Embed Size (px)
Citation preview
parole chiave
PRODUTTIVITA’
Matteo Bugamelli
Banca d’Italia
Dipartimento Economia e Statistica
Perhaps the most remarkable fact about economic growth in recent decades is
the slowdown in productivity growth that occurred around the year 2000.
This slowdown is global in nature, featuring in many countries throughout the
world.”
Prof. Chad Jones (Stanford) @ 2017 Sintra Forum on Central Banking
“The euro area economy continues to expand at a moderate, but steady pace
…. expected to continue…But productivity growth has remained very
subdued. If it persists, [it] will matter greatly for our future prosperity,
…and the cohesion of the euro area.”
Mario Draghi (Nov. 2016)
“The Italian economy has been suffering for a long time of a too low
dynamics of productivity. […] The more we hesitate to fill this gap …, the
more negative would be the effects on Italians’ living standards.”
Ignazio Visco (Sept. 2017)
Productivity at the center of the debate
Why productivity so
relevant?
GDP per capita and productivity
Source: Total Economy Database, The Conference Board, May 2017
19501990
19702016
19501970
1990
2016
Why productivity so relevant?
• Productivity directly affects firms’ marginal cost of
production: ceteris paribus, higher productivity means
lower prices (higher real disposable income) and
stronger competitiveness on international markets
• Productivity is a key determinant of potential output
(“highest level of real GDP”): used to estimate the
structural deficit (i.e. net of the effects of business
cycle), determines “fiscal space” (fiscal policy)
• Short-run deviation of actual output from potential
(“output gap”) is indicator of future inflationary
pressures (monetary policy)
Outline of the presentation
1. Definition of productivity
2. Data: Italy vs other euro area countries
3. Productivity growth: the channels
4. Productivity growth: the determinants
- Innovation & technology
- Ownership and Management
- Human capital
- Business environment: rule of law
(M. Bugamelli & F. Lotti (eds.) et al. (2018), “Productivity growth in Italy: a tale of a slow-
motion change”, Bank of Italy, Occasional papers, no. 422)
What is productivity?
The definition of productivity [1]
• Productivity is commonly defined as a ratio of a volume measure of
production/output to a volume measure of factor/input use: efficiency
Source: OECD Manual, «Measuring Productivity»
The definition of productivity [2]
• Labour productivity:
- Value added per person employed
- Value added per employee
- Value added per hour worked
- Value added per full-time equivalent (FTE) person
• Multi/total factor productivity:
- Technology
- Management and organization
2. The data
𝐺𝐷𝑃𝑡 =𝐺𝐷𝑃𝑡𝐻𝑜𝑢𝑟𝑠𝑡
×𝐻𝑜𝑢𝑟𝑠𝑡
𝑊𝑜𝑟𝑘𝑒𝑟𝑠𝑡×
𝑊𝑜𝑟𝑘𝑒𝑟𝑠𝑡𝐿𝑎𝑏𝑜𝑟𝐹𝑜𝑟𝑐𝑒𝑡
×𝐿𝑎𝑏𝑜𝑟𝐹𝑜𝑟𝑐𝑒𝑡𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑡
× 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑡
Efficiency Labor market Demographics
ItalyFrance Germany
Manufacturing better than services
Manufacturing:
- improving since 2003
- same performance as main
euro area countries since 2009
Private services:
- always flat
- no signs of recovery
both in absolute and
relative terms
Firm size is key
A very polarized productive structure
The channels
Within firm, reallocation, entry, exit
Allocative efficiency
Source: Andrews & Cingano (2014)
Up-or-out dynamics
As compared to US, Italian new firms:
• enter smaller
• grow at lower rates and for a lower number of years,
• less likely to exit
The determinants
WithinFirms increasing
their productivity
Entry/exitNew firms displacing
older and less
productive onesCh
an
nel
s
Internal (to the firm) External
Det
erm
inan
ts
Innovation
Technology
Human capital (demand)
Ownership
Management
Human capital (supply)
Finance
Labor market & Industrial relations
Regulation of entry
Competition and regulation
Insolvency regime
Rule of law
PRODUCTIVITY
GROWTH
ReallocationFactors moving
from less to more
productive firms
Firm size
Innovation and technology
Innovation & technology
Key factors for productivity growth: all 3 channels at work
• Efficiency gains at the firm level:
R&D expenditure: product innovation
Capital accumulation: embodied technological change
Adoption of new technologies: ICTs, Robots, IoT, Big data…
Infrastructures: availability of high-speed Internet (broadband access)
Organizational innovation
• Creative destruction triggered by innovation increases reallocation
• Relevance of innovative start ups for employment and productivity
growth
Italy’s lagging behind: intangibles
Physical capital (GFCF) and Knowledge-based capital
Source: Source: OECD Science, Technology and Industry Scoreboard 2015; OECD calculations based on INTAN-Invest
data, www.intan-invest.net; and OECD STAN Database. OECD Survey of Italy 2017, Figure 31.
Italy’s lagging behind: IT
Source: Schivardi & Schmitz (2018)’s elaborations on OECD and EUKlems data
Italy’s lagging behind: robotics
Source: Eurostat Census data as of 2001 and IFR, 1995-2015.
Number of robots per 1,000 inhabitants
Innovation: which obstacles?
• External determinants: financing of innovation, business
environment, competition and regulation
• Internal determinants:
Firm size fig1 fig2
Ownership and management
Ownership and
management
Management practices
Source: Schivardi & Schmitz (2018)’s elaborations on WMS data
Management practices, IT and productivity
Source: Schivardi & Schmitz (2018)’s elaborations on WMS data
MP by type of ownership and management
Source: Bloom et al (2009)’s elaborations on WMS data
Family ownership & management in Italy
Source: Bugamelli et al. (2012)’s calculations using EFIGE data.
• Family owners: less diversified & more risk averse (Michelacci & Schivardi, 2013)
• Family management: overly cautious; strong negative correlation with
innovation propensity and growth (Bugamelli et al., 2012)
• Loyalty-based & non-meritocratic management (excessive dose of
familism): while needed to overcome financial and bureaucratic hurdles, it
implies worse utilization of IT, weaker productivity growth (Pellegrino & Zingales,
2017)
Human capital
Human capital and productivity
Key factor for innovation, technology adoption & therefore
productivity growth
• Macro level: educational attainments explain significant fraction of
cross-country heterogeneity in per capita output growth
• Micro level: human capital increases firms’ productivity
− Educated workers display higher ability to perform job tasks, process
information, acquire new competencies, create innovation, adapt to
technological changes
− Educated entrepreneurs and managers: better managerial practices
• Even more relevant in digital age
Lack of human capital
Italy: quantitative and qualitative shortage of HK wrt other
advanced economies
• In 2015: only 60% of people aged 25-64 years successfully
completed upper secondary education; only 18% hold a tertiary
level degree, well below EU average (79 and 32%)
• Gap does not reflect only past generations’ choices: among people
aged 25-34, share of college graduates is 25%, 7 pp less than EU
average
• Low participation in formal education → lower logical-analytical
and cognitive skills of the adult population
− According to PIAAC survey on adult skills, as of 2015 Italy ranked last in
language skills and third to last in numeracy (among OECD countries)
Human capital: demand or supply?(Colonna, 2017)
Negative feedbacks between demand and supply of skills:
• Supply: firms’ propensity to invest in new technologies, provide
on-the-job training, demand skilled labor restrained by difficulty in
finding skilled workers (education system)
• Demand: firms’ specialization in low skilled productions and
small firm size limit demand for skilled workers
• Vicious circle: low demand for skilled workers → low returns to
education → low incentives to invest in education (young people
within education system and older ones on the job) → low supply
of skilled workers → low innovation → specialization in low
skilled productions → low demand for skilled workers → …
Skill mismatch(Ballatore et al, 2018)
Business environment
Business environment
Many dimensions, all 3 channels at work:
• Regulation of entry (monetary vs time costs)
• Labor market regulation
• Competition and product market regulation (services
vs manufacturing)
• Insolvency regime (exit of firms)
• Efficiency of Public Administ. & civil justice
• Rule of law: Political connections
Corruption: one of highest level in EU
Shadow economy: tax evasion and illegal activities
Criminal organizations (Pinotti, 2015; Barone & Narciso, 2015; Barone & Mocetti,
2014)
Rule of law: political connections
Source: Cingano & Pinotti (2013)
Trade-off btw static efficiency gains (overcome regulatory barriers through political
connections) and dynamic losses (lower firm entry, innovation and productivity) (Akcigit, Basladze & Lotti, 2017)
Rule of law: tax evasion(Bobbio, 2016)
Hypothesis: tax enforcement increase with firm size
Mechanism:• Small firms invest less in innovation to avoid (shadow) cost of tax
regularization (within firm effect #1)
• → unfair competition: lower expected value of innovation reduced
→ incumbent firms optimally choose a lower innovation rate (within
firm effect #2)
• Selection hampered
Result:• many small and few innovative firms, weak innovation, high tax
evasion, very unfair competition → low productivity growth
• No tax evasion → GDP growth rate 1995-2006: from 0.9 to 1.1%
(higher: share of innovators, propensity to innovate, firm size)
Tables and figures
Firm size matters [1]
back
Firm size matters [2]
Source: Schivardi & Schmitz (2018)’s elaborations on Eurostat data back
