Wages and innovations in Spanish manufacturing firms

Abstract

The question of whether workers take part of the rents when a firm introduces technological changes is studied. Information from a Spanish survey, the Encuesta sobre Estrategias Empresariales covering a period of five years, 1990-94 is used. Given the data available, panel data techniques are used to control unobserved heterogeneity. A new estimation method proposed by Arellano and Bover (1995) has also been used to improve efficiency results. The results provide confirmation that innovations may be a good approximation to economic rents. In fact, firms which carry out process and product innovations jointly pay larger wages. Moreover, there exists evidence that process innovations and process and product innovations jointly are determined with wages.