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Title:What's driving the new economy: The benefits of workplace innovation PDF Logo
Authors:Black, Sandra E.
Lynch, Lisa M.
Issue Date:2001
Series/Report no.:Staff Report, Federal Reserve Bank of New York 118
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.
Subjects:Wages
Labor productivity
Technology
Labor unions
JEL:D24
J24
J31
J33
J51
M12
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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