We would like to thank Robert Topel, Andrew Hildreth and seminar participants at Carnegie-

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We review the econometric literature on measuring the returns to R&D. The theoretical frameworks that have been used are outlined, followed by an extensive discussion of measurement and econometric issues that arise when estimating the models. We then provide a series of tables summarizing the major results that have been obtained and conclude with a presentation of R&D spillover returns measurement. In general, the private returns to R&D are strongly positive and somewhat higher than those for ordinary capital, while the social returns

Abstract: This paper studies why multinational firms often share ownership of a foreign affiliate with a local partner even in the absence of government restrictions on ownership. We show that shared ownership may arise, if (i) the partner owns assets that are potentially important for the investment project, and (ii) the value of these assets is private information. In this context shared ownership acts as a screening device. Our model predicts that the multinational’s ownership share is increasing in its productivity, with the most productive multinationals choosing not to rely on a foreign partner at all. This prediction is shown to be consistent with data on the ownership choices of Japanese multinationals.

Based on firm-level data for Belgium over the period 1997-2005, we evaluate the elasticity of labour and average real wage per firm to microeconomic total factor productivity (TFP). We find that the elasticity of wages with respect to TFP is rather low. Our results suggest that sector-level collective bargaining in Belgium leaves limited margin for adjustment of real wages to firm-specific shocks. Next, we report evidence of a positive relationship between hours and technology. Finally, our finding of sluggish wage response in the services sector can be related to the observed higher price stickiness for services than for other goods.

This paper explores what we know and bow we think about firm performance, firm and industry evolution, and economic growth. It reports empirical findings from a new literature that focuses explicitly on individual business units. In contrast to traditional empirical studies of competition and economic growth that examine aggregate economic variables such as industry or regional productivity, this new work concentrates on differences in the behavior of firms and their business units. The results emerging from these analyses confirm the importance of microeconomic approaches to economic research and place the firm at the center of economic growth. 1.

We use detailed income, balance sheet, and cash flow statements constructed for households in a long monthly panel in an emerging market economy, and some recent contributions in economic theory, to document and better understand the factors underlying success in achieving upward mobility in the distribution of net worth. Wealth inequality is decreasing over time, and many households work their way out of poverty and lower wealth over the seven year period. The accounts establish that, mechanically, this is largely due to savings rather than incoming gifts and remittances. In turn, the growth of net worth can be decomposed household by household into the savings rate and how productively that savings is used, the return on assets (ROA). The latter plays the larger role. ROA is, in turn, positively correlated with higher education of household members, younger age of the head, and with a higher debt/asset ratio and lower initial wealth, so it seems from cross-sections that the financial system is imperfectly channeling resources to productive and poor households. Household fixed effects account for the larger part of ROA, and this success is largely persistent, undercutting the story that successful entrepreneurs are those that simply get lucky. Persistence does vary across households, and in at least one province with much change and increasing opportunities, ROA changes as households move over time to higher-return occupations. But for those households with high and persistent ROA, the savings rate is higher, consistent with some micro founded macro models

Economic development implies that the efficiency of firms in developing countries is approaching that of firms in advanced economies. We examine the extent of this convergence in the Czech Republic and Russia, economies that represent alternative models of implementing development policies, often referred to as the Washington Consensus, that have promoted privatization, competition and foreign investment. We also test hypotheses positing that only firms near the efficiency frontier benefit from these policies and catch up. Using 1992-2000 panel data on virtually all industrial firms in each country, we find that privatization to domestic owners did not markedly improve the efficiency of firms; domestic firms are not catching up to the (world) efficiency standard given by foreign-owned firms; and the distance of the Russian firms to the efficiency frontier is much larger than that of the Czech firms and continued to grow for most firms beyond 1997 while remaining constant in the Czech Republic. Domestic firms closer to the frontier are not more likely to catch up than firms further from the frontier although foreign firms do exhibit this behavior. Foreign-owned firms are increasingly displacing domestic firms in the top deciles of the overall distribution of efficiency, due in part to slower “learning ” by domestic firms, higher

Productivity dispersion across firms is large and persistent, and worker reallocation among firms is an important source of productivity growth. The purpose of the paper is to estimate the structure of an equilibrium model of growth through innovation. The model is a modified version of the Schumpeterian theory of firm evolution and growth developed by Klette and Kortum (2002). The data set is a panel of Danish firms than includes information on value added, employment, and wages. The model’s fit is good and the structural parameter estimates have interesting implications for the aggregate growth rate and the contribution of worker reallocation to it. 1 1

This thesis develops new methods for measuring capital-embodied technological change and its effects on productivity. Rates of embodied technological change are necessary to properly measure the productive stock of capital. Results from the hedonic pricing literature have been used for this purpose, though not without controversy. In this dissertation, I first develop an alternative, production-side approach to estimating embodied technological change. The method exploits the large variation in plant-level investment histories available in the Longitudinal Research Database at the U.S. Census Bureau. The empirical results show that the rate of embodied technological change (or, equivalently, obsolescence) in U.S. manufacturing from 1972-96 is between 7 and 17 percent. Any number in this range is substantially larger than price-based estimates. A method of measuring embodied technological change via data on research and development (R&D) is also developed. I propose an index that captures the amount of R&D embodied in an industry’s capital. Combining (and adjusting) data