Innovation and Productivity
12:00 - 13:30
What do we know about the relationship between innovation and productivity among firms? The workhorse model of this relationship is presented and the implications of an analysis using this model and the usually available data on product and process innovation are derived. Recent empirical evidence on the relationship between innovation and productivity in firms is then surveyed. The conclusion is that there are substantial positive impacts of product innovation on revenue productivity, but that the impact of process innovation is more ambiguous, suggesting substantial measurement error in the innovation indicators or market power on the part of firms.