Technological progress, organizational change and the size of the Human Resources Department

5.1 Calibration

As usual, the simulation of the model requires a calibration, and the values chosen
for the different parameters are reported in the following table:

Table 5: Calibration of the model, benchmark case

In particular, on the one hand these parameters are such that they satisfy the
restrictions obtained above (in order to have convexity of the cost function and exis-
tence of the steady-state). On the other hand, the same parameters allow to obtain
steady-state values of some relevant quantities that are reasonable on the basis on
the empirical evidence that is available. For instance, with this parameterization in
the steady state the fraction of time devoted to production is slightly more than
0.5, the ratio consumption/output is close to 0.95 and the fraction of the workforce
in the human resources services is close to 0.15 (this is consistent with the numbers
for UK and US in recent years, see Table 3).

It is important to observe that this calibration considers a value of the parameter
η positive and small, that corresponds to a “high bureaucratic” scenario, in which
both coordination costs and fraction of the workforce in the human resources ser-
vices are quite high. Considering a value of η negative would correspond to a “less
bureaucratic” situation, in which coordination costs decrease as the proportion of
human resources employees increases in the economy, but in any case the qualitative
results would not be altered, and there would be no major difference in terms of
organizational change.

5.2 Simulation

Starting from the values chosen, different types of shocks are considered, and the
consequences on the economy are analyzed. In particular, it is possible to consider
a shock on the productivity of output A, a shock on the efficiency of human capital
E and a shock on the coordination costs through the parameter d. All these shocks
are permanent.

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