Laggards imitate, leaders innovate: the heterogeneous productivity effect of imitation versus innovation

This study finds that imitation increases the productivity of laggards more than that of leaders, while innovation has the opposite effect. As firms approach the productivity frontier, the effect of imitation on productivity decreases, while that of innovation increases. The empirical evidence suggests that search costs are the mechanism underlying this effect. Firms increase their productivity by imitating productive firms. When they become more productive, search costs increase, because they have fewer opportunities to imitate.

Labor market trends in a low and heterogeneous productivity country. Evidence from Argentina’s manufacturing

ABSTRACT During Substitution Industrialization (1930-1975), wages rose, and unemployment and poverty were low. During the “neoliberal process” (1976-2002) the liberalization of the goods and financial markets resulted in the regression of the productive structure, high unemployment and the decline of real wages. Finally, since the collapse of 2002, Argentina has had enormous success in terms of unemployment, with limited achievements in wages or poverty. This paper tries to answer why Argentina faces difficulties to return to past labor market figures highlighting the process of capital differentiation and the new international division of labor.

HETEROGENEITY AND REDISTRIBUTION IN FINANCIAL CRISES

This paper presents a simple model of an economy with heterogeneous agents to show that the redistribution of wealth among such agents can play a significant role in the propagation mechanism of financial crises. In an economy where firms with heterogeneous productivity operate under borrowing constraints, the redistribution reproduces hump-shaped responses for output and labor and procyclicality in observed productivity. In this model, a financial shock generates a persistent and hump-shaped response, whereas a productivity shock does not. Further, the redistribution of wealth significantly amplifies the persistence and hump shape of these responses following a financial shock. This model suggests that redistribution may thus be a key driving force behind the transmission of financial crises.

On the macroeconomic effects of heterogeneous productivity shocks

The conventional wisdom that producer heterogeneity washes out, and is therefore irrelevant for the aggregate economy, does not apply when producers compete monopolistically. Despite this, the effects of such heterogeneity can be reproduced with an appropriately redefined representative-agent framework where the equilibrium values of aggregates are expressed in terms of the moment generating function of the distribution of heterogeneity, or its asymptotic distribution. Increased heterogeneity raises aggregate productivity and production, more so the fiercer competition is. We propose a framework where the entire distribution of heterogeneity matters, yet computationally requires no more than a representative-agent model.