Estimating the role of labor resources reallocation between sectors on the growth of aggregate labor productivity in the Russian economy
Abstract
Relevance. Economic growth can be achieved in two different ways: through technological improvements and reallocation of market shares from less to more productive units. Despite the significant research literature on innovation in Russia, the literature on market selection, especially at the sectoral level, is relatively scarce. This is the research gap that this study aims to address.
Research objective. The article assesses how labor resource reallocation between sectors has influenced the dynamics of aggregate labor productivity in the Russian economy over the past two decades.
Data and methods. For this purpose, the growth of aggregate labor productivity was decomposed into the growth of productivity within the sectors themselves and the reallocation of labor resources between them. This allowed us to conduct a quantitative estimation of the role of market selection at the sectoral level. For our study, we used data from Rosstat (from 2002 to 2018) and the World Input-Output Database (from 2000 to 2014).
Results. For Rosstat data, the ratio of the effect of changes in labor productivity and labor resource reallocation by sector on total labor productivity over the period was 0.71/0.29, and for WIOD data it was 0.44/0.56. This indicates that labor resources are more likely to be reallocated to related sectors (e.g. between manufacturing industries).
Conclusions. The results suggest that there is competitive market selection at the sectoral level and that labor has generally been reallocated to more productive sectors of the economy, contributing significantly to the growth of aggregate productivity in the economy. Our study shows the sectors of the economy where this reallocation has taken place, which may help to determine where this process is successful and where it needs additional stimulation.
Keywords
Full Text:
PDFReferences
Baily, M.N., Hulten, C., Campbell, D., Bresnahan, T., & Caves, R.E. (1992). Productivity dynamics in manufacturing plants. Brookings Papers on Economic Activity. Microeconomics, Brookings Institution Press: Washington, DC, pp. 187–267.
Bartelsman, E., Haltiwanger, J., & Scarpetta, S. (2013). Cross-country differences in productivity: The role of allocation and selection. American economic review, 103(1), 305–334. doi: 10.1257/aer.103.1.305
Bessonov, V.A. (2004). On Dynamics of Total Factor Productivity in the Russian Economy in Transition. The HSE Economic Journal, 8, 542–587. Retrieved from: https://ej.hse.ru/en/2004-8-4/26547197.html
Cantner, U., Kruger, J., & Sollner, R. (2012). Product quality, product price, and share dynamics in the German compact car market. Industrial and Corporate Change, 21(5), 1085–1115. doi: 10.1093/icc/dts002
Cantner, U., Savin, I., & Vannuccini, S. (2019). Replicator dynamics in value chains: Explaining some puzzles of market selection. Industrial and Corporate Change, 28(3), 589–611 doi: 10.1093/icc/dty060
Denison, E.F. (1962) The Sources of Economic Growth in the United States and the Alternatives before Us. Committee for Economic Development, New York.
De Vries, G., Timmer, M., & de Vries, K. (2015). Structural transformation in Africa: Static gains, dynamic losses. The Journal of Development Studies, 51(6), 674–688. doi: 10.1080/00220388.2014.997222
Dosi, G., Moschella, D., Pugliese, E., & Tamagni, F. (2015). Productivity, market selection, and corporate growth: Comparative evidence across US and Europe. Small Business Economics, 45, 643–672. doi: 10.1007/s11187-015-9655-z
Foramitti, J., Savin, I., & van den Bergh, J. (2021a). Emission tax vs. permit trading under bounded rationality and dynamic markets. Energy Policy, 148(B), 112009. doi: 10.1016/j.enpol.2020.112009
Foramitti, J., Savin, I., & van den Bergh, J. (2021b). Regulation at the source? Comparing upstream and downstream climate policies. Technological Forecasting and Social Change, 172, 121060. doi: 10.1016/j.techfore.2021.121060
Foster, L., Haltiwanger, J., & Krizan, C.J. (2001). New Developments in Productivity Analysis, Chicago: University of Chicago Press. In: Aggregate Productivity Growth: Lessons from Microeconomic Evidence, pp. 303–372.
Gimpelson, V., Zhikhareva, O., & Kapeliushnikov, R. (2014). Job Turnover: What the Russian Statistics Tells Us. Voprosy Ekonomiki, (7), 93–126. (In Russ.) doi: 10.32609/0042-8736-2014-7-93-126
Griliches, Z., & Regev, H. (1995). Firm productivity in Israeli industry 1979–1988. Journal of Econometrics, 65(1), 175–203. doi: 10.1016/0304-4076(94)01601-U
Gross, C. (2012). Explaining The (Non)Causality between Energy and Economic Growth in the U.S.A. Multivariate Sectoral Analysis, Energy Economics, 34(2), 489–499. doi: 10.1016/j.eneco.2011.12.002
Hsieh, C.T., & Klenow, P.J. (2009). Misallocation and manufacturing TFP in China and India. The Quarterly Journal of Economics, 124(4), 1403–1448. doi: 10.1162/qjec.2009.124.4.1403
Ma, Y.Z. (2015). Simpson’s paradox in GDP and per capita GDP growths. Empirical Economics, 49, 1301–1315. doi: 10.1007/s00181-015-0921-3
McMillan, M., & Rodrik, D (2011) Globalization, structural change and productivity growth. In: Bacchetta, M., & Jansen, M. (eds) Making globalization socially sustainable, international labour organization and world trade organization. Geneva, pp. 49–84.
McMillan, M., Rodrik, D., & Verduzco-gallo, I. (2014). Globalization, structural change, and productivity growth, with an update on Africa. World Development, 63, 11–32. doi: 10.1016/j.worlddev.2013.10.012
Metcalfe, J.S. (1994). Competition, Fisher’s Principle and increasing returns in the selection process. Journal of Evolutionary Economics, 4, 327–346. doi: https://doi.org/10.1007/BF01236409
Mironov, V.V., & Konovalova, L.D. (2019). Structural changes and economic growth in the world economy and Russia. Russian Journal of Economics, 5(1), 1–26. doi: 10.32609/j.ruje.5.35233
Mundt, P., Cantner, U., Inoue, H., Savin, I., & Vannuccini, S. (2021). Market selection in global value chains. BERG Working Paper Series No. 170. Retrieved from: http://hdl.handle.net/10419/234123
Olley G. S. & Pakes A. (1996). The dynamics of productivity in the telecommunications equipment industry. Econometrica, 64(6), 1263–1297. doi: 10.2307/2171831
Pasinetti, L.L. (1981). Structural change and economic growth. Cambridge University Press, Cambridge.
Rodrik, D. (2013). Unconditional convergence in manufacturing. The Quarterly Journal of Economics, 128(1), 165–204. doi: 10.1093/qje/qjs047
Savin, I. (2021). Measuring market selection: state of the art and ways forward. Emerging Economies, pp. 9–13. Retrieved from: https://www.osservatorio-economie-emergenti-torino.it/emerging-economies/71-20-december-21/364-20-savin.html
Savin, I. (2020). Studying market selection in Russia and abroad: Measurement problems, national specificity and stimulating methods. Journal of the New Economic Association, 48(4), 197–204 (In Russ.) doi: 10.31737/2221-2264-2020-48-4-9
Savin, I.V., Mariev, O.S., & Pushkarev, A.A. (2019). Survival of the fittest? Measuring the strength of market selection on the example of the Urals Federal District. The HSE Economic Journal, 23(1), 90–117. (In Russ.) doi: 10.17323/1813-8691-2019-23-1-90-117
Savin, I.V., Mariev, O.S., & Pushkarev, A.A. (2020). Measuring the strength of market selection in Russia: When the (firm) size matters. Voprosy Ekonomiki, 2, 101–124. (In Russ.) doi: 10.32609/0042-8736-2020-2-101-124
Savin, I., & Winker, P. (2009). Forecasting Russian foreign trade comparative advantages in the context of a potential WTO accession. Central European Journal of Economic Modelling and Econometrics, 1(2), 111–138.
Savin, I., & Winker, P. (2012). Heuristic optimization methods for dynamic panel data model selection: application on the Russian innovative performance. Computational Economics, 39, 337–363. doi: 10.1007/s10614-010-9243-x
Simachev, Y.V., Kuzyk, M.G., & Pogrebnyak, E.V. (2018). Federal Industrial Policy: Basic Models and Russian Practice. Journal of the New Economic Association, 3, 39–51. doi: 10.31737/2221-2264-2018-39-3-8
Simpson, E.H. (1951). The interpretation of interaction in contingency tables. Journal of the Royal Statistical Society. Series B. Statistical Methodology, 13(2), 238–241. doi: 10.1111/j.2517-6161.1951.tb00088.x
Tang, J., & Wang, W. (2004). Sources of aggregate labour productivity growth in Canada and the United States. Canadian Journal of Economics. 37(2), 421–444. doi: 10.1111/j.0008-4085.2004.00009.x
Timmer, M., de Vries, G.J., & De Vries, K. (2015). Patterns of structural change in developing countries. Routledge. doi: 10.1257/9780203387061
Voskoboynikov, I., & Gimpelson, V. (2015). Productivity growth, structural change and informality: the case of Russia. Voprosy Ekonomiki, 11, 30–61. (In Russ.) doi: 10.32609/0042-8736-2015-11-30-61
DOI: https://doi.org/10.15826/recon.2022.8.1.005
Copyright (c) 2022 Ivan V. Savin, Denis K. Letyagin
Сertificate of registration media Эл № ФС77-80764 от 28.04.2021
Online ISSN 2412-0731