsperson s a necessary condton for productvtyenhancng restructurng Mcro-level dynamcs affect productvty dsperson through External restructurng Internal restructurng

18 Two mechansms of changes n productvty dsperson Creatve destructon Productvty Convergence among stayng frms Productvty t t+1 t+1

19 Dsperson between frms, Wthn manufacturng ndustres Employment weghted standard devaton of log of labour productvty (and wages) of the frms Source: Malranta (2016)

20 Dsperson between frms, Wthn selected manufacturng ndustres n Fnland Source: Malranta (2018)

21 Dsperson between frms, Manufacture of machnery and equpment n.e.c. (28) Source: Malranta, Barth and Heyman (2018)

22 Productvty dsperson and creatve destructon between frms, Fnnsh manufacturng

23 Convergence term and productvty dsperson between frms, Manufacturng sector, Fnland C s ( ) z z z Z Z xc, 1 0 z

24 Convergence term and bas n geometrc average based decompostons Manufacturng sector, Fnland C s ( ) z z z Z Z xc, 1 0 z

25 MANAGEMENT AND PRODUCTIVITY

26 Management qualty and (aggregate) productvty Increasng nterest n management and productvty (Bloom, van Reenen etc) World Management Survey (WMS) Open ended questons (ntervews),

27 Source: Bloom, N., Sadun, R. ja Van Reenen, J. (2017). Management as a technology? : CEP, Dscusson Paper No Revsed October 2017 (Replaced June 2016 verson).

28 Source: Bloom, N., Sadun, R. ja Van Reenen, J. (2017). Management as a technology? : CEP, Dscusson Paper No Revsed October 2017 (Replaced June 2016 verson).

29 Management & Organzatonal Practzes Survey (MOPS) Conducted US Census for year 2010 and 2015 Closed questons ; tradtonal survey Mandatory; abt 50,000 manufacturng establshments, hgh response rate Conducted also some other countres Germany, Pakstan etc.

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32 Fnnsh Management & Organzatonal Practses (FMOP) -survey Part of a large project funded by Academy of Fnland Malranta, Ohlsbom and Hurr We tred to replcate US survey as closely as possble for year 2016 Conducted by Statstcs Fnland However, response was NOT requred by law Data can be lnked to dfferent regsters and other surveys Followng US example, we calculated an ndex of management qualty

33 Man fndngs for the management analyss Unweghted average management qualty n Fnnsh manufacturng plants s pretty close to US level A lot of dsperson n management qualty between plants Compared to US Relatve strengths n performance montorng Relatve weakness n ncentves and target settng Smlar to fndngs for Swedsh manufacturng wth WMS approach Bloom, N., Genakos, C., Sadun, R. ja Van Reenen, J. (2012). Management practces across frms and countres. Academy of Management Perspectves, 26(1), Weghted average management qualty More relevant from the pont of vew of aggregate labour productvty Gap between Fnland and USA seems to be greater than wth unweghted measure Olley-Pakes productvty decomposton => allocaton term s lower n Fnland (Re)allocaton has had greater role n USA than n Fnland?