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Small Steps for Workers, a Giant Leap for Productivity

Author

Listed:
  • Igal Hendel
  • Yossi Spiegel

Abstract

We document the evolution of productivity in a steel mini mill with fixed capital, producing an unchanged product with Leontief technology working 24/7. Despite?almost?unchanged production conditions, output doubled within the sample period (12 years). We decompose the gains into downtime reductions, more rounds of production per time, and more output per run. After attributing productivity gains to investment and an incentive plan, we are left with a large unexplained component. Learning by experimentation, or tweaking, seems to be behind the continual and gradual process of productivity growth. The findings suggest that capacity is not well defined, even in batch-oriented manufacturing.

Suggested Citation

  • Igal Hendel & Yossi Spiegel, 2014. "Small Steps for Workers, a Giant Leap for Productivity," American Economic Journal: Applied Economics, American Economic Association, vol. 6(1), pages 73-90, January.
    • Handle: RePEc:aea:aejapp:v:6:y:2014:i:1:p:73-90
    Note: DOI: 10.1257/app.6.1.73
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    Citations

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    Cited by:

    1. Ayoubi, Charles, 2020. "Machine learning in healthcare: Mirage or miracle for breaking the costs dead-lock?," Thesis Commons tc24d, Center for Open Science.
    2. Hal Varian, 2018. "Artificial Intelligence, Economics, and Industrial Organization," NBER Chapters, in: The Economics of Artificial Intelligence: An Agenda, pages 399-419, National Bureau of Economic Research, Inc.
    3. Menzel, Andreas, 2021. "Knowledge exchange and productivity spill-overs in Bangladeshi garment factories," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 721-746.
    4. Loren Brandt & Feitao Jiang & Yao Luo & Yingjun Su, 2022. "Ownership and Productivity in Vertically Integrated Firms: Evidence from the Chinese Steel Industry," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 101-115, March.
    5. Lundborg, Petter & James, Stefan & Lagerqvist, Bo & Vikström, Johan, 2021. "Learning-by-Doing and Productivity Growth among High-Skilled Workers: Evidence from the Treatment of Heart Attacks," IZA Discussion Papers 14744, Institute of Labor Economics (IZA).
    6. Gautam Gowrisankaran & Charles He & Eric A. Lutz & Jefferey L. Burgess, 2015. "Productivity, Safety, and Regulation in Underground Coal Mining: Evidence from Disasters and Fatalities," NBER Working Papers 21129, National Bureau of Economic Research, Inc.
    7. Patel, Pankaj C. & Tsionas, Mike & Oghazi, Pejvak & Izquierdo, Vanessa, 2022. "No entrepreneur steps in the same river twice: Limited learning advantage for serial entrepreneurs," Journal of Business Research, Elsevier, vol. 142(C), pages 1038-1052.
    8. Rembrand Koning & Sharique Hasan & Aaron Chatterji, 2022. "Experimentation and Start-up Performance: Evidence from A/B Testing," Management Science, INFORMS, vol. 68(9), pages 6434-6453, September.
    9. Kareem Haggag & Brian McManus & Giovanni Paci, 2017. "Learning by Driving: Productivity Improvements by New York City Taxi Drivers," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 70-95, January.

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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