What's driving the new economy? The benefits of workplace innovation

Sandra Black and Lisa Lynch

No 118, Staff Reports from Federal Reserve Bank of New York

Abstract: Using a unique nationally representative sample of U.S. establishments surveyed in both 1993 and 1996, we examine the relationship between workplace innovations and establishment productivity and wages. Using both cross-sectional and longitudinal data, we find evidence that high-performance workplace practices are associated with both higher productivity and higher wages. Specifically, we find a positive and significant relationship between the proportion of non-managers using computers and the productivity of establishments. We find that firms re-engineer their workplaces and incorporate` more high-performance practices experience higher productivity. For example, profit sharing is associated with increased productivity, and employee voice has a large positive effect on productivity when it is implemented in the context of unionized establishments. These workplace practices appear to explain a large part of the movement in multifactor productivity over the 1993-96 period. When we examine the determinants of wages within these establishments, we find that re-engineering a workplace to incorporate more high-performance practices leads to higher wages. However, increasing the usage of profit sharing results in lower regular pay for workers, especially technical workers and clerical/sales workers. Finally, increasing the percentage of workers meeting regularly in groups has a larger positive effect on wages in unionized establishments.

Keywords: Technology; Wages; Labor productivity; Labor unions (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-lab and nep-tid
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: What's driving the new economy?: the benefits of workplace innovation (2004)
Working Paper: What's driving the new economy?: the benefits of workplace innovation (2003)
Working Paper: What's Driving the New Economy? The Benefits of Workplace Innovation (2002)
Working Paper: What's Driving the New Economy: The Benefits of Workplace Innovation (2000)
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