Working Paper: NBER ID: w1016
Authors: jeffrey i bernstein; m ishaq nadiri
Abstract: In this study we have developed a dynamic analysis of a firm under taking plant and equipment and research and development investment,along with labor requirement and P&E utilization decisions. It is shown that in the short run increases in R&D cause the utilization rate of plant and equipment to rise and to decrease demand for labor per unit of R&D. We distinguish between the effects of the stock of R&D and the investment flow. The short run effect of changes in the stock of R&Don labor demand are quite distinct from the behavior observed along the intertemporal path. Along the path increases in the R&D investment rate must be accompanied by an increase in the labor requirement per unitof R&D. Contrary to a view point held by many, the R&D investment flow does not displace labor. Finally, our model provides a framework to justify the empirically observed positive relationship between the utilization and the P&E investment rates.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| R&D investment increases (O39) | PE utilization rate increases (H43) |
| R&D investment increases (O39) | labor demand per unit of R&D decreases (O39) |
| PE relative to R&D increases (O39) | labor demand per unit of R&D decreases (O39) |
| PE relative to R&D increases (O39) | growth rate of R&D increases (O39) |
| growth rate of R&D increases (O39) | labor requirements per unit of R&D increases (J24) |