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Showing papers on "Physical capital published in 2006"


Posted Content
TL;DR: This paper showed that immigrants are imperfect substitutes for U.S.-born workers within the same education-experience-gender group (because they choose different occupations and have different skills) and that most of the wage effects of immigration accrue to native workers within a decade.
Abstract: This paper asks the following question: what was the effect of surging immigration on average and individual wages of U.S.-born workers during the period 1990-2004? We emphasize the need for a general equilibrium approach to analyze this problem. The impact of immigrants on wages of U.S.-born workers can be evaluated only by accounting carefully for labor market and capital market interactions in production. Using such a general equilibrium approach we estimate that immigrants are imperfect substitutes for U.S.- born workers within the same education-experience-gender group (because they choose different occupations and have different skills). Moreover, accounting for a reasonable speed of adjustment of physical capital we show that most of the wage effects of immigration accrue to native workers within a decade. These two facts imply a positive and significant effect of the 1990-2004 immigration on the average wage of U.S.-born workers overall, both in the short run and in the long run. This positive effect results from averaging a positive effect on wages of U.S.-born workers with at least a high school degree and a small negative effect on wages of U.S.-born workers with no high school degree.

1,098 citations


Posted Content
TL;DR: The authors examined how accounting quality relates to firm-level capital investment efficiency and found that higher quality accounting enhances investment efficiency by reducing information asymmetry between managers and outside suppliers of capital, and that this effect should be stronger in economies where financing is largely provided through arm's-length transactions compared with countries where creditors supply more capital.
Abstract: This study examines how accounting quality relates to firm-level capital investment efficiency. Our first hypothesis is that higher quality accounting enhances investment efficiency by reducing information asymmetry between managers and outside suppliers of capital. Our second hypothesis is that this effect should be stronger in economies where financing is largely provided through arm's-length transactions compared with countries where creditors supply more capital. Our results are consistent with these hypotheses both across and within countries. They are robust to alternative econometric specifications, different measures of accounting quality and investment-cash flow sensitivity, and numerous control variables.

626 citations


Journal ArticleDOI
TL;DR: In this article, the authors show that the level of capital demanded by market participants may be above the one chosen by a regulator, even when capital is a relatively costly source of funds.
Abstract: Market discipline for financial institutions can be imposed not only from the liability side, as has often been stressed in the literature on the use of subordinated debt, but also from the asset side. This will be particularly true if good lending opportunities are in short supply, so that banks have to compete for projects. In such a setting, borrowers may demand that banks commit to monitoring by requiring that they use some of their own capital in lending, thus creating an asset market-based incentive for banks to hold capital. Borrowers can also provide banks with incentives to monitor by allowing them to reap some of the benefits from the loans, which accrue only if the loans are in fact paid off. Since borrowers do not fully internalize the cost of raising capital to the banks, the level of capital demanded by market participants may be above the one chosen by a regulator, even when capital is a relatively costly source of funds. This implies that capital requirements may not be binding, as recent evidence seems to indicate.

571 citations


Posted Content
TL;DR: The authors showed that immigrants are imperfect substitutes for U.S.-born workers within the same education and experience group and that most of the wage effects of immigration accrue to native workers already within a decade.
Abstract: This paper asks the following important question: what was the effect of surging immigration on average and individual wages of U.S.-born workers during the period 1990-2004? Building on section VII of Borjas (2003) we emphasize the need for a general equilibrium approach to analyze this problem. The impact of immigrants on wages of US born workers can be evaluated only by accounting carefully for labor market and capital market interactions in production. Using such a general equilibrium approach we estimate that immigrants are imperfect substitutes for U.S.-born workers within the same education and experience group (because they choose different occupations and have different skills). Moreover, accounting for reasonable speed of adjustment of physical capital we show that most of the wage effects of immigration accrue to native workers already within a decade. These two facts, overlooked by the previous literature, imply a positive and significant effect of the 1990-2004 immigration on the average wage of U.S.-born workers overall, both in the short and in the long run. This positive average effect resulted from a positive effect on wages of all US-born workers with at least a high school degree and a small negative effect on wages of U.S born workers with no high school degree.

468 citations


Journal ArticleDOI
TL;DR: In this article, the authors show that corporate venture capital investment will create greater firm value when firms explicitly pursue corporate VC to harness novel technology, using a panel of CVC investments, and present evidence consistent with their proposition.

443 citations


ReportDOI
TL;DR: In this article, the authors add intangible capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth.
Abstract: Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add intangible capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.

421 citations


Journal ArticleDOI
TL;DR: The authors suggests that the demise of the capitalists-workers class structure was a socioeconomic transformation orchestrated by the capitalists in reaction to the increasing importance of human capital in sustaining their profit rates.
Abstract: This paper suggests that the demise of the capitalists–workers class structure was a socio-economic transformation orchestrated by the capitalists in reaction to the increasing importance of human capital in sustaining their profit rates. Physical capital accumulation in the process of industrialization enhanced the importance of human capital in production and generated incentives for capitalists to support the provision of public education for the masses, triggering the demise of the existing class structure. The implications of the theory are consistent with the voting patterns on England’s education reform of 1902.

391 citations


Journal ArticleDOI
TL;DR: In this paper, the authors test the hypotheses that entrepreneurship and university-industry relations are vehicles for knowledge flows and thus, spur economic growth, and show that entrepreneurship is a crucial element of economic growth.

388 citations


Journal ArticleDOI
TL;DR: In this article, the authors describe a model where, in equilibrium, the characteristics of formal and informal workers differ systematically, even though labor markets are perfectly competitive in developing nations, where formal workers tend to be more experienced, more educated, and earn more than informal workers.

328 citations


Journal ArticleDOI
TL;DR: The authors used panel data over the 1960-2000 period, a modified neoclassical growth equation, and a dynamic panel estimator to investigate the effect of higher education human capital on economic growth in African countries.
Abstract: This paper uses panel data over the 1960–2000 period, a modified neoclassical growth equation, and a dynamic panel estimator to investigate the effect of higher education human capital on economic growth in African countries. We find that all levels of education human capital, including higher education human capital, have positive and statistically significant effect on the growth rate of per capita income in African counties. Our result differs from those of earlier research that find no significant relationship between higher education human capital and income growth. We estimate the growth elasticity of higher education human capital to be about 0.09, an estimate that is twice as large as the growth impact of physical capital investment. While this is likely to be an overestimate of the growth impact of higher education, it is robust to different specifications and points to the need for African countries to effectively use higher education human capital in growth policies.

296 citations


Journal ArticleDOI
TL;DR: In this paper, the authors apply meta-analytic techniques to the literature on the impact of economic freedom on economic growth and find an overall positive direct association between economic freedom and economic growth.

Journal ArticleDOI
TL;DR: Wegmans Food Markets Inc., a Rochester, New York-based grocer, was 2005's Fortune Best Company to Work For as discussed by the authors, and employs more than 17,500 full-time and part-time employees.

Journal ArticleDOI
TL;DR: In this paper, the authors combine data on international trade linkages with network methods to examine the global trading system as an interdependent complex network and suggest new network based measures of international economic integration, at both a global system-wide level and a local country-level.
Abstract: We combine data on international trade linkages with network methods to examine the global trading system as an interdependent complex network. We map the topology of the international trade network and suggest new network based measures of international economic integration, at both a global system-wide level and a local country-level. We develop network based measures that incorporate not only the volume of trade but also the influence that a country has on the international trading system. These measures incorporate the structure and function of the network and may provide a more meaningful approach to globalization than current measures based on trade volumes. We find that in terms of participation and influence in the network, global trade is hierarchical with a core-periphery structure at meaningful levels of trade, though integration of smaller countries into the network increased considerably over the 1990's. The network is strongly "balkanized" according to geography of trading partners but not as strongly by income or legal origin. Using these new measures we find that a country's position in the network has substantial implications for economic growth and that network position is a substitute for physical capital but a complement to human capital. We therefore suggest that a network approach to international economic integration has potential for useful applications in international business, finance and development.

Journal ArticleDOI
TL;DR: In this article, the authors estimate the impact of schooling and capital constraints at the time of startup on the performance of Dutch entrepreneurial ventures, taking into account the potential endogeneity and interdependence of these variables.
Abstract: We estimate the impact of schooling and capital constraints at the time of startup on the performance of Dutch entrepreneurial ventures, taking into account the potential endogeneity and interdependence of these variables. Instrumental variable estimates indicate that a 1 percentage point relaxation of capital constraints increases entrepreneurs' gross business incomes by 3.9% on average. Education enhances entrepreneurs' performance both directly—with a rate of return of 13.7%—and indirectly, because each extra year of schooling decreases capital constraints by 1.18 percentage points. The indirect effect of education on entrepreneurs' performance is estimated to be 3.0–4.6%.

Journal ArticleDOI
TL;DR: In this paper, the authors studied the long-term effects of war in Sub-Saharan Africa and found that war impacts are limited to the destruction of capital, while the neoclassical model predicts rapid economic growth postwar, converging back to steady-state growth.
Abstract: Scholars of economic development have argued that war can have adverse impacts on later economic performance: war destroys physical capital and infrastructure and disrupts human capital accumulation, and it may also damage institutions by creating political instability, destroying the social fabric and endangering civil liberties (World Bank, 2003). Understanding war’s impact on development is particularly important for Sub-Saharan Africa, where two-thirds of all nations suffered from armed conflict during the 1980s and 1990s. The proliferation of armed conflict in the world’s poorest region begs the question of what role conflict may be playing in Africa’s disappointing economic performance. Yet the net long-run effects of war are ambiguous from the point of view of economic theory. To the extent that war impacts are limited to the destruction of capital, the neoclassical model predicts rapid economic growth postwar, converging back to steady-state growth. Several recent papers that study war impacts—including in Japan (Donald R. Davis and David E. Weinstein, 2002) and Vietnam (Miguel and Gerard Roland, 2005)—find few persistent local impacts of U.S. bombing, with heavily bombed areas experiencing rapid recovery to prewar population and economic trends. This is consistent with the neoclassical model if war’s main consequence is to destroy capital. War could also affect long-run growth— either positively or negatively—by modifying the scale parameter in the neoclassical growth model. For example, while the World Bank (2003) argues that war has adverse institutional consequences, Charles H. Tilly shows how war promoted state formation and nation building in Europe historically, ultimately strengthening institutions (Tilly, 1975). We study the aftermath of the recent civil conflict in Sierra Leone. One notable aspect of this project is the extensive household data for Sierra Leone on conflict experiences and on local institutions. Our results are complementary to the other recent studies mentioned above, none of which examines institutional impacts.

Journal ArticleDOI
TL;DR: This article showed that human capital investments are not independent of the aggregate state of labor markets and that frictions and slackness of the labor market raise the returns to specific human capital investment relative to general investments.
Abstract: We show a fundamental property of human capital investments : they are not independent of the aggregate state of labor markets. In particular, frictions and slackness of the labor market raise the returns to specific human capital investments relative to general investments. This is a property that Becker's seminal contribution in the context of perfect labor markets did not consider. We then build a macroeconomic model where in equilibrium emerge different regimes. In the G-regime, workers invest in general skills. This occurs when they face high turnover labor markets and in the absence of employment protection. The S-regime in which workers invest in skills specific to their job appears when employment protection is high enough. Low job turnover is both a cause and a consequence of specifi ci nvestments in human capital. This paper then re-interprets Europe-US differences in arguing that the US are closer to the G-regime and Continental Europe to the S-regime. This conjecture provides, among other things, a rationale for differences in labor mobility and reallocation costs, which are typically ignored in American 'International Trade' textbooks while considered as extremely large in the public debate in Europe. In a S-regime, mobility costs are high and transitions between steady-states have especially strong adverse effects. On the other hand, in the steady-state, workers in the S-regimes are very productive. Each regime has thus its own coherence, although the European type incurs higher transition costs when macroeconomic conditions change.

Journal ArticleDOI
TL;DR: This paper investigated the relationship between interregional human capital knowledge flows and regional knowledge assets and found that the primary role of the university system appears to be as a conduit for bringing potential high quality undergraduate human capital into a region.
Abstract: Our paper constructs a simultaneous equation model in order to investigate the relationship between interregional human capital knowledge flows and regional knowledge assets. With the aid of a GIS system, we model the simultaneous relationship between the interregional migration behaviour of British students and graduates from university and into employment, the knowledge assets of the regions, and the regions of employment of the graduates. Our results indicate that after controlling for the human-capital flows of students and graduates, there is little evidence in favour of direct spillovers between university research and regional innovation. Rather, the primary role of the university system appears to be as a conduit for bringing potential high quality undergraduate human capital into a region. We argue therefore that the migration effects of embodied human capital in Great Britain appear far more important than informal university-industry spillovers as an explanation of regional learning effects.

Journal ArticleDOI
TL;DR: Tests based on observational, interview, and experimental data collected among Tsimane Amerindians of the Bolivian Amazon suggest that size alone cannot explain the long delay until peak hunting productivity.

Journal ArticleDOI
TL;DR: This paper examined the relative importance of the growth of physical and human capital and the growth in total factor productivity (TFP) using newly organized data on 145 countries that spans more than 100 years for 23 of these countries.
Abstract: We examine the relative importance of the growth of physical and human capital and the growth of total factor productivity (TFP) using newly organized data on 145 countries that spans more than 100 years for 23 of these countries. For all countries, only 14% of average output growth per worker is associated with TFP growth. We use priors from theories to construct estimates of the relative importance of the variances of aggregate input growth and TFP growth across countries. Much of the importance of the variance of TFP growth across countries is associated with negative TFP growth. (JEL O47, O50, O57, O30, N10) How much of growth in output per worker is associated with growth in physical and human capital per worker, and how much is due to technology, institutional change, and other factors? An economy’s output is a positive function of physical and human capital given the technology. Assumptions of constant returns to scale and competitive factor markets make it possible to calculate the growth rate of output implied by the growth of physical and human capital; deviations of actual output from this implied growth rate are due to changes in technology, institutional change, failure of the twin assumptions of constant returns to scale and competitive factor markets, and other factors. These deviations are called growth in total factor productivity (TFP), although these deviations include much more than what is suggested by the word productivity and probably are more fairly called the ‘‘residual’’ or ‘‘Solow residual’’ in growth. This type of analysis, called growth accounting, preceded the theoretical contributions to growth theory by Solow (1956) and Swan (1956), but many more publications succeeded them. Abramovitz (1956) found that only 10% of output growth per person in the United States from 1869–78 to 1944–53 is associated with growth of factors of production, and 90% of output growth is associated with growth of TFP. Solow (1957) found that the accumulation of physical capital accounts for roughly 12% of output growth per hour worked in the United States from 1900 to 1949 with the remaining 88% attributed to growth of TFP. Although later work has reduced this unexplained residual, it is

Journal ArticleDOI
TL;DR: In this paper, the authors examined the ways in which productivity in tourism businesses can be increased by studying the roles of changes in physical capital, human capital, innovation, and the competitive environment.

Posted Content
TL;DR: In this article, the potential of FDI inflows to affect host country economic growth is discussed and models the potential for FDI in terms of technology spillovers and physical capital inflows.
Abstract: This paper discusses and models the potential of FDI inflows to affect host country economic growth. The paper argues that FDI should have a positive effect on economic growth as a result of technology spillovers and physical capital inflows. Performing both cross-section and panel data analysis on a dataset covering 90 countries during the period 1980 to 2002, the empirical part of the paper finds indications that FDI inflows enhance economic growth in developing economies but not in developed economies.

Journal ArticleDOI
TL;DR: In this paper, a theoretical model is developed which generates predictions about the nature and directions of the interdependencies between human and financial capital, and also possible interdependence between these variables.
Abstract: To what extent is the performance of a small business venture, once started, affected by capital constraints at the time of inception and by the business founder's investment in human capital? We attempt to answer this question taking into account the potential endogeneity of human and financial capital, and also possible interdependence between these variables. A theoretical model is developed which generates predictions about the nature and directions of the interdependencies. Using a rich data set on Dutch entrepreneurs in 1995, we obtain findings that are broadly consistent with the theoretical model. Instrumental variable estimates indicate that a 1 percentage point relaxation of capital constraints increases entrepreneurs' gross business incomes by 2 per cent on average. Also, education enhances entrepreneurs' performance both directly - with a rate of return of 12.7 per cent - and indirectly, because each extra year of schooling decreases capital constraints by 1.18 percentage points. The indirect effect of education on entrepreneurs' performance is estimated to be between 0.8 and 2.4 per cent.

Book ChapterDOI
01 Jan 2006
TL;DR: In this article, the authors discussed international liberalisation of financial capital in a perfect world (Chapters 2 and 3) and under tax distortions (Channels 4 and 5). The perfect-world analysis delivered the result that international liberalization contributes via optimal international allocation of physical capital to welfare of both countries and therefore of the world as a whole.
Abstract: In the previous chapters I discussed international liberalisation of financial capital in a perfect world (Chapters 2 and 3) and under tax distortions (Chapters 4 and 5). The perfect-world analysis delivered the result that international liberalisation contributes via optimal international allocation of physical capital to welfare of both countries and therefore of the world as a whole. In Chapter 4 a tax distortion was introduced by way of differences in company taxes between countries. This distortion jeopardizes the perfect-world result, even to the extent that the benefits of international liberalisation of financial capital become uncertain. This outcome represents the actual stance of the literature. Policy thinking regarding tax harmonisation in the EU is developing on this basis.

Book
09 Aug 2006
TL;DR: Social capital as an economic concept and social capital as capital as a spatial externality are discussed in this article, where the authors compare Sweden, Japan and USA/California in terms of social capital.
Abstract: Social Capital as an Economic Concept.- Social Capital as Capital in the Economic Sense.- Social Capital as a Spatial Externality.- The Social Capital of the Enterprise.- Social Capital and Entrepreneurship.- Social Capital and Innovation: Actors and Policies.- Why Compare Sweden, Japan and USA/California?.- Social Capital Expressed in the Form of Labor Market Relations.- Social Capital and Institutions for Growth, Innovation and Renewal.- Civil Society's Social Capital.- The Knowledge-Intensive Biotech Industry: Structures and Policies.- The Biotech Industry's Social Capital: An Empirical Study.- Some Forward Looking Comments.

Journal Article
TL;DR: Different kinds of capital as mentioned in this paper have been found to be the most significant resource in responding to damage caused by natural and other hazards, such as terrorism, in cities such as London, Hamburg, Dresden, Hiroshima, and Tokyo.
Abstract: Recent events in the United States have generated considerable discussion about dealing with emergencies. Such discussion has produced congressional investigations and governmental reorganization while blaming victims for their own ineptness. Much of that discussion misses the point. Every community shows evidence of past problem solving and many of those problems were considered emergencies. Everywhere, people solve their problems within their own social and cultural context. Cities that experienced traumatic damage in World War II - London, Hamburg, Dresden, Hiroshima, and Tokyo - are still vibrant communities. 1 San Francisco recently celebrated the 100th anniversary of the 1906 earthquake. Some celebrated the city's continuity but others predicted a dangerous future. We easily recall the disasters but forget the continuity and creativity of these communities.When new threats appear, they are usually seen as more deadly and more disorganizing than those that have come before. On the other hand, we often miss the effectiveness of individual communities in addressing these threats. In 1995, when the federal building in Oklahoma City was bombed by domestic terrorists, the city was home to a population of 450,000 and had fifteen hospitals. Within ninety seconds after the blast, emergency medical services had seven ambulances and two supervisory vehicles en route to the scene. The final report indicated that by 9:45 a.m., there were more medical personnel, drivers and people wanting to help than the site could handle. By 10:30 a.m. there were 442 people treated at various emergency rooms, eighty-three hospitalized and 243 treated by private physicians; all live victims, with perhaps two exceptions, had been removed from the damaged building. This effort - centering on a bomb-destroyed building - involved 167 deaths and 675 non-fatal injuries. The unanticipated emergency response from the community dealt with the immediate injuries in a little more than an hour. 2Of course, the central symbol of international terrorism in the United States was the collapse of the World Trade Towers in New York and the perhaps 3,000 deaths that resulted from the collapse. Often overlooked, however, is the fact that at the time of impact there were an estimated 17,400 occupants in those buildings and eighty-seven percent of them evacuated successfully. Most of the deaths were on the floors or above the floors where the planes hit. It is now determined that ninety-nine percent of those below the impact floors successfully evacuated. 3 This successful evacuation was not accomplished by conventional search and rescue groups; it was the result of people on site helping others and themselves to take protective action to get out of the towers and to a safe location. While the loss of property and life occurring on 9/11 is frequently recalled, the protective actions of the other "victims" in the building are often overlooked.Much of the contemporary discussion about emergency planning assumes that community members "panic" and that strong authority is necessary. The vocabulary of "command and control" suggests chaos rather than citizen adaptability and creativity. Such assumptions can be questioned by the research evidence accumulated in recent years. 4 While we calculate damage to physical and human capital, we usually ignore the social capital available within communities to deal with emergencies. Social capital is our most significant resource in responding to damage caused by natural and other hazards, such as terrorism.Different Kinds of CapitalInsight into the ways in which communities respond to emergencies can be found by looking at the types of capital used to construct the human community. Most obvious is physical capital. We have tools and materials to build houses and streets, string wires or go wireless, build 110-story towers and create the material environment we experience every day. …

Journal ArticleDOI
TL;DR: In this paper, the effect of the business cycle on the regulatory capital buffer of German local banks in the period 1993-2004 has been analyzed and shown that low-capitalized banks do not decrease risk-weighted assets in a business cycle downturn and that their low capitalization does not force them to retreat from lending.
Abstract: This paper analyzes the effect of the business cycle on the regulatory capital buffer of German local banks in the period 1993-2004. The capital buffer is found to fluctuate countercyclically over the business cycle. The fluctuation is stronger for public banks than for cooperative banks. Further, low-capitalized banks do not catch up with their well-capitalized peers over the observation period. Finally, low-capitalized banks do not decrease risk-weighted assets in a business cycle downturn. This finding suggests that their low capitalization does not force them to retreat from lending.

Book ChapterDOI
TL;DR: The relationship between natural resource dependence and economic growth is discussed in this paper, where the authors present empirical cross-country evidence to the effect that nations that depend heavily on their natural resources tend to have (a) less trade and foreign investment, (b) more corruption, (c) less equality, (d) less political liberty, (e) less education, (f) less domestic investment, and (g) less financial depth than other nations that are less well endowed with or less dependent on, natural resources.
Abstract: This Paper reviews the relationship between natural resource dependence and economic growth, and stresses how natural capital intensity tends to crowd out foreign capital, social capital, human capital, physical capital, and financial capital, thereby impeding economic growth across countries. Specifically, the Paper presents empirical cross-country evidence to the effect that nations that depend heavily on their natural resources tend to have (a) less trade and foreign investment, (b) more corruption, (c) less equality, (d) less political liberty, (e) less education, (f) less domestic investment, and (g) less financial depth than other nations that are less well endowed with, or less dependent on, natural resources. This matters for long-run growth because empirical evidence also suggests that trade, honesty, equality, liberty, education, investment, and financial maturity are all positively and significantly related to economic growth across countries. Before concluding, the Paper briefly compares and contrasts the experience of the OPEC countries with that of Norway, a singularly successful oil producer.

Journal ArticleDOI
TL;DR: The authors developed an endogenous growth model with elastic labor supply, in which agents differ in their initial endowments of physical capital and the growth rate and the distribution of income are jointly determined.
Abstract: We develop an endogenous growth model with elastic labor supply, in which agents differ in their initial endowments of physical capital. In this framework, the growth rate and the distribution of income are jointly determined. The key equilibrating variable is the equilibrium labor supply. It determines the rate of return to capital, which in turn affects both the rate of capital accumulation and the distribution of income across agents. We then examine the impact of various structural shocks on growth and distribution. We find that faster growth is associated with a more unequal, contemporaneous distribution of income, consistent with recent empirical findings.

Journal ArticleDOI
TL;DR: In this article, the effects of intangible assets on wages and productivity are examined. But the authors focus on the effect of investment in physical capital, training and R&D on workers' productivity.
Abstract: The present paper offers a novel study of the effects of intangible assets on wages and productivity. Training, R&D and physical capital are all taken into account, and their joint effects are examined. We use panels of firms in order to control for unobserved fixed effects and the potential endogeneity of training and R&D, using data for France and Sweden. The estimation of productivity and wage equations allows us to show how the benefits of investment in physical capital, training and R&D are shared between the firm and the workers. We found that firms indeed obtain the largest part of the returns to their investments, but their share is relatively lower for intangible assets (R&D and training) than for physical capital.

Journal ArticleDOI
TL;DR: In this article, the authors estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household-specific fixed effects, and suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period.
Abstract: Using a unique set of household-level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household-specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period. Over 5-year periods, the effect of capital gains in corporate equities on saving is substantially larger than the effect of capital gains in housing or other assets. Failure to differentiate wealth effects across asset types results in a significant understatement of their size.