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Allocation of human capital and innovation at the frontier: firm-level evidence on Germany and the Netherlands


Bartelsman, Eric; Dobbelaere, Sabien; Peters, Bettina (2015). Allocation of human capital and innovation at the frontier: firm-level evidence on Germany and the Netherlands. Industrial and Corporate Change, 24(5):875-949.

Abstract

This article examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6634 enterprises in Germany and 14,841 enterprises in the Netherlands over the period 2000-2008, considering five manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. In Germany, average innovation performance is higher in all industries, except for low-technology manufacturing, and in the Netherlands the innovation performance distributions are more dispersed. In both countries, we observe nonlinearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to product innovation whereas for process innovation the most negative returns are observed in the best-performing enterprises of most industries. We find that in both countries the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence suggests an interpretation of a winner-takes-all market in knowledge-intensive services

Abstract

This article examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6634 enterprises in Germany and 14,841 enterprises in the Netherlands over the period 2000-2008, considering five manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. In Germany, average innovation performance is higher in all industries, except for low-technology manufacturing, and in the Netherlands the innovation performance distributions are more dispersed. In both countries, we observe nonlinearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to product innovation whereas for process innovation the most negative returns are observed in the best-performing enterprises of most industries. We find that in both countries the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence suggests an interpretation of a winner-takes-all market in knowledge-intensive services

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Item Type:Journal Article, refereed, original work
Communities & Collections:National licences > 142-005
Dewey Decimal Classification:Unspecified
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Language:English
Date:1 October 2015
Deposited On:19 Sep 2018 14:31
Last Modified:31 Jul 2020 01:52
Publisher:Oxford University Press
ISSN:0960-6491
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1093/icc/dtu038
Related URLs:https://www.swissbib.ch/Search/Results?lookfor=nationallicenceoxford101093iccdtu038 (Library Catalogue)

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