The great divergence(s)

Abstract

Calligaris provided excellent assistance with the metadata and Flavio Calvino with the policy data. A previous version of this document was presented and discussed by the OECD Committee for Industry, Innovation and Entrepreneurship (CIIE) and its Working Party on Industry Analysis (WPIA).

Bits and bolts

“…These factors likely reflect that more productive firms benefit from a higher endowment of (or better access to) human and organisational capital that are essential complements to digital technologies. These results are consistent with the idea that digitalisation, while supporting productivity for the average firm, has also played a role in the widening productivity divergence between firms (documented in Andrews, Criscuolo and Gal, 2016;Berlingieri et al, 2017). It is also in line with recent findings on the speed of catch-up of laggard firms (i.e., 40% least productive firms) by Berlingieri et al (2018).…”

“…Recent micro-level evidence has raised concerns that new digital technologies may be linked to increasing productivity gap between frontier and other firms. The productivity slowdown has accompanied an increasing productivity divergence between highlyproductive "superstar" firms and a mass of laggard firms where productivity growth has been sluggish (Andrews et al, 2016;Berlingieri et al, 2017). At the same time, new digital technologies can yield positive effects on productivity at the firm and industry level (Draca et al, 2009;Syverson, 2011;Gal et al, 2019).…”

“…The trends were initially documented for the US; see, for example,Decker et al (2014) andDecker et al (2016). For cross-country evidence, seeCriscuolo et al (2014).3 SeeAndrews et al (2016) andBerlingieri et al (2017).4 See, for example, Furman and Orszag (2015),Grullon et al (2015),Honjo, Doi and Kudo (2014) andBajgar et al (2019a).5 De Loecker and Eeckhout (2017) for the US and Calligaris, Criscuolo and Marcolin (2018) for 26 mostly OECD economies.6 Karabarbounis and Neiman (2014) and OECD (2015) document declining labour shares in a large number of countries Autor et al (2017b). andBarkai (2017) show evidence for the US and discuss some potential drivers of the observed trends.…”

Reform of the welfare state or dreams about universal basic income?

“…The risk, however, is that new and existing jobs will increasingly be of the low-paid variety, unless matched by rising skill levels in the population. 92 There is new evidence that wages have not kept pace with economic growth in the last few decades. 93 Therefore one urgent policy challenge is to improve skills, including for those who are already employed.…”

Decoupling of wages from productivity: what implications for public policies?

“…It also provides descriptive evidence on decoupling for the covered OECD countries based on aggregate data (Schwellnus et al, 2017). The following section summarises the results from OECD country, industry and firm-level studies on the effects of structural trends and policy developments for the transmission of productivity gains to real median wages, with a special emphasis on recent firm dynamics (Berlingieri et al, 2017;Pak and Schwellnus, 2018;Schwellnus et al, 2018).…”