an article by George J. Borjas (Harvard Kennedy School, USA) and Richard B. Freeman (Harvard University, USA) published in RSF: The Russell Sage Foundation Journal of the Social Sciences Volume 5 Issue 5 (December 2019)
Abstract
Using numbers of industrial robots shipped to primarily manufacturing industries as a supply shock to an industry labor market, we estimate that an additional robot reduces employment by roughly two to three workers overall and by three to four workers when robots are likely to be good substitutes for humans.
The supply shock also reduces wages. The estimates far exceed those of an additional immigrant on employment and wages.
While growth of robots in the 2000s was too modest to be a major determinant of wages and employment, the estimated effects suggest that continued exponential growth of industrial robots could disrupt job markets in the foreseeable future and thus merit attention from analysts and policymakers concerned about the economic well-being of workers.
Full text (PDF 23pp)
Showing posts with label manufacturing. Show all posts
Showing posts with label manufacturing. Show all posts
Thursday, 5 December 2019
Wednesday, 4 December 2019
Industrial strategy and the UK regions: sectorally narrow and spatially blind
an article by Steve Fothergill, Tony Gore and Peter Wells (Sheffield Hallam University, UK) published in Cambridge Journal of Regions, Economy and Society Volume 12 Issue 3 (November 2019)
Abstract
The UK government’s new Industrial Strategy could have a significant impact on the country’s regions and localities.
However, this has received little attention to date.
The analysis presented here examines the existing location of the sectors targeted by the first phase of the Industrial Strategy Challenge Fund and the location of the RandD laboratories likely to be first in line for funding.
In focusing on an extremely narrow range of sectors, the Fund is likely to have limited impact on the UK’s persistent regional inequalities. The activities eligible for support account for relatively little of manufacturing or the rest of the economy and the basis of this targeting and its potential distributional consequences are spatially blind.
As such, it runs the risk of widening regional divides in prosperity.
JEL Classification: L52, O25, R11
Full text (PDF 22pp)
Abstract
The UK government’s new Industrial Strategy could have a significant impact on the country’s regions and localities.
However, this has received little attention to date.
The analysis presented here examines the existing location of the sectors targeted by the first phase of the Industrial Strategy Challenge Fund and the location of the RandD laboratories likely to be first in line for funding.
In focusing on an extremely narrow range of sectors, the Fund is likely to have limited impact on the UK’s persistent regional inequalities. The activities eligible for support account for relatively little of manufacturing or the rest of the economy and the basis of this targeting and its potential distributional consequences are spatially blind.
As such, it runs the risk of widening regional divides in prosperity.
JEL Classification: L52, O25, R11
Full text (PDF 22pp)
Thursday, 28 February 2019
Regulations, immigration, and firms' offshoring decisions
a column by Simone Moriconi, Giovanni Peri and Dario Pozzoli for VOX: CEPR’s Policy Portal
Firms’ offshoring decisions depend on the size of entry costs in target countries. But the institutional and policy determinants of these costs have received little empirical attention.
This column uses data on 2,000 Danish manufacturing firms to explore how costs of entry affect offshoring decisions. Higher levels of labour market rigidity, credit risk, and corruption all lower the probability of offshoring to a given country, while immigrant networks within the firm increase the likelihood of offshoring to their home countries.
Continue reading
Firms’ offshoring decisions depend on the size of entry costs in target countries. But the institutional and policy determinants of these costs have received little empirical attention.
This column uses data on 2,000 Danish manufacturing firms to explore how costs of entry affect offshoring decisions. Higher levels of labour market rigidity, credit risk, and corruption all lower the probability of offshoring to a given country, while immigrant networks within the firm increase the likelihood of offshoring to their home countries.
Continue reading
Wednesday, 20 February 2019
The Decline of British Manufacturing, 1973–2012: The Role of Total Factor Productivity
an article by Richard Harris and John Moffat (Durham University Business School, UK) published in National Institute Economic Review Volume 247 Issue 1 (February 2019)
Abstract
This paper uses plant-level estimates of total factor productivity covering 40 years to examine what role, if any, productivity has played in the decline of output share and employment in British manufacturing.
The results show that TFP growth in British manufacturing was negative between 1973 and 1982, marginally positive between 1982 and 1994 and strongly positive between 1994 and 2012. Poor TFP performance therefore does not appear to be the main cause of the decline of UK manufacturing.
Productivity growth decompositions show that, in the latter period, the largest contributions to TFP growth come from foreign-owned plants, industries that are heavily involved in trade, and industries with high levels of intangible assets.
JEL Classification: D22, D24, L6
Abstract
This paper uses plant-level estimates of total factor productivity covering 40 years to examine what role, if any, productivity has played in the decline of output share and employment in British manufacturing.
The results show that TFP growth in British manufacturing was negative between 1973 and 1982, marginally positive between 1982 and 1994 and strongly positive between 1994 and 2012. Poor TFP performance therefore does not appear to be the main cause of the decline of UK manufacturing.
Productivity growth decompositions show that, in the latter period, the largest contributions to TFP growth come from foreign-owned plants, industries that are heavily involved in trade, and industries with high levels of intangible assets.
JEL Classification: D22, D24, L6
Tuesday, 11 December 2018
You are needed but not your skills: Challenges to manufacturing workers in the wake of globalisation
a column by Hâle Utar for VOX: CEPR’s Policy Portal
The impact of trade shocks on labour market shifts is usually studied in the context of re-training and social welfare frictions.
Using evidence from Denmark, this column shows how workers can experience long-run reductions in earnings no matter how easy it is to change sector. A sudden and obligatory shift toward a new sector may, by its nature, generate some worker dissatisfaction.
Continue reading
The impact of trade shocks on labour market shifts is usually studied in the context of re-training and social welfare frictions.
Using evidence from Denmark, this column shows how workers can experience long-run reductions in earnings no matter how easy it is to change sector. A sudden and obligatory shift toward a new sector may, by its nature, generate some worker dissatisfaction.
Continue reading
Monday, 30 July 2018
Government must urgently deliver Industrial Strategy plan to solve productivity puzzle
from South West Skills Newsletter
Britain’s manufacturers are calling for the Industrial Strategy Council to be immediately created and given the urgent task of setting clear goals that will focus on solutions to boost manufacturing productivity growth.
The call from EEF, the manufacturers’ organisation, comes on the back of new research showing the evolution of manufacturing sub-sector productivity growth against key international competitors before and after the financial crisis, including where the problems and opportunities for growth now sit.
Full text of the EEF press release (HTML)
Britain’s manufacturers are calling for the Industrial Strategy Council to be immediately created and given the urgent task of setting clear goals that will focus on solutions to boost manufacturing productivity growth.
The call from EEF, the manufacturers’ organisation, comes on the back of new research showing the evolution of manufacturing sub-sector productivity growth against key international competitors before and after the financial crisis, including where the problems and opportunities for growth now sit.
Full text of the EEF press release (HTML)
Tuesday, 3 July 2018
The declining share of manufacturing jobs
a column by Oya Celasun and Bertrand Gruss for VOX: CEPR’s Policy Portal
The manufacturing sector is believed to play a unique role as a catalyst for productivity growth and income convergence, and as a provider of well-paid jobs for less-skilled workers.
This column argues, however, that the declining share of manufacturing employment over the past decades need not hurt the income convergence prospects of developing economies and that the loss of manufacturing jobs can only explain a small fraction of the rise in inequality in advanced economies. That said, getting the policies right is key to help countries make the most out of structural transformation.
Continue reading
The manufacturing sector is believed to play a unique role as a catalyst for productivity growth and income convergence, and as a provider of well-paid jobs for less-skilled workers.
This column argues, however, that the declining share of manufacturing employment over the past decades need not hurt the income convergence prospects of developing economies and that the loss of manufacturing jobs can only explain a small fraction of the rise in inequality in advanced economies. That said, getting the policies right is key to help countries make the most out of structural transformation.
Continue reading
Wednesday, 25 April 2018
Barriers to trade in services have an impact on multinational production in the manufacturing sector
a column by Koen De Backer, Sébastien Miroudot and Davide Rigo for VOX: CEPR’s Policy Portal
Multinational enterprises that produce goods rely on services to organise their value chain, so barriers to investment in services are likely to affect their production.
The column uses a new and comprehensive OECD database to measure the share of services in the exports of multinational enterprises, and also in the output of their foreign affiliates. The results suggest that policymakers may need to focus more on the services that support manufacturing industries.
Continue reading
I found the chart of “double counting” particularly interesting although I got lost in the statistical explanation.
Multinational enterprises that produce goods rely on services to organise their value chain, so barriers to investment in services are likely to affect their production.
The column uses a new and comprehensive OECD database to measure the share of services in the exports of multinational enterprises, and also in the output of their foreign affiliates. The results suggest that policymakers may need to focus more on the services that support manufacturing industries.
Continue reading
I found the chart of “double counting” particularly interesting although I got lost in the statistical explanation.
Thursday, 26 October 2017
The rise of robots in the German labour market
a column for VOX: CEPR’s Policy Portal by Wolfgang Dauth, Sebastian Findeisen, Jens Südekum and Nicole Woessner
Recent research has shown that industrial robots have caused severe job and earnings losses in the US. This column explores the impact of robots on the labour market in Germany, which has many more robots than the US and a much larger manufacturing employment share. Robots have had no aggregate effect on German employment, and robot exposure is found to actually increase the chances of workers staying with their original employer. This effect seems to be largely down to efforts of work councils and labour unions, but is also the result of fewer young workers entering manufacturing careers.
Continue reading
Recent research has shown that industrial robots have caused severe job and earnings losses in the US. This column explores the impact of robots on the labour market in Germany, which has many more robots than the US and a much larger manufacturing employment share. Robots have had no aggregate effect on German employment, and robot exposure is found to actually increase the chances of workers staying with their original employer. This effect seems to be largely down to efforts of work councils and labour unions, but is also the result of fewer young workers entering manufacturing careers.
Continue reading
Friday, 14 August 2015
The Scale of ‘Leakage’ of Engineering Graduates from Starting Work in Engineering and its Implications for Public Policy and UK Manufacturing Sectors
SKOPE Research Paper No. 122, January 2015 by Dr Matthew Dixon (SKOPE Fellow)
Abstract
The fact that not all graduates from vocational higher education courses go and work in the ‘natural’ profession or ‘natural industry sector’ corresponding to the course content is recognised. However, the scale of the ‘leakage’ of those completing engineering courses away from working in relevant engineering companies comes as a considerable surprise. The fraction of those graduating from particular engineering disciplines who go into the corresponding industry sector (in particular within manufacturing) is not only not 100 per cent, but generally less than 50 per cent and, in some cases, less than 10 per cent.
This paper presents evidence from the Higher Education Statistics Agency’s (HESA) surveys, Destinations of Leavers from Higher Education (DHLE), over 10 years that shows just how invalid is the idealised ‘linear pipeline’ assumption that has prevailed (often by default) in much higher education skills supply thinking over recent years, and examines the implications. Any shortages, in a particular engineering manufacturing sector, of bright young people who might understand the engineering principles and technical details involved in that work, arise not from a lack of supply of such graduates as a whole but from the fact that most of them go and work elsewhere.
A default response focused on trying to get more (young) people to sign up for the corresponding higher education courses in order to tackle any shortages in individual manufacturing sectors would therefore generally be particularly wasteful from a policy point of view. An ultimately more effective response would rather be to work to significantly raise the attractiveness of the sector to students on the courses.
This paper also considers the natural response from a classical economics perspective – of urging engineering employers, if they perceive a supply shortage, to raise their starting salary offers to graduates. While plausible, this suggestion ignores the realities of the business model within the sector in the highly competitive market context in which these companies must trade. Their operating profit levels mean that engineering manufacturing companies cannot afford, as easily as employers in various other sectors can, to offer higher salaries: the market in which engineering employers recruiting graduates operate is not a level playing field’.
As well as examining aspects of the reported skill shortage context of the issue, the paper also throws light on answers to the questions that naturally follow a recognition of the comparatively large scale of leakage: Where do engineering graduates from particular disciplines go and work? What other disciplines are recruited by engineering firms? In addition, evidence from DLHE data on initial unemployment of graduates from different disciplines confirms that the shortages often asserted are not generally enough to put the corresponding labour markets into a particularly ‘tight’ state.
Evidence on role requirements from the Migration Advisory Committee suggests that such recent engineering skill shortages as are substantiated could not generally be directly resolved with ‘fresh’ graduates. The rather complex realities of engineering graduate recruitment outcomes uncovered by this analysis will help policy analysts realise the need for more robust evidence of market failure when considering possible policy responses attempting to link reported skill shortages in specific sectors to higher education flows into the workforce.
Full text (Wordpress)
Abstract
The fact that not all graduates from vocational higher education courses go and work in the ‘natural’ profession or ‘natural industry sector’ corresponding to the course content is recognised. However, the scale of the ‘leakage’ of those completing engineering courses away from working in relevant engineering companies comes as a considerable surprise. The fraction of those graduating from particular engineering disciplines who go into the corresponding industry sector (in particular within manufacturing) is not only not 100 per cent, but generally less than 50 per cent and, in some cases, less than 10 per cent.
This paper presents evidence from the Higher Education Statistics Agency’s (HESA) surveys, Destinations of Leavers from Higher Education (DHLE), over 10 years that shows just how invalid is the idealised ‘linear pipeline’ assumption that has prevailed (often by default) in much higher education skills supply thinking over recent years, and examines the implications. Any shortages, in a particular engineering manufacturing sector, of bright young people who might understand the engineering principles and technical details involved in that work, arise not from a lack of supply of such graduates as a whole but from the fact that most of them go and work elsewhere.
A default response focused on trying to get more (young) people to sign up for the corresponding higher education courses in order to tackle any shortages in individual manufacturing sectors would therefore generally be particularly wasteful from a policy point of view. An ultimately more effective response would rather be to work to significantly raise the attractiveness of the sector to students on the courses.
This paper also considers the natural response from a classical economics perspective – of urging engineering employers, if they perceive a supply shortage, to raise their starting salary offers to graduates. While plausible, this suggestion ignores the realities of the business model within the sector in the highly competitive market context in which these companies must trade. Their operating profit levels mean that engineering manufacturing companies cannot afford, as easily as employers in various other sectors can, to offer higher salaries: the market in which engineering employers recruiting graduates operate is not a level playing field’.
As well as examining aspects of the reported skill shortage context of the issue, the paper also throws light on answers to the questions that naturally follow a recognition of the comparatively large scale of leakage: Where do engineering graduates from particular disciplines go and work? What other disciplines are recruited by engineering firms? In addition, evidence from DLHE data on initial unemployment of graduates from different disciplines confirms that the shortages often asserted are not generally enough to put the corresponding labour markets into a particularly ‘tight’ state.
Evidence on role requirements from the Migration Advisory Committee suggests that such recent engineering skill shortages as are substantiated could not generally be directly resolved with ‘fresh’ graduates. The rather complex realities of engineering graduate recruitment outcomes uncovered by this analysis will help policy analysts realise the need for more robust evidence of market failure when considering possible policy responses attempting to link reported skill shortages in specific sectors to higher education flows into the workforce.
Full text (Wordpress)
Thursday, 28 June 2012
Sustainable developments in knitting
an article by E.J. Power (affiliation(s) not provided) published in International Journal of Business and Globalisation Volume 9 Number 1 (2012)
Abstract
The global community is aware that policies and practices regarding human consumption of resources need to change. Sustainability is a dominant factor within government policies worldwide.
A recent report compiled on behalf of the European Union identified clothing and textiles as key industries in terms of reducing environmental impact.
In response to this report, the UK government devised the clothing roadmap to investigate sustainable developments within these industries. Sustainable design was identified as one area for improvement.
This paper acknowledges that the clothing supply chains are not transparent. Consumers can purchase garments produced from organic and eco fibres since labelling identifies the raw material sources. However, it is less straightforward to purchase garments produced using sustainable technologies since processing information is not displayed at the point of sale.
This paper investigates sustainability within the knitwear industry and challenges the view that textile manufacturing industries are significant contributors to energy consumption.
Abstract
The global community is aware that policies and practices regarding human consumption of resources need to change. Sustainability is a dominant factor within government policies worldwide.
A recent report compiled on behalf of the European Union identified clothing and textiles as key industries in terms of reducing environmental impact.
In response to this report, the UK government devised the clothing roadmap to investigate sustainable developments within these industries. Sustainable design was identified as one area for improvement.
This paper acknowledges that the clothing supply chains are not transparent. Consumers can purchase garments produced from organic and eco fibres since labelling identifies the raw material sources. However, it is less straightforward to purchase garments produced using sustainable technologies since processing information is not displayed at the point of sale.
This paper investigates sustainability within the knitwear industry and challenges the view that textile manufacturing industries are significant contributors to energy consumption.
Thursday, 21 June 2012
The Impact of Fathers’ Job Loss during the 1980s Recession on their Child’s Educational Attainment and Labour Market Outcomes
a working paper (12/288) by Paul Gregg, Lindsey Macmillan and Bilal Nasim published by Centre for Market and Public Organisation, Bristol Institute of Public Affairs (April 2012)
Abstract
The research on intergenerational correlations in outcomes is increasingly moving from measurement into assessment of causal transmission mechanisms.
This paper analyses the causal impact of fathers’ job loss on their children’s educational attainment and later economic outcomes. To do so, we isolate the effect of job loss associated with major industry contractions, mainly in manufacturing, during the 1980s recession by mapping industry level employment change data from 1980 to 1983 into the British Cohort Study (BCS).
Children with fathers’ who were identified as being displaced did significantly worse in terms of their GCSE attainment than those from non-displaced families. A child with a displaced father obtained on average 17 grade points lower or half a GCSE grade A-C less than their otherwise identical counterparts, the equivalent of 2.2% lower wages as an adult.
There is also a small effect of fathers’ displacement on the early labour market attachment of children, but no direct impact on their earnings at 30/34. This does not mean that the impact of job loss will not affect social mobility. Those with lower income, education and social class were most affected by job losses and there is a direct effect on education and youth unemployment which we know to be drivers of later earnings.
This suggests that the recent recession may have significant long-term consequences for the children of those who lost their jobs.
Full text (PDF 33pp)
Abstract
The research on intergenerational correlations in outcomes is increasingly moving from measurement into assessment of causal transmission mechanisms.
This paper analyses the causal impact of fathers’ job loss on their children’s educational attainment and later economic outcomes. To do so, we isolate the effect of job loss associated with major industry contractions, mainly in manufacturing, during the 1980s recession by mapping industry level employment change data from 1980 to 1983 into the British Cohort Study (BCS).
Children with fathers’ who were identified as being displaced did significantly worse in terms of their GCSE attainment than those from non-displaced families. A child with a displaced father obtained on average 17 grade points lower or half a GCSE grade A-C less than their otherwise identical counterparts, the equivalent of 2.2% lower wages as an adult.
There is also a small effect of fathers’ displacement on the early labour market attachment of children, but no direct impact on their earnings at 30/34. This does not mean that the impact of job loss will not affect social mobility. Those with lower income, education and social class were most affected by job losses and there is a direct effect on education and youth unemployment which we know to be drivers of later earnings.
This suggests that the recent recession may have significant long-term consequences for the children of those who lost their jobs.
Full text (PDF 33pp)
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