Experience, Innovation and Productivity - Empirical Evidence from Italy's Slowdown



the problem of interpreting the statistical results from cross-sectional estimates arises if and only if
the unobserved (therefore unmeasured) firm variables are correlated with the included explanatory
variables. For example, if managerial ability - a typically unobserved firm variable - were unrelated
to the age of managers, then leaving it out of the empirical analysis would not be a major problem.
This may or may not be the case though. If managerial ability is not observed and therefore omitted
from the analysis but it turns out to be correlated with some included variable such as the age of
managers, its effect may be picked up by the negative estimated relation between high-age
managers and productivity. We would be misperceiving the effect of managerial ability on
productivity as if it were the causal effect of age on productivity. To tackle this problem, we control
for a few dummy variables that capture some, though presumably not all, of the unobserved
determinants of firm productivity.

References

Autor, David H., Frank Levy, and Richard J. Murnane (2003): “The Skill Content of Recent
Technological Change: An Empirical Exploration”,
Quarterly Journal of Economics, Vol. 118, No.
4, pp. 1279-1333.

Bandiera, Oriana, Luigi Guiso, Andrea Prat and Raffaella Sadun (2008): “Italian managers: fidelity
or performance?” Report presented at the Annual Rodolfo De Benedetti Foundation Conference
“The ruling class”, September.

Brown, James R., Steven M. Fazzari, and Bruce C. Petersen (2009): “Financing Innovation and
Growth: Cash Flow, External Equity, and the 1990s R&D Boom”,
Journal of Finance, Vol. 64, No.
1, pp.151-185.

Capitalia-Unicredit (2004): IXth Survey on Manufacturing Firms.

Comin, Diego and Bart Hobijn (2009): “Lobbies and Technology Diffusion”, Review of Economics
and Statistics,
Vol. 91, No. 2, pp. 229-244.

26



More intriguing information

1. Flatliners: Ideology and Rational Learning in the Diffusion of the Flat Tax
2. The name is absent
3. Inflation Targeting and Nonlinear Policy Rules: The Case of Asymmetric Preferences (new title: The Fed's monetary policy rule and U.S. inflation: The case of asymmetric preferences)
4. Towards a Mirror System for the Development of Socially-Mediated Skills
5. The name is absent
6. On the job rotation problem
7. The name is absent
8. Performance - Complexity Comparison of Receivers for a LTE MIMO–OFDM System
9. The name is absent
10. The Impact of Individual Investment Behavior for Retirement Welfare: Evidence from the United States and Germany
11. The economic doctrines in the wine trade and wine production sectors: the case of Bastiat and the Port wine sector: 1850-1908
12. The Formation of Wenzhou Footwear Clusters: How Were the Entry Barriers Overcome?
13. Policy Formulation, Implementation and Feedback in EU Merger Control
14. The Response of Ethiopian Grain Markets to Liberalization
15. The name is absent
16. MULTIMODAL SEMIOTICS OF SPIRITUAL EXPERIENCES: REPRESENTING BELIEFS, METAPHORS, AND ACTIONS
17. Mergers under endogenous minimum quality standard: a note
18. Macro-regional evaluation of the Structural Funds using the HERMIN modelling framework
19. L'organisation en réseau comme forme « indéterminée »
20. Reconsidering the value of pupil attitudes to studying post-16: a caution for Paul Croll