Data The dataset used for this analysis provides information on - PowerPoint PPT Presentation

Regional patterns of intangible capital, agglomeration effects and localised spillovers in Germany Kurt Geppert INNODRIVE Brussels workshop February 22-23, 2011

Data The dataset used for this analysis provides information on … … establishments, not firms … self -produced intangible assets calculated on the basis of expenditures … the period from 1999 to 2003 INNODRIVE Brussels workshop February 22-23, 2011

Steps of the analysis Distribution of self- produced intangible capital across … … establishments … industries … regions Intangible capital and the wage level of establishments – micro data analysis Conclusions INNODRIVE Brussels workshop February 22-23, 2011

Establishments Share of intangible capital in total capital by establishment size 25 20 15 10 5 0 1-9 10-49 50-99 >=100 Sizeclass (employees) INNODRIVE Brussels workshop February 22-23, 2011

Industries Intangible capital per hour worked Components of intangible capital Euros 100 % 25 90 % 80 % 20 70 % 60 % 15 50 % 40 % 10 30 % 20 % 5 10 % 0 % Production Transport and Trade and business services consumer services 0 Production Transport and Trade and business services consumer services Org. capital R&D capital ICT capital INNODRIVE Brussels workshop February 22-23, 2011

Regions Shares of regions in national intangible capital Intangible capital per hour worked 2003 2003 INNODRIVE Brussels workshop February 22-23, 2011

Regions Growth of regional value added 1999 - 2003 Regional value added per hour worked 2003 45 35 Frankfurt Hamburg 43 Growth of value added 1999 - 2003 in % 30 Value added per hour worked 2003 R² = 0.2319 41 25 39 20 37 15 35 10 33 5 31 0 29 -5 27 R² = 0.8012 25 -10 0 5 10 15 20 25 0 5 10 15 20 25 Intangible capital intensity 2003 Intangible capital intensity 1999 INNODRIVE Brussels workshop February 22-23, 2011

Intangible capital and the wage level of establishments Dependent variable: log average hourly wage of establishments. Period of observation: 1999-2003 Fixed Random OLS effects effects Non- All employees intangible All employees employees (1) (2) (3) (4) (5) Establishment variables 0.0108 *** 0.0116 *** 0.0141 *** -0.0046 *** 0.0053 *** Employment 0.0103 *** 0.0103 *** 0.0097 *** 0.0015 ** 0.0087 *** Intangible capital intensity 0.0594 *** 0.0566 *** 0.0583 *** 0.0149 *** 0.0187 *** Tangible capital intensity Economic environment Own-industry: 0.0064 *** 0.0064 *** 0.0021 *** Number of Establishments 0.0003 0.0013 *** 0.0012 *** 0.0004 * Intangible capital intensity 0.0000 Rest of regional economy: 0.0267 *** 0.0268 *** 0.0067 *** Industrial diversity -0.0021 0.0833 *** 0.0828 *** -0.0180 *** 0.0197 *** Intangible capital intensity Settlement type: 0.1190 *** Large Metro 0.0335 *** Small Metro 0.0234 *** Intermediate region -0.226 *** -0.180 *** -0.182 *** -0.201 *** East dummy 2.394 *** 2.127 *** 2.111 *** 3.023 *** 2.498 *** Constant N 150471 150471 149779 150471 150471 R-squared 0.684 0.683 0.660 0.459 0.662 Number of establishments 41156 41156 INNODRIVE Brussels workshop *** p<0.01, ** p<0.05, * p<0.1 (robust standard errors); variables in logarithms; 3-digit industry dummies. February 22-23, 2011

Conclusions  Intangible capital accounts for more than 20 % of total capital in the non-farm private economy  R&D capital is the largest component of intangible capital – at least in Germany  Intangible capital is positively related to the economic performance of regions  Self-produced intangible capital of establishments has a positive effect on productivity and wages – both for “intangible” and “non - intangible” workers  There are sizable externalities of agglomeration: establishments in large metro areas pay 12 % more than those in rural regions  Externalities across industries (urbanisation effects) appear to be more important than externalities within industries (localisation effects)  With our dataset we can not satisfyingly tackle estimation problems resulting from spatial selection, unobserved characteristics and endogeneity …  … but our findings indicate that there are significant positive relationships between intangible capital, productivity of establishments, and regional economic performance – and that intra-regional externalities play a role in these processes INNODRIVE Brussels workshop February 22-23, 2011