Determinants of Productivity Per Employee: An Empirical Estimation Using Panel Data

Abstract

Two different approaches are used in this article to study productivity per employee: the determinants of its growth rate in the 1990s are first examined, and then the determinants of its level, using a more structural approach. ICT are shown to have a positive and significant effect on both growth rates and levels of productivity. This result is consistent with that of Gust and Marquez (2002), although the sample of countries is larger and GMM are used. In both sections of the paper, the employment rate and productivity exhibit a significant negative relationship, arising from the concentration of employment on the most productive members of the workforce. Indicators of financial depth and price stability are found to be significant.

Total factor productivity and the role of entrepreneurship

“…High labor participation is often characterized by increased deployment of less-productive labor, which lowers labor productivity (Pomp 1998;Belorgey et al 2006;Bourlès and Cette 2007).…”

“…In addition to participation levels, the number of hours worked per person employed has implications for the level of labor productivity. Working fewer hours may have a positive impact on productivity if less fatigue occurs among workers or if employees work harder during the shorter number of active hours (Belorgey et al 2006;Bourlès and Cette 2007). However, a low number of hours worked per person may result from there being a relatively large share of less productive (small) part-time jobs.…”

“…With the exception of Belorgey et al (2006), endogeneity is seldom addressed in studies using our approach. For instance, R&D and TFP are both sensitive to the cycle.…”

“…Using the above three assumptions we examine the role of the business ownership rate (in four models) in driving productivity development (Coe and Helpman 1995;Engelbrecht 1997;Griffith et al 2004;Belorgey et al 2006). We use one single data set covering a 42-year period (1969-2010) and 20 OECD countries to extend these models.…”

Information technology and transnational integration: Theory and evidence on the evolution of the modern multinational enterprise

“…Finally, capital-intensive industries (e.g., chemicals, and pulp and paper) can also be expected to use ICT more intensely. In such industries that tie up physical capital, ICT is well suited to optimize rates of utilization, machine switching costs, and quality, all of which are key influences on efficiency (see Belorgey, Lecat, & Maury, 2006;Motohashi, 1997). 11 Capital intensity is measured as total real capital stock per employee (with data from the NBER-CES Manufacturing Industry Database).…”