Creator: Holmes, Thomas J. and Mitchell, Matt Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 325 Abstract:
In this paper we develop a theory of how factors interact at the plant level. The theory has implications for (1) the micro foundations for capital-skill complementarity, (2) the relationship between factor allocation and plant size, and (3) the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 19th and 20th centuries.
Fach: L20 - Firm Objectives, Organization, and Behavior: General, F10 - Trade: General, and J30 - Wages, Compensation, and Labor Costs: General
Creator: Mitchell, Matt Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 290 Abstract:
The skill premium fell substantially in the first part of the 20th century, and then rose at the end of the century. I argue that these changes are connected to the organization of production. When production is organized into large plants, jobs become routinized, favoring less skilled workers. Building on the notion that numerically controlled machines made capital more “flexible” at the end of the century, the model allows for changes in the ability of capital to do a wide variety of tasks. When calibrated to data on the distribution of plant sizes, the model can account for between half and two-thirds of the movement in the skill premium over the century. It is also in accord with a variety of industry level evidence.
Creator: Mitchell, Matt Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 269 Abstract:
Many manufacturing industries, including the computer industry, have seen large increases in productivity growth rates and have experienced a reduction in average establishment size and a decrease in the variance of the sizes of plants. A vintage capital model is introduced where learning increases productivity on any given technology and firms choose when to adopt a new vintage. In the model, a rise in the rate of technological change leads to a decrease in both the mean and variance of the size distribution.
Stichwort: Technological Change, Plant Size, and Productivity Growth Fach: L11 - Production, Pricing, and Market Structure; Size Distribution of Firms, L60 - Industry Studies: Manufacturing: General, and O30 - Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
Creator: Hopenhayn, Hugo Andres, Llobet, Gerard, and Mitchell, Matt Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 273 Abstract:
This paper presents a model of cumulative innovation where firms are heterogeneous in their research ability. We study the optimal reward policy when the quality of the ideas and their subsequent development effort are private information. The optimal assignment of property rights must counterbalance the incentives of current and future innovators. The resulting mechanism resembles a menu of patents that have infinite duration and fixed scope, where the latter increases in the value of the idea. Finally, we provide a way to implement this patent menu by using a simple buyout scheme: The innovator commits at the outset to a price ceiling at which he will sell his rights to a future inventor. By paying a larger fee initially, a higher price ceiling is obtained. Any subsequent innovator must pay this price and purchase its own buyout fee contract.
Stichwort: Asymmetric Information, Mechanism Design, Compulsory Licensing, Patents, Innovation, Policy, and Sequential Innovation Fach: D82 - Asymmetric and Private Information; Mechanism Design, K23 - Regulated Industries and Administrative Law, O31 - Innovation and Invention: Processes and Incentives, D43 - Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection, L51 - Economics of Regulation, L50 - Regulation and Industrial Policy: General, and H41 - Public Goods