Allocation of human capital and innovation at the frontier: Firm-level evidence on Germany and the Netherlands

Eric Bartelsmann, Sabien Dobbelaere and Bettina Peters ()

No 14-064, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. In Germany, average innovation performance is higher in all industries, except for low-technology manufacturing, and in the Netherlands the innovation performance distributions are more dispersed. In both countries, we observe non-linearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to product innovation whereas for process innovation the most negative returns are observed in the best-performing enterprises of most industries. We find that in both countries the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence suggests an interpretation of a winner-takes-all market in knowledge-intensive services.

Keywords: Human capital; innovation; productivity; quantile regression (search for similar items in EconPapers)
JEL-codes: C10 I20 O14 O30 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-eur, nep-hrm, nep-ino, nep-knm, nep-sbm and nep-tid
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Allocation of Human Capital and Innovation at the Frontier: Firm-Level Evidence on Germany and the Netherlands (2013)
Working Paper: Allocation of Human Capital and Innovation at the Frontier: Firm-level Evidence on Germany and the Netherlands (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:14064

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