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Internal And External Adjustment To New Technologies

Author

Listed:
  • Lutz Bellmann
  • Tito Boeri

Abstract

Schumpeterian creative destruction occurs not only at the industry level, but also with each firm trying to maintain or improve its position in the technology race. Based on a rich data set on more than 4,000 German business units, this paper shows that the simultaneous occurrence of hiring and separations is more likely in firms with the most advanced technologies in use than in units more distant from the technological frontier. This positive relation between technological advance and creative destruction documented also by churning and 'excess job reallocation equations - holds particularly in recovery years, while it is weak during a recession. The explanation provided for this finding in the paper is that firms can also improve technologies by upgrading machinery and/or retraining workers, and these 'implementation' costs arc likely to be lower during economic downturns.

Suggested Citation

  • Lutz Bellmann & Tito Boeri, 1998. "Internal And External Adjustment To New Technologies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 325-343.
  • Handle: RePEc:taf:ecinnt:v:5:y:1998:i:2-4:p:325-343 DOI: 10.1080/10438599800000010
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    References listed on IDEAS

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    1. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, Oxford University Press, pages 557-586.
    2. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
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    4. E. S. Phelps, 1966. "Models of Technical Progress and the Golden Rule of Research," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 133-145.
    5. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
    6. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, pages 796-815.
    7. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    8. Filip Abraham, 1994. "Social protection and regional convergence in a European Monetary Union," Open Economies Review, Springer, pages 89-114.
    9. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-350, April.
    10. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    11. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, pages 810-822.
    12. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, pages 569-594.
    2. Michael Mesch, 2007. "Die Berufsstruktur der Beschäftigung in Wien 1991-2001," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 33(1), pages 41-72.
    3. Pekka Ilmakunnas & Mika Maliranta, 2005. "Worker inflow, outflow, and churning," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1115-1133.
    4. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, pages 569-594.
    5. repec:iab:iabmit:v:35:i:3:p:385-396 is not listed on IDEAS
    6. Boockmann, Bernhard & Hagen, Tobias, 2002. "Arbeitsplatzdynamik und befristete Verträge: Empirische Evidenz aus dem IAB-Betriebspanel für Baden-Württemberg (Job dynamics and fixed-term contracts : empirical evidence from the IAB establishment p," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 35(3), pages 385-396.
    7. Alda, Holger & Allaart, Piet & Bellmann, Lutz, 2005. "Churning and institutions : Dutch and German establishments compared with micro-level data," IAB Discussion Paper 200512, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    Creative destruction; labour turnover; implementation costs. JEL classification codes: 03; L21; 363;

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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