Estimating the change in privately financed R&D expenditures induced by government subsidizat... more Estimating the change in privately financed R&D expenditures induced by government subsidization of R&D activities—the “additionality effect”—is an important item in the current empirical research agenda in the economics of technical change. However, there are very few papers that formulate a model of firm decision-making that explains the mechanism by which this additionality effect can arise. In this paper, we take up this task. Our model extends the traditional theoretical literature on the optimal management of an R&D project and provides a theoretical underpinning for the additionality effect. The model also provides a framework for interpreting anew the empirical association between R&D expenditures and productivity growth found in many micro-level productivity regressions. The theoretical framework illustrates that the sign and size of the additionality effect depends on the model’s parameters and assumptions on the distribution of development costs. Thus, it is not at all surprising that empirical studies of the additionality effect have not come up with a clear-cut answer as to whether R&D subsidies stimulate or crowd out privately financed R&D.
Is there any empirical evidence that firms become more efficient after becoming exporters? Do fir... more Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links behveen exporting and productivity using firm-level panel data from three semi-industrialized countries. Representing export market participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shifi when they break into foreign markets. We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation. So the well-known efficiency gap between exporters and non-exporters is due to self-selection of the more efficient firms into the export market, rather than learning by exporting. Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient.
In evaluating the effect of an R&D subsidy we need to know what the subsidized firm would have sp... more In evaluating the effect of an R&D subsidy we need to know what the subsidized firm would have spent on R&D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1 990s we find evidence suggesting that the R&D subsidies granted by the Ministry of Industry and Trade stimulated long-run company-financed R&D expenditures: their long-run elasticity with respect to R&D subsidies is 0.22. At the means of the data, an extra dollar of R&D subsidies increases long-run companyfinanced R&D expenditures by 41 cents (total R&D expenditures increase by 1.41 dollars). Although the magnitude of this effect is large enough to justify the existence of the subsidy program, it is lower than expected given the dollar-by-dollar matching upon which most subsidized projects are based. This "less than full" effect reflects two forces: first, subsidies are sometimes granted to projects that would have been undertaken even in the absence of the subsidy and, second, firms adjust their portfolio of R&D projectsclosing or slowing down non-subsidized projects-after the subsidy is received.
Journal of Economics <html_ent glyph="@amp;" ascii="&"/> Management Strategy, 1995
for helpful comments. We have also benefitted from the comments of two anonymous referees and a c... more for helpful comments. We have also benefitted from the comments of two anonymous referees and a co-editor. The usual disclaimer, unfortunately, applies. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research.
... Rubio for his research assistance, and Arie Bregman, Karnit Flug, Giora Hanoch, Zvi Hercovitz... more ... Rubio for his research assistance, and Arie Bregman, Karnit Flug, Giora Hanoch, Zvi Hercovitz, Yaacov Lavy, Rafi Melnick, Arie Merom, Haim Regev, Manuel Trajtenberg and Morris Teubal for their useful comments and guidance with the data. Haim Regev, Malkiel Yoha and ...
... 59-67. [2] Lach, Saul, “Do R&D Subsidies Stimulate or Displace Private R&D? Evidence ... more ... 59-67. [2] Lach, Saul, “Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from ... [3] Trajtenberg, Manuel, 2002, “Government Support for Commercial R&D: Lessons from the Israeli Experience”, Adam B. Jaffe, Josh Lerner, and Scott Stern (eds.), ...
We use a large sample of over half a million individuals to study the relationship between the lo... more We use a large sample of over half a million individuals to study the relationship between the longevity of fathers and their children. We find that when a father dies between 45 and 65 years of age, his age at death has no effect on his sons’ longevity. For daughters, there is no effect when a father dies between the ages 45 and 85. When a father dies between 65 and 85 years of age, an additional year of life is associated with almost 2 additional months of life for his sons. Death after 85 years of age has an even stronger effect reaching over 3 additional months for sons and daughters alike. These correlations are a result of hereditary factors as well as socioeconomic conditions. Thus, our findings set an upper bound to the hereditary effect.
Estimating the change in privately financed R&D expenditures induced by government subsidizat... more Estimating the change in privately financed R&D expenditures induced by government subsidization of R&D activities—the “additionality effect”—is an important item in the current empirical research agenda in the economics of technical change. However, there are very few papers that formulate a model of firm decision-making that explains the mechanism by which this additionality effect can arise. In this paper, we take up this task. Our model extends the traditional theoretical literature on the optimal management of an R&D project and provides a theoretical underpinning for the additionality effect. The model also provides a framework for interpreting anew the empirical association between R&D expenditures and productivity growth found in many micro-level productivity regressions. The theoretical framework illustrates that the sign and size of the additionality effect depends on the model’s parameters and assumptions on the distribution of development costs. Thus, it is not at all surprising that empirical studies of the additionality effect have not come up with a clear-cut answer as to whether R&D subsidies stimulate or crowd out privately financed R&D.
Is there any empirical evidence that firms become more efficient after becoming exporters? Do fir... more Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links behveen exporting and productivity using firm-level panel data from three semi-industrialized countries. Representing export market participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shifi when they break into foreign markets. We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation. So the well-known efficiency gap between exporters and non-exporters is due to self-selection of the more efficient firms into the export market, rather than learning by exporting. Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient.
In evaluating the effect of an R&D subsidy we need to know what the subsidized firm would have sp... more In evaluating the effect of an R&D subsidy we need to know what the subsidized firm would have spent on R&D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1 990s we find evidence suggesting that the R&D subsidies granted by the Ministry of Industry and Trade stimulated long-run company-financed R&D expenditures: their long-run elasticity with respect to R&D subsidies is 0.22. At the means of the data, an extra dollar of R&D subsidies increases long-run companyfinanced R&D expenditures by 41 cents (total R&D expenditures increase by 1.41 dollars). Although the magnitude of this effect is large enough to justify the existence of the subsidy program, it is lower than expected given the dollar-by-dollar matching upon which most subsidized projects are based. This "less than full" effect reflects two forces: first, subsidies are sometimes granted to projects that would have been undertaken even in the absence of the subsidy and, second, firms adjust their portfolio of R&D projectsclosing or slowing down non-subsidized projects-after the subsidy is received.
Journal of Economics <html_ent glyph="@amp;" ascii="&"/> Management Strategy, 1995
for helpful comments. We have also benefitted from the comments of two anonymous referees and a c... more for helpful comments. We have also benefitted from the comments of two anonymous referees and a co-editor. The usual disclaimer, unfortunately, applies. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research.
... Rubio for his research assistance, and Arie Bregman, Karnit Flug, Giora Hanoch, Zvi Hercovitz... more ... Rubio for his research assistance, and Arie Bregman, Karnit Flug, Giora Hanoch, Zvi Hercovitz, Yaacov Lavy, Rafi Melnick, Arie Merom, Haim Regev, Manuel Trajtenberg and Morris Teubal for their useful comments and guidance with the data. Haim Regev, Malkiel Yoha and ...
... 59-67. [2] Lach, Saul, “Do R&D Subsidies Stimulate or Displace Private R&D? Evidence ... more ... 59-67. [2] Lach, Saul, “Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from ... [3] Trajtenberg, Manuel, 2002, “Government Support for Commercial R&D: Lessons from the Israeli Experience”, Adam B. Jaffe, Josh Lerner, and Scott Stern (eds.), ...
We use a large sample of over half a million individuals to study the relationship between the lo... more We use a large sample of over half a million individuals to study the relationship between the longevity of fathers and their children. We find that when a father dies between 45 and 65 years of age, his age at death has no effect on his sons’ longevity. For daughters, there is no effect when a father dies between the ages 45 and 85. When a father dies between 65 and 85 years of age, an additional year of life is associated with almost 2 additional months of life for his sons. Death after 85 years of age has an even stronger effect reaching over 3 additional months for sons and daughters alike. These correlations are a result of hereditary factors as well as socioeconomic conditions. Thus, our findings set an upper bound to the hereditary effect.
Uploads
Papers by S. Lach