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Comparative studies of work, organization, management, human resources, and industrial relation in Germany — according to methodologically rigorous standards of international comparison — have been carried out since the 1950s. They show the consequences of the meta-tradition on the South Germanic bedrock: a prevalence of small and medium-sized companies with personalized owner-manager arrangements, but with similarities and links between these and larger enterprises; continuity of education and training ‘from the bottom up’ to top management; continuity of careers; and professionalization of work roles encompassing representation of interests and governance, diffusion, and piecemeal development of technology rather than mobilization for radical break-throughs. Such tendencies have asserted themselves relative to other societies in different historical, technical, and organizational instances. But there has also developed a within-nation variety of work systems, which may lead to different comparative results between sectors or industries. Nevertheless, even these can be explained by the dialectics inherent to societal effects.

The Kuznets curve hypothesis has been one of the most debated issues in development economics since the mid-1950s. In a nutshell, the hypothesis simply states that income inequality should follow an inverse-U shape along the development process: first rising with industrialization and then declining, as more and more workers join the high-productivity sectors of the economy. Today, the Kuznets curve is widely held to have doubled back on itself, especially in the United States, with the period of falling inequality during the first half of the 20th century being followed by a sharp reversal of the trend since the 1970s. This essay looks at this “technical change” view of inequality dynamics, whereby waves of technological innovations generated waves of inverse-U curves. It considers the inequality decline that took place in the West during the first half of the 20th century, arguing that recent historical research is rather damaging for Kuznets’s interpretation: the reasons why inequality declined in rich countries seem to be due to very specific shocks and circumstances that do not have much to do with the migration process described by Kuznets, and that are very unlikely to occur again in today’s poor countries. It takes a broader perspective on the technical change view of inequality dynamics, drawing both from historical experience and from more recent trends. It argues that this view has proven to be excessively naïve and that country-specific institutions often play a role that is at least as important as technological waves.

The relationship between war and economic development has been controversial in economic history. During the Cold War, defense and defense-related research and development were criticized as a burden on commercial technology development. The purpose of this book is to demonstrate that military and defense-related research, development, and procurement have represented major sources of technology development across a broad spectrum of industries that account for an important share of U.S. industrial production. This first chapter presents an overview of the theoretical perspectives that economists have used to interpret the rate and direction of technical change.

The consequences of utilizing computers for the labour market has changed over time because of how computers have become rapidly dispersed and easily available. Compared to how computers were initially perceived as an advantage, not possessing a computer today presents several difficulties across different industries. Skill-biased technical change has become evident across North America because of changes observed in the wage structures while similar patterns may be observed across Europe. As such, the chapter attempts to analyze the empirical evidence regarding the link between the outcomes of the labour market and the use of computers, particularly on the issues which concern the expansion on computer use and workforce's skill-composition, wages, and unemployment.

The chapter seeks to shed some light on the issue of creating firms’ unique organizational capabilities by reporting the findings of an in‐depth, field‐based, longitudinal analysis of the evolution of process development capabilities in the pharmaceutical industry. The chapter presents a simple conceptual framework for learning across development projects that highlights the dual ‘outputs’ of development projects: the technology that is implemented in a new process (or product design) and the knowledge that becomes available for future projects. It is argued that the latter can push technical and organizational learning that become part of a firm's knowledge base and which, in turn, influence strategies chosen for and performance achieved on future projects. In the example of four biotechnology organizations is explored the dynamic interaction between the organization's knowledge base, its capability for different development strategies (e.g. learning by doing versus learning before doing), and changes in project performance over time (e.g. lead time).

Production functions in many CGE models use a nest of CES functions which imposes a strong assumption about substitution patterns. Here we describe the implementation of a more flexible translog function where capital, labor, energy and non-energy inputs (KLEM) are chosen symmetrically, i.e. the separability assumptions are weaker. Technical change is key to understanding past performance and to projecting future responses to policy and our functions allow for both autonomous change and endogenous (or, price-induced) technical change. We use latent variables to represent these changes in technology and use the Kalman filter to recover them for the sample period and to project them for the future. This latent variable approach for the biases of technical change is also used for specifying the demand for all intermediate inputs below the top KLEM tier. We describe the econometric results, including the covariance structure that is used later in the confidence interval analysis in Chapter 9. We also summarize the post-War productivity record for our 35 industries.

Thanks to globalization, the United States along with the other developed economies has eclipsed her glory days and is on the way to managing decline. This chapter questions: is the best the managed economy can do to manage decline? It seems to be true that globalization has rendered physical capital as no longer competitive in economies burdened with high costs in general, and certainly high wages. Is it inevitable that in order to keep capital located in a place, wages must keep dropping until they reach levels so low that the low wages in developing countries no longer seem sufficiently attractive as to lure away capital investment? Ideas and knowledge, were at least as or perhaps even more important than the physical capital, consisting of plants and factories, that had so dependably served as the engine of growth, jobs, and prosperity in the post-war era. Scholars responded to this increasingly apparent insight by expanding their characterization of what matters for growth by starting to focus on knowledge and ideas as the driving force. This became known as the endogenous growth theory in economics, which revolved around the factor of knowledge and ideas as the engine of economic growth.

The 1995 removal of a railway transportation subsidy for exports of grains from Western Canada led to large aggregate changes in technology adoption and land use. We decompose the impact of the reform on seeding methods and cropping patterns to study how aggregate changes were driven by reallocation versus within-farm adaptation. Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada we find a range of new results. We find that the reform-induced shift from producing low-value to high-value crops for export, the adoption of new seeding technologies and reduction in summerfallow observed at the aggregate level between 1991 and 2001 were driven mainly by the within-farm effect. In the longer run, however, reallocation of land from shrinking and exiting farms to growing and new farms explains more than half of the aggregate changes in technology adoption and land use between 1991 and 2011.

This chapter presents the simulation results for five increasingly aggressive carbon tax regimes covering all greenhouse gas emissions. Major fiscal reform is viewed from a tax perspective involving capital tax reductions, labor tax reductions, their combination or lump-sum redistribution. The economy differs markedly across the four fiscal treatments but emissions reductions do not. Macroeconomic and industry impacts are described in detail. For the economy, the benefits of capital tax recycling outweigh the costs of carbon taxation; this reverses for the labor and lump-sum alternatives. Price-induced technical change is shown to be a net positive force for growth. Welfare effects are described demographically for individual households and in the aggregate. Social welfare is decomposed into efficiency and equity effects and is viewed from an egalitarian or utilitarian perspective. Labor tax reductions are welfare inferior despite their unqualified progressivity and are not necessarily superior to lump-sum redistribution at either the household or societal levels. Capital tax reductions, the book's titular double dividend, are welfare superior despite their qualified regressivity.

This chapter speculates that technological spillover effects may have become more important over time as information technology (IT) penetrated the US economy. The rationale is that IT may speed up the process of knowledge transfer and make these knowledge spillovers more effective. Using US input-output tables for years 1958 through 2007, the chapter compares my new results with Wolff and Nadiri (1993) covering years 1947–1977 and Wolff (1997) covering 1958–1987. The chapter estimates that the direct rate of return to R&D is now 22% and the indirect rate of return to R&D is 37%. The former is higher and the latter has a higher significance level than in the previous studies. Separate regressions on the 1958-1987 and 1987-2007 periods and the addition of successive periods to the sample also suggest a strengthening of R&D spillovers between the 1958–1987 and 1987–2007 periods. These results suggest a strengthening of the R&D spillover effect over time.

This chapter begins by listing 111 revolutionary new products that have emerged since 1917, the same period as the birth of the Soviet Union. Out of the 111 innovations, about 25–30 are related to computers, digital equipment, and information. It then considers the technical change related and unrelated to the revolution of information and communication. This is followed by discussions of how the socialist system followed the pioneering inventions that originated in capitalist countries; innovative entrepreneurship under capitalism; the impossibility of innovative entrepreneurship under socialism; and direct linkages between the political structure and technical progress.

Numerous careful studies of productivity have been made at the firm level. None of these studies, however, focus on multinational corporations (MNCs) in the United States despite their important role in the global economy. In the canonical Solow (1957) growth model, tax policy can affect the growth rate of output by changing the growth rates of factor inputs such as capital and labor. In this model, tax changes cannot affect total factor productivity (TFP) directly because improvements in productivity are disembodied. However, when technical change is embodied in capital, tax policy can affect TFP through investment. To gauge whether this role for tax policy is economically important, this chapter uses a vintage capital model, with both embodied and disembodied technical change, to analyse the sources of growth of U.S. MNCs. Specifically, it analyzes the parameters of the MNC's production technology and uses them to study the sources of firm growth. It shows that growth in parent and affiliate capital is the most important. The importance of foreign direct investment is especially striking.

This chapter concludes that the book has presented evidence showing that technology and technical change are more flexible than generally allowed. The efficiency of different factors changes across countries and over time at different rates. Indeed, in some instances the efficiency with which one factor is used can decline while the efficiency of others increases. Since the 1990s, it has been increasingly clear that technical change tends to have a skill bias, but this book's findings reveal that nonneutralities are much more pervasive than that. They also occur across countries, and not just over time. Furthermore, they invest a broader set of inputs: not only skilled and unskilled labor, but also experienced and inexperienced workers, natural and reproducible capital, and a broad labor aggregate and a broad capital aggregate. The book has merely scratched the surface of the likely patterns of nonneutrality that exist across countries and over time.

Immigration has constituted an important source of growth in high-skilled employment, innovation, and productivity in the U.S. during the past 35 years. In this chapter, we study the role of this immigration in accounting for changes in the occupational-skill distribution and wage inequality experienced during this time period. We study the role of foreign-born workers in the growth of employment in STEM occupations since 1980. Given the importance of employment in these fields for research and innovation, we consider their role in a model featuring endogenous non-routine-biased technical change. We use this model to quantify the impact of high-skilled immigration, and the increasing tendency of such immigrants to work in innovation, on the pace of non-routine biased technical change, the polarization of employment opportunities, and the evolution of wage inequality since 1980.

This chapter describes the IGEM in detail – the demand and supply sides of the economy, the inter-industry (input-output) structure and the determination of intertemporal equilibrium. The production function allows for substitution among inputs, autonomous technical change, and induced technical change. The household model allows an aggregate demand function to be expressed as a sum of individual household demand functions; this aggregate function is non-homothetic and depends on the demographic projections of the population. Household optimization also generates goods demand and labor supply. Intertemporal optimization generates savings and hence investment for capital accumulation and the cost-of-capital equation. The model is made consistent with the National Accounts and the Input-Output accounts. We describe the solution algorithm.

This chapter documents and analyzes the development within RAND of a body of pioneering literature in what has come to be known as the economics of technical change. Although undertaken in the 1950s and early 1960s to help RAND fight the Cold War and plan for World War III, RAND’s research on technical change remains part of the foundation of knowledge in the economics of technical change. As the chapter shows, this research emerged from a growing sense within RAND that the corporation’s main stock in trade could not effectively deal with technological change. The dynamics of technological change seemed to some RAND researchers central to understanding the dynamics of complex technological systems, such as modern air warfare. The optimization promised by RAND’s systems analysts either would have to be limited to more stable systems with lower orders of uncertainty, or it would have to incorporate a fundamental understanding of technological change into its methods.

This chapter reviews recent research on Britain's Industrial revolution, showing that the presumed rate of economic growth during this economic watershed has been reduced progressively by several authors working with different methods. How can the evidence of widespread technological progress around the start of the nineteenth century be reconciled with the slow rate of national growth? Data from several goldsmith banks let us examine one hypothesis: that the British government's demand for resources to fight Napoleon crowded out demand from the private economy for investment. Previous historians have proposed crowding out but have had trouble identifying its effects. The usury rate meant that scarcity of bank loans showed up in credit rationing rather than higher interest rates. We show that loans from Hoare's Bank and other lenders decreased when the British government borrowed, and the rate of growth of the economy slowed at these times.

Empirical analysis of innovation and patenting in the automotive industry has shown the existence of a so-called path dependence in the direction of technical change. Specifically, a study of the dynamic of patenting in clean versus fuel-consuming cars showed that individuals or companies that have in the past pursued dirty innovations tend to continue to innovate along that path. This in turn suggests a role for government intervention: namely, to redirect technical change from dirty to clean innovation. Without intervention, not only will there be more pollution by car producers and other fuel-consuming industries, but the technological gap between dirty and clean innovation will increase, thereby making it more costly to intervene tomorrow. This chapter argues that efficient dynamic allocation can be implemented by a combination of the carbon tax (which directly deals with current environmental externalities) and research subsidies to clean innovation and the diffusion of clean technologies (to deal with the knowledge externality and with environmental externalities in the future).