Education, cost of living and regional wage inequality in Brazil

The objective of this article is to analyze wage inequality among the 10 largest metropolitan regions in Brazil in the 1990s. We assess the extent to which worker characteristics (education, age, gender, race, position in the family) and job characteristics (occupational position, sector, experience) can explain wage inequality. The analysis is made both with regional-nominal and with regional-real wage data. In the second case regional price indexes are used to control for differences in cost of living among regions. Wage differentials in Brazil were slightly lowered when control variables were introduced, but the leftover inequality remained high. The results indicate that cost of living levels do have a role in explaining wage inequality in Brazil, but even after controlling for this factor, the remaining regional differentials are still important. Received: 18 August 2000 / Accepted: 20 June 2001     

An analysis of construction productivity differences between Canada and the United States

Comparisons of industry sectors in advanced economies since the 1960s show that the construction sector has lagged in productivity growth rates, especially in the United States. Although the US and Canadian economies are highly integrated, Canada’s experience differs in key ways. Analysis of these differences offers insight into fundamental construction productivity drivers. Three levels of analyses of construction productivity in the US are provided in this study. The first analysis compared international levels of labour productivity growth. The second compared construction productivity between the US and Canada, and the third analysed cost estimating data from RS Means estimating manuals to measure the changes in labour and partial factor productivity in the US from 1995 to 2009. Statistical significance testing indicates that labour productivity remained nearly constant in the building sub-sector and that partial factor productivity has improved at an annual compound rate of 0.66%. This supports previous findings that US construction has stagnated but is still improving in Canada, with wage differentials and training systems as potential drivers of this difference. While growth rates of productivity seem to decline with higher absolute levels of productivity, there is no evidence that high absolute productivity levels preclude significant growth.     

Regional productivity patterns in Europe: An alternative approach

This article aims to examine the differences in the behaviour of productivity across the European regions. First, we give an overview of regional convergence of productivity in the European Union. Significant regional differences emerge from the detailed analysis of the evolution of productivity that follows. We note that those differences can even be observed in relatively homogeneous regions (peripheral, central, old industrialised, etc.).  A new methodological approach is introduced with the aim of exploring in greater depth this diversity, especially in the evolution of labour productivity. A total of 97 regions from the European Union have been selected in order to verify some specific differences in productivity, employment and GVA growth rates. Despite the global trend towards convergence in productivity, this article reveals that significant regional differences persist. Finally, a regional typology is presented. Received: January 1999 / Accepted: August 1999     

Intertemporal and interspatial productivity differentials in U.S. manufacturing

This study analyzes the role productivity plays in explaining the variation in regional manufacturing growth rates. Using the neoclassical growth accounting procedure, we measure productivity from an intertemporal and interspatial perspective. Previous regional studies of U.S. manufacturing look only at the contribution of intertemporal productivity growth in explaning regional growth. These studies ignore the level of productivity and its effect on regional growth. For each year of our study, we rank regions by their interspatial productivity index. We find little difference between the productivity growth rates among the regions of the north and south. Differences among the regions emerge only when we consider interspatial productivity differentials. The North's level of factor productivity is 25 to 30% higher than the South's. The absolute productivity disadvantage of the South, however, is offset by its low input prices. Thus, it is the cost advantage of the South and not its productivity advantage that explains the region's relatively high growth rate.     

The European construction industry and its competitiveness: a construct of the European Commission

The 'European construction industry' is a fiction that tends to obscure its heterogeneous character and to mar studies and policies of the European Commission aimed at improving the internal and external 'competitiveness' of the sector. In order to assess the process of integration in Europe under the impact of its own dynamics as well as Union policies, this paper looks at the dynamics of the sector from three different aspects: as investment, production and labour process. It shows, in particular, the persistent regional and social disparities dividing the industry into separate entities. Political attention tends to focus on a small number of construction companies competing for a few projects which represent the European dimension. Yet, these companies still rely on their respective national bases and local labour from the place where construction is carried out. Persistent divisions between the states are also reflected in the low level of transnational organization of the construction industry. The policy of the European Commission generally ignores these divisions and attempts to establish principles intended to make a whole sector more 'competitive', while its component parts, operating at hugely different levels of productivity, do not even meet on the same market. This paper argues that, instead of trying in vain to introduce a 'knock-out' system of competition in the EU Member States, a targeted approach might help raise productivity in lagging regions and thus improve the basis of competitiveness on global markets.     

Impact of the global crisis on spatial disparities in Russia

The global crisis has hit regions within Russia to variable degrees because of great differences in regional economy patterns, which might have changed inter-regional disparities observed at the aggregate national level. This paper focuses on two of them, related to population's welfare, namely, inter-regional inequality in real incomes and integration of regional goods markets, and seeks an answer to the question of whether the global crisis has had a persistent effect on these. Results obtained suggest that the answer is generally negative.     

Creative service industries and regional productivity

This research analyses the effect of creative service industries on labour productivity of the regions. Creative service industries offer services that increase a region's capacity to generate and combine new ideas, resulting in an increased production of innovations which raise productivity. The paper proposes an analytical framework and compares findings in 250 regions in 24 countries of the European Union in 2008. We find that creative service industries increases labour productivity of the regions and their effects are as important for regional productivity as scientific research or highly qualified human capital.     

Effects of digital transformation on electricity sector growth and productivity: A study of thirteen industrialized economies

This study examines growth patterns and sources of labour productivity growth and catch-up in the electricity sector. The study uses decomposition analysis to examine 13 industrialized economies from 2000 to 2015, a period of high growth in the sector. The study finds that total factor productivity and digital assets are the most powerful drivers of labour productivity growth and catch-up, while non-ICT assets have only a minor effect. Furthermore, labour quality outpaces R&D as a determinant of productivity. This study has implications for labour and industrial policy in the context of technological transformation and institutional restructuring in the electricity sector.     

Forecasting construction manpower demand: A vector error correction model

Manpower demand forecast is an essential component to facilitate manpower planning. The purpose of this paper is to establish a long-run relationship between the aggregate demand for construction manpower and a group of inter-related economic variables including construction output, wage, material price, bank rate and productivity, based on dynamic econometric modelling techniques. The Johansen co-integration procedure and the likelihood ratio tests indicate the existence of a long-run and stable relationship among the variables. A vector error correction (VEC) model is then developed for forecasting purposes and is verified against various diagnostic statistical criteria. The construction output and labour productivity are found to be the most significant and sensitive factors determining the demand of construction manpower. The model and the factors identified may assist in predicting manpower demand trend and formulating policies, training and retraining programmes tailored to deal effectively with the industry's labour resource requirements in this critical sector of economy.     

Nonlabor income measures of capital intensity versus capital stock measures in estimatingthe determinants of regional labor productivity differentials: The manufacturing sector

This study is concerned with the estimation and explanation of regional differentials in productivity and with nonlabor income per unit of labor is a usable capital intensity proxy in the estimation of Cobb-Douglas production functions. The approach is to estimate labor productivity as a function: first of regional dummy variables and urbanization; second, of these variables plus capital intensity and other production function variables; and third, of all these variables plus labor force characteristics. Large regional labor productivity differentials emerge. Adding capital intensity measured either as capital stock or nonlabor income per unit of labor substantially reduces these differentials. Adding labor force characteristics then completely eliminates the differentials in most instances. At this point, however, it becomes clear that the estimates based on nonlabor income per unit of labor are as good as, if not better than, those based on the capital stock measure. Finally, the productivity disadvantage of the South is related to its low levels of education and unionization.     

Agglomeration and the spatial distribution of creativity

Abstract.  This article analyses the spatial distribution of "creativity"– the production of new knowledge. We analyse commercial patents granted in Sweden between 1994 and 2001 using a panel of 100 labour market areas that encompass the entire country. We relate patent activity to measures of localisation and urbanisation, to the industrial composition and size distribution of firms, and to the regional distribution of human capital. Our analysis confirms the importance of human capital and research facilities in stimulating regional patent output. Our results document the importance of agglomeration and spatial factors in influencing creativity: patent activity is increased in larger and more dense labour markets and in regions in which a larger fraction of the labour force is employed in medium-sized firms. Our results also indicate that creativity is greater in labour markets with more diverse employment bases and in those which contain a larger share of national employment in certain industries, thus confirming the importance of urbanisation and localisation economies in stimulating creativity. Our quantitative results suggest that the urbanisation of Sweden during the 1990s had an important effect upon the aggregate level of patent activity in the country, leading to increases of up to 15 percent in aggregate patents.     

The North-South Divide: Earnings,unemployment and cost of living differences in Great Britain

This paper investigates the impact of regional labour market conditions and cost of living differentials on regional earnings in Britain. Unemployment duration is found to be of crucial importance when data from the General Household Surveys of 1975 and 1982 and the New earnings Surveys from 1970–86 are analysed. In particular, those with unemployment durations over 52 weeks appear to exert little downwards pressure on earnings. This has important implications for policy since the incidence of such long-term unemployment has been geographically concentrated in the less-prosperous regions of Britain.     

Local manufacturing productivity markers: an empirical study of the Italian counties

We analyse productivity differentials across about 63,000 manufacturing firms located in 103 Italian counties, in order to shed light on the relation between the business environment and firm performance. We find that a limited set of local variables related to institutional quality, local credit development, market access and innovation environment significantly contribute to explaining manufacturing productivity differentials in Italy. Our empirical findings confirm that firm competitiveness reacts to the local business environment on a multidimensional scale. This suggests that better targeted regional policies at the national and EU level, including measures for fostering convergence or decentralizing wage negotiations, should take into account the interdependence between productivity and the economic environment.     

Do high-quality local institutions shape labour productivity in Western European manufacturing firms?

We investigate the extent to which regional institutional quality shapes firm labour productivity in Western Europe, using a sample of manufacturing firms from Austria, Belgium, France, Germany, Italy, Portugal and Spain, observed over the period 2009–2014. The results indicate that regional institutional quality positively affects firms' labour productivity and that government effectiveness is the most important institutional determinant of productivity levels. However, how institutions shape labour productivity depends on the type of firm considered. Smaller, less capital endowed and high-tech sectors are three of the types of firms whose productivity is most favourably affected by good and effective institutions at the regional level.     

Exploring the sources of labour productivity growth and convergence in the Italian regions: some evidence from a production frontier approach

This paper investigates labour productivity growth and regional convergence patterns in Italy over the time span 1982–2000. Starting from some evidence of spatial polarisation within Italian economy, the analysis aims at exploring the sources of this tendency. To this end, an approach based on data envelopment analysis (DEA) production frontiers is employed which allows to decompose labour productivity growth into efficiency change, technological progress and capital deepening, looking then at the relative contribution of each component to regional convergence. Moreover, some measures of human capital and public capital are used as augmentation factors of the conventional inputs. The study leads to the conclusion that polarisation is mainly due to regional differences in efficiency change.     

The components of regional disparities in Europe

The aim of this paper is to analyse the components of development disparities across the EU NUTS 2 regions by means of a new method of decomposition of per capita GDP. Decomposition first provides evidence of a remarkable inconsistency of the per capita GDP indicator at regional NUTS 2 level. This is addressed by proposing an “adjusted” development index. The analysis highlights in general the relatively greater importance of productivity and employment differentials over structural features, such as industry mix and demographic structure, although the picture becomes more complex when the focus shifts to the lagging-behind EU regions.     

Regional price levels and the agglomeration wage differential in western Germany

We analyse whether wage differences between cities and rural areas in western Germany are due to unobserved differences in regional price levels. Since regional prices are available for only 10% of the regions we use multiple imputation to generate prices for all regions. Our results show that the nominal agglomeration wage differential is 25%, whereas the real differential is 19%. If we control for the composition of the labour force and jobs, the real wage differential is 4%. If we additionally control for differences in regional building land prices the agglomeration wage differential vanishes.     

Growth effects of regional policy in Germany: results from a spatially augmented multiplicative interaction model

Private investment subsidies are a key instrument for regional policy making to foster the economic development in lagging regions. In this paper, we analyze their effect on labor productivity growth for German labor market regions for the period from 1994 to 2006. A spatially augmented multiplicative interaction model based on neoclassical growth theory is used, which allows us to assess the marginal effect of regional policy proxied by overall payments of the main German regional development program on the region’s convergence speed conditional on its initial income position as well as policy-related spillovers from its spatial neighborhood. Our results show a statistically significant positive effect of regional policy on labor productivity growth, which increases, the further away the supported region is from its steady-state income level, and the more grants are provided to its geographical neighborhood. The latter effect highlights the existence of positive spatial spillover effects from regional policy in Germany, which enhance the attractiveness of the whole macro region for private sector investments. The additional growth stimulus provided by a 1 % increase in the region’s funding volume is thereby related to an up to 0.3 % gain in terms of labor productivity growth. For regions with the highest initial gaps to steady-state income in the sample distribution, the regional policy stimulus accounts for almost 8 % of the regions’ productivity growth performance.     

Growth, development, and innovation: A look backward and forward

Abstract. This article reviews where we have come from and where we are going in research on regional growth and development. Our object of study is the region, an imprecise term that has been taken to mean areas as large as small countries or as small as urban regions, although how regions are defiend does itself have implications for both theories and the empirics of regional growth. How growth occurs remains a poorly understood process. Clearly the basic ingredients of the neo-classical cookbook are important – growth in capital and labour stocks with technological change – but they are neither enough nor revealing enough. Why does the stock of capital grow at different rates? Why does the labour supply increase? What drives technical progress? What are the roots of spatial dependence? We are fairly certain that the answers to these questions embrace agglomeration economies but they also embrace much more. Innovation is associated with research and development and has an identifiable spatial pattern in relation to highly skilled labour and institutions such as universities. But innovation is not just the result of R&D but also entrepreneurship applied to investment. Labour supply responds to real wage differentials but also to environmental and other amentities. Labour is far more geographically mobile in the New World, however, than it is in the Old.     

Factor mobility,the elasticity of substitution and interregional wage differentials

The analysis of non-neutral technical change has emphasized the element of factor intensity while ignoring the impact of changes in the elasticity of factor substitution on interregional wage differentials. This paper provides a formalized treatment of changes in the elasticity of factor substitution on interregional wage-rate differentials in the case where labour mobility is present. The paper demonstrates that changes in this element of non-neutral technical change (unlike changes in the factor intensity element) will have differing impacts on regional wage-rates depending on the existing labour-capital ratio in the region. The paper concludes by relating changes in factor intensity to the elasticity of factor substitution to demonstrate the interaction of both elements on non-neutral technical change on regional wage rates.