2018 Fiscal Year Research-status Report
Analysis on TFP Sources of Growth to Enhance Competitiveness
| Project/Area Number |
17K03745
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| Research Institution | Ritsumeikan Asia Pacific University |
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Principal Investigator |
キム サンホ 立命館アジア太平洋大学, 国際経営学部, 教授 (20635461)
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| Project Period (FY) |
2017-04-01 – 2022-03-31
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| Keywords | Firm heterogeneity / stochastic frontier / productivity growth / technical efficiency / factor adjustment / dynamic duality / scale efficiency / Japanese manufacturing |
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| Outline of Annual Research Achievements |
In FY2018, I published a working paper, “Firm Heterogeneity in Sources of Total Factor Productivity (TFP) Growth: Evidence from Japanese Manufacturing Firms” in a SSCI-indexed journal. The paper decomposed TFP growth into four sources: technical change, technical efficiency change, scale efficiency change, and allocative efficiency change. Then, the paper estimates firm heterogeneity in the decomposed sources to derive policy implications.
The paper shows that large firms are more productive mainly because they are more innovative, despite often operating at less-than-efficient scales. The paper suggests that the beneficial impact of exports on productivity is realized most when firms become exporters, and after a certain threshold intrafirm trade results in inefficiency.
The paper helps not only policy-makers to derive specific policy to boost productivity but scholars to better understand firm heterogeneity in productivity.
Further, I drafted two working papers about dynamic factor adjustment in the Japanese manufacturing industry. In the first working paper, I investigated the dynamic production structure of the Japanese manufacturing industry by estimating both adjustment speed of capital and labor and dynamic elasticities of factor inputs and output supply. In the second working paper, I applied the factor adjustment model in simulating the effects of corporate tax reduction on investment.
With feedback from conferences and workshops, I have revised the papers and sent them to academic journals for possible publication.
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| Current Status of Research Progress |
Current Status of Research Progress
1: Research has progressed more than it was originally planned.
Reason
I am working on a dynamic model to analyze the impacts of macro policy on TFP growth, which was supposed to be done in FY 2017-2018 according to my Disbursement Application Form. I am pursuing this research in FY 2018-2019, instead. In FY 2018, I developed and wrote two working papers about dynamic factor models to investigate dynamic factor adjustment for the Japanese manufacturing industry.
The papers show the existence of great adjustment costs inherent in the Japanese manufacturing industry. Furthermore, the simulations suggest that providing a tax reduction as an incentive to firms for raising wage turns out to boost not only capital investment but also employment.
The dynamic model provides a consistent theoretical basis for explaining manufacturing investment patterns based on the dynamic optimization of economic agents, but researches regarding the dynamic factor adjustment of the Japanese manufacturing industry are rare. These papers are expected to fill the research vacuum. In addition, my papers can simulate impacts of a corporate tax rate reduction on investments,
In FY 2019, I will apply the dynamic factor model to investigate dynamic TFP growth.
Considering that I published one paper in a journal and drafted out two working papers in FY 2018 and have already started on my new research in FY 2019. My research is progressing more smoothly than initially planned.
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| Strategy for Future Research Activity |
In FY 2019, I am working on a research about TFP growth under dynamic factor adjustment. This study will apply a dynamic adjustment-cost framework to estimate a dynamic productivity growth for the Japanese manufacturing industry. Contrary to a static productivity growth, the dynamic productivity growth acknowledges that firms don’t usually operate at the optimal input level. This research will provide a dynamic mechanism in which government policies affect factor adjustment and productivity growth of the economy. The research help firms achieve optimal input levels as they can estimate the impacts of factor investment on productivity more accurately.
In FY 2020-2021, I will try to investigate the relationship between TFP growth and labor share so as to explain the declining trend in labor compensation. My research on dynamic factor adjustment has led me to this new research interest about temporal change in factor compensation and productivity. With this change, I can deal with more practical issues of labor compensation, which has been falling recently.
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| Causes of Carryover |
The remaining amount of 938 yen was too small to use for meaningful research purposes. So I intend to use it in the next Academic Year with the new funds for AY2019. I will use it to purchase a book in the next academic year.
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