The Creation and Capture of Rents: Wages and Innovation in a Panel of UK Companies
AbstractThis paper examines the impact of technological innovation on wages using a panel of UK manufacturing firms. We utilize a headcount measure of major innovations between 1945-83 combined with share price and accounting information. Innovating firms are found to have higher average wages, but rival innovation tends to depress own wages. This appears consistent with a model where wages are partly determined by a sharing in the rents generated by innovation. In other words innovation may be a good instrument for proxies for rents such as profitability, quasi-rents or Tobin's q. Instrumental variable estimates of the elasticity between wages and quasi-rents are about 0.3, remarkably close to the recent findings of Abowd and Lemieux (1993).
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1071.
Date of creation: Nov 1994
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Other versions of this item:
- Van Reenen, John, 1996. "The Creation and Capture of Rents: Wages and Innovation in a Panel of U.K. Companies," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 195-226, February.
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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