Latest Documents

Differences in average wages across firms – which account for around one-half of overall wage inequality – are mainly explained by differences in firm wage premia (the part of wages that depends exclusively on characteristics of firms) rather than workforce composition. Using a new cross-country dataset of linked employer-employee data, this paper investigates the role of cross-firm dispersion in productivity in explaining dispersion in firm wage premia, as well as the factors shaping the link between productivity and wages at the firm level. The results suggest that around 15% of cross-firm differences in productivity are passed on to differences in firm wage premia. The degree of pass-through is systematically larger in countries and industries with more limited job mobility, where low-productivity firms can afford to pay lower wage premia relative to high-productivity ones without a substantial fraction of workers quitting their jobs. Stronger product market competition raises pass-through while more centralised bargaining and higher minimum wages constrain firm-level wage setting at any given level of productivity dispersion. From a policy perspective, the results suggest that the key priority should be to promote job mobility, which would reduce wage differences between firms while easing the efficient reallocation of workers across them.

The paper investigates the financial vulnerability of non-financial firms during the Coronavirus (COVID-19) epidemic crisis. In particular, it evaluates the extent to which firms may run into a liquidity crisis following the COVID-19 outbreak and the impact of stylised policy measures to reduce the risks and depth of such crisis. The analysis relies on three ingredients: a simple accounting model, a large dataset reporting firms’ balance sheets for 14 countries and granular data on the magnitude of the shock measuring the impact of confinement measures on economic activity (notably depending on the capacity of each sector to operate by teleworking). Results suggest that, without any policy intervention, up to 38% of firms would face liquidity shortfalls after 10 months since the implementation of confinement measures. Comparing the impact of different policies (tax deferral, debt moratorium and support to wage payments), the analysis shows that government support to relieve wage bills is the most effective tool to reduce liquidity shortages, followed by debt moratorium policies. Finally, the paper zooms into labour market policies and compares the costefficiency of short-term work and wage subsidies schemes, highlighting how their relative efficiency depends on their design.

This report assesses the impact of digitalisation on competition by examining the evolution of mark-ups and multifactor productivity (MFP) across firms of different sizes. It finds that size is positively related to mark-ups and that this relationship has strengthened over time. This trend has been accompanied by an increase in the relative productivity advantage of larger firms and both changes are more pronounced in digital-intensive sectors, suggesting that digitalisation may be an underlying driver. Policy makers may need to consider appropriate responses if digital technologies affect larger and smaller firms in a heterogeneous manner.

The paper analyses data on state-owned enterprises as cross-border investors and takes a first step towards analysing their investment characteristics since 2000. It shows that the number of cross-border investments by state-owned enterprises was overall small, with most originating from the People’s Republic of China (hereafter 'China'), and suggests that the investment preferences of state-owned enterprises may fuel excess capacity in the steel sector. This is because state-owned enterprises display a preference for building new capacity over acquiring existing capacity when investing abroad, and a preference for investment destinations with volatile demand growth. Data also suggest that state-owned enterprises might be more likely to undertake domestic capacity closures after a cross-border investment, which is likely influenced by recent policies introduced to curb excess capacity in China. Conversely, the data offer insufficient evidence regarding the link between cross-border investment by state-owned enterprises and capacity outcomes in target jurisdictions.

This paper describes the sources and methods used to estimate carbon emissions embodied in final demand and international gross trade for 65 economies over the period 2005-2015. Earlier OECD analyses of carbon footprints, accounting for global production networks, helped raise awareness of divergences between territorial and resident principles, and between production-based and consumption-based carbon emissions. Understanding the differences in these measures is important for governments to better understand and address greenhouse gas mitigation options. Thus, a new refined methodology was applied to allocate territorial emissions to production-based emissions (industries and households) using OECD Inter-Country Input-Output tables and International Energy Agency (IEA) CO2 emissions from fuel combustion statistics. In particular, this methodology introduces: 1) explicit distinctions between territorial and resident principles, economic output and final demand-based emissions and emissions embodied in gross imports and exports; 2) estimates by major fuel combustion sources; and 3) fuel purchases by non-resident industries and households.

This paper summarises and describes the variables, industries, methods and sources used in the construction of the STructural ANalysis (STAN) industry database. The STAN database serves as a tool for analysing industrial performance at a relatively detailed level of industrial activity. It includes annual measures of output, value added and its components, as well as labour input, investment and capital stock from 1970 onwards. This allows for a wide range of comparative cross-country analyses focusing on, for example, productivity growth, competitiveness and economic structural change. A standard industry list allows for comparisons across countries and provides sufficient detail to focus on, for example, high R&D-intensive activities, high digital-intensive activities or detailed ICT industries. The industry list is compatible with those used in related OECD industry databases.

This paper analyses trends in business dynamism across 18 countries and 22 industries over the last two decades, using highly representative comparable data. It finds that declines in business dynamism, pervasive in many countries, are driven by dynamics occurring at a disaggregated sectoral level, rather than reallocation across sectors. Average trends within sectors point to steady declines in each country over the last two decades, even after accounting for the role of the business cycle, with market structure and firm heterogeneity emerging as prominent determinants. Investments in intangibles and digital technologies, globalisation, and changes in demographics also contribute to these trends. Policy can, however, help boost business dynamism by reducing barriers to entry and to knowledge diffusion, favouring experimentation and creative destruction, and increasing absorptive capacity and firms’ potential to benefit from technological change.

This paper examines the determinants of structural adjustment in Japan and identifies several factors that explain the use of certain employment types. Its findings are based on a novel plant-level dataset that provides considerable detail on the types of employees used by Japanese manufacturers between 2001 and 2014. Analysis of this dataset shows that growth in the diffusion of robotics is linked to fewer non-regular employees, which seems to be partially driven by the positive association between robot adoption and the dismissal of certain types of non-regular workers. It also finds that offshoring from Japan to other countries contributes to the use of both regular and non-regular workers, while higher plant productivity is related to the use of more regular workers. Finally, establishments that experienced job dismissals appear to substitute non-regular workers for regular workers.