Richard Kneller

• PhD Economics
• Professor at University of Nottingham

Offshoring continues to be an important dimension of firms’ internationalization choices. However, offshoring also increases contract enforcement costs by inhibiting the coordination and monitoring of performance. Immigrant employees may reduce such costs through their specific knowledge of the employer, their country of birth and access to foreign...

Cloud computing has shifted how firms access IT away from investment in fixed capital to pay-on-demand services that facilitate remote and simultaneous use. Using firm-level data we examine the impact of cloud adoption on firm performance and organizational geography with an IV approach that exploits cross-section and time-series variation in fiber...

BACKGROUND Mental health problems affect one in six workers annually and is one of the leading causes of sickness absence; with stress, anxiety, and depression being responsible for half of all working days lost in the UK. Line managers hold a primary role in preventing poor mental health within the workplace and, therefore, need to be equipped wit...

Background Mental health problems affect 1 in 6 workers annually and are one of the leading causes of sickness absence, with stress, anxiety, and depression being responsible for half of all working days lost in the United Kingdom. Primary interventions with a preventative focus are widely acknowledged as the priority for workplace mental health in...

Background The cost of sickness absence has major social, psychological and financial implications for individuals and organisations. Return-to-work (RTW) interventions that support good quality communication and contact with the workplace can reduce the length of sickness absence by between 15 and 30 days. However, initiatives promoting a sustaina...

Differences in access to high-speed broadband between urban and rural locations are known as the ‘digital divide’. Governments around the world have committed to spending considerable amounts of money to alleviate disparities in broadband infrastructure. However, to date, there is limited causal evidence for broadband and firm performance with even...

Using data from Italian firms during the period of 2008-2012, this paper empirically explores how the presence of foreign-owned firms can affect the domestic firm's probability to invest abroad (i.e. Outward FDI spillovers from Inward FDI). We find positive spillovers via horizontal linkages, and negative spillovers through forward and backward lin...

Background The cost of sickness absence has major social, psychological, and financial implications for individuals and organisations. Return-to-work (RTW) interventions that support good quality communication and contact with the workplace can reduce the length of sickness absence by between 15 to 30 days. However, initiatives promoting a sustaina...

Using novel firm‐level data, we examine the trade effect of the changed security arrangements for Pakistan's exports to the US following 9/11. The pre‐shipment scanning facility introduced by the Integrated Cargo Container Control (IC3) program, following the 100% scanning requirement, affected the beyond‐the‐border and behind‐the‐border costs of e...

en We estimate the impact of the container revolution on new trade in temperature-sensitive products. Our identification strategy is justified by a historical narrative suggesting that the containerization of bilateral trading routes was exogenous to the occurrence of new trade in temperature-sensitive products because their small trade volumes mad...

We analyze the effect of a labor market reform on firms’ product innovation. The reform, which amounts to a natural experiment, differentially reduced firing costs for some firms, thereby lowering adjustment costs in the presence of demand uncertainty. Using a difference-in-differences framework, we show that the reform increased product innovation...

We present novel evidence on the effect of market size on technology adoption and productivity. Our tests exploit a natural experiment in the U.S. corn industry where changes to national energy policy created exogenous increases in demand. Difference‐in‐difference estimates show that the demand shock caused technical change as corn producers adopte...

We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore depends on the extent that wholesalers are a feature of in...

This paper provides empirical evidence on whether individual firms choose to structure their production globally to exploit international differences in energy resources and prices. We use the US shale gas revolution as a quasi-natural experiment to analyse two extensive margins of adjustment by heterogeneous UK firms. First, we consider whether en...

In this paper we consider how the location, organization and output of knowledge production evolve within domestic firms following acquisition-FDI in order to understand the aggregate effect on an index of domestically produced innovations. We find strong differences according to how close the acquiring MNE is to the technologically frontier. Front...

The recent economics literature has begun to recognise that ICT is a heterogeneous technology altering information storage, processing and communication in distinct ways. In this paper we use the arrival of a new communication technology, ADSL broadband, to study the effects of heterogeneous types of ICT on firm performance. To do so free from endo...

We examine the long-run GDP impacts of changes in total government expenditure and in the shares of different spending categories for a sample of OECD countries since the 1970s, taking account of methods of financing expenditure changes and possible endogenous relationships. We provide more systematic empirical evidence than available hitherto for...

This paper explores whether higher corporate tax rates reduce the speed with which small firms converge to the productivity frontier by lowering the after-tax returns to productivity-enhancing investments. Using data for 11 European countries we find evidence that their productivity catch-up is slower the higher are statutory corporate tax rates. I...

This study reviews the existing evidence on the effects of tax reforms on output levels and growth over the short and long run from different strands of the literature. It develops and applies criteria to evaluate the usefulness of ex-post estimates to predict the effects of tax reforms ex ante. Based on these criteria, we present detailed tables s...

Over recent decades the global economy has witnessed rapid growth of international trade in services. This has been particularly true of service-intensive countries such as the UK. Developments in information and communication technologies are an obvious explanation for this. We provide empirical evidence for the effects of broadband use on the fir...

Recent models of international trade have identified product quality as an important determinant of bilateral trade flows. In this paper we examine the relationship between the characteristics of the export market and the aggregate quality of products using Chinese data. We find evidence that product unit values vary with standard gravity variables...

Many historical accounts have asserted that containerization triggered complementary technological and organizational changes that revolutionized global freight transport. We are the first to suggest an identification strategy for estimating the effects of the container revolution on world trade. Our empirical strategy exploits time and cross-secti...

The rise of China as an economic power has led to concern in many Asian counties that this development poses a threat to their ability to export. The empirical support for this remains inconsistent, however. One explanation for these inconsistencies includes biases that follow from the use of a gravity model specified in an a-theoretical manner. We...

This paper examines firm-level investment responses to exogenous changes in the forward looking user cost of capital associated with reforms to the corporate and personal tax system over the last decade. Adjustments to personal tax rates and fiscal depreciation allowances provide a direct lever through which government policy can affect the cost of...

This paper explores the merits of macro- and micro-based tax rate measures within an open economy "fiscal policy and growth" model. Using annual data for 15 OECD countries we find statistically small, non-robust long-run growth effects of macro-based average tax rates on capital income and consumption, but some evidence for average labour income ta...

In an endogenous growth model with information asymmetry between the government and the bureaucracy, the bureaucrats can falsely report of high-quality high-cost procurement, while providing low-quality low-cost product. This reduces the quality of public services, but inflates the public spending, which in effect reduces growth. We test our result...

This paper assesses the merits of using surveys of business perceptions of growth constraints as a guide to growth-enhancing …fiscal policy reforms. Using endogenous growth models in which the government levies an income tax to provide public inputs to the production of private …firms, the paper demonstrates that business perceptions of growth cons...

This paper examines the effect of demand on productivity. Our quasi-experiment exploits plausibly exogenous variation in the capacity of ethanol plants following major reforms to U.S. energy policy to establish the causal effect of demand on productivity within the corn sector. Using physical output productivity measures we show that the demand sho...

We examine the long-run GDP impacts of changes in total government expenditure and in the shares of different spending categories for a sample of OECD countries since the 1970s, taking account of methods of financing expenditure changes and possible endogenous relationships. We provide more systematic empirical evidence than available hitherto for...

This paper evaluates the trade-off between growth and welfare maximization from two perspectives. Firstly, it synthesizes and extends endogenous growth models with public finance to compare the growth and welfare maximizing tax rates. Secondly, it examines the distinct model outcomes in terms of the growth rates and welfare levels. This comparison...

This article examines whether the efficiency gains accompanying fiscal decentralization generate higher growth in more decentralized economies, applying pooled‐mean group techniques to a panel dataset of 23 Organization for Economic Co‐operation and Development (OECD) countries, 1972–2005. We find that spending decentralization has tended to be ass...

This paper exploits the unique institutional features of South Africa to estimate the impact of provincial public spending on health, education and transport on firm productivity. Our identification strategy is based on within industry-province differences between firms of the effects of public spending. We show that public spending composition aff...

Firms that lie far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to underinvest in their productivity. In this paper we explore how far higher rates of c...

The literature testing for aggregate impacts of taxes on long-run growth rates in the OECD has generally used tax rate measures constructed from macroeconomic aggregates such as tax revenues. These have a number of advantages but two major disadvantages: they are typically average, rather than marginal, rates, and are constructed from endogenous ta...

Effective marginal tax rates can be very different from the statutory rate and vary across firms, reflecting such factors as the extent and nature of taxable deductions (losses, depreciation), asset and ownership structures, and debt/equity financing. We estimate firm-specific EMTRs and related user cost of capital (UCC) measures allowing for share...

Effective marginal tax rates (EMTRs) can be very different from the statutory rate and vary across firms, reflecting such factors as the extent and nature of taxable deductions (losses, depreciation), asset and ownership structures, and debt/equity financing. We estimate firm-specific EMTRs and related user cost of capital (UCC) measures allowing f...

It is widely recognised that the pioneering papers of Krugman (1979) and Lancaster (1979) triggered a revolution in the way in which we think about and model international trade. These theoretical insights were in fact motivated by empirical observation, namely intra-industry trade, which appeared to sit oddly with what we would expect in a world w...

In the literature there is substantial evidence that a plant is more likely to be closed down if it is owned by a firm with other plants or is owned by a multinational enterprise (MNE). But does ownership or multi-plant status matter for which plants are closed? Using Japanese data we study plant closure by multi-plant MNEs and non-MNEs. We show th...

Abstract We analyse a very rich and unique panel database that provides information on exports at the firm-product level. Motivated by the recent theory of multi-product firms, we investigate what determines the survival of products in the export mix to find that, in export dynamics, characteristics of the product as well as that of the firm matter...

This paper studies how exchange rate movements affect the export market entry and intensity decision of firms and the export behaviour of multinationals in the UK. Using data on British manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. Multination...

We examine the relationship between environmental regulations and innovation, using data from UK manufacturing industry during 2000-2006. We estimate a dynamic model of innovation behaviour, and explicitly account for the likely endogeneity of our measure of the stringency of environmental regulations (pollution abatement costs). Our results indica...

This paper considers the effect of acquisition FDI on the knowledge production function. We distinguish between acquisitions by MNEs from technologically leading countries and those behind the technological frontier. We show that both acquire similarly R&D intensive domestic firms, but there are important differences post-acquisition. Acquisitions...

This article investigates whether there are threshold effects in the relationship between openness and productivity growth that are fashioned by a country's natural barriers, using a cross‐country growth model. Alternative methods of modelling thresholds are explored. An endogenous threshold model is shown to be preferable to the use of interaction...

This FIW Special – International Economics contains a policy report on the relationship between trade and productivity in the European Economy. The reports consists of three chapters which all mainly deal with empirical evidence from firm level but with each chapter focusing on a specific aspect of the trade and productivity nexus. Chapter 1 presen...

In this paper we study the effects of reforms to corporate and personal income taxation on the rate of firm entry and exit using industry data for 19 OECD countries from 1998 to 2005. Using a difference-in-differences approach to correct for endogeneity bias we find that increases in corporate taxation affect entry but not exit. The effects of pers...

The current recession has highlighted the potentially severe impact of shrinkages in demand and fiscal austerity upon firm entry and survival. Using data covering broad manufacturing and service sectors in 17 countries this paper investigates how changes in fiscal policy and market size affect rates of firm entry and exit. We find that reductions i...

The international trade literatures on gravity modelling and firm‐level export behaviour have established that nontariff barriers are important impediments to international trade flows. In this paper, we provide fresh evidence on the actual barriers to exports firms face and how they vary with firm‐level characteristics. Our results indicate that t...

In this paper we study the effects of reforms to corporate and personal income taxation on the rate of firm entry and exit using industry data for 22 OECD countries from 1998 to 2005. Using a difference-in-difference approach to correct for endogeneity bias we find that increases in corporate taxation affect entry but not exit. The effects of perso...

This paper reviews the existing evidence on the effects of tax reforms on output levels and growth over the short and long run from different strands of the literature. It develops and applies criteria to evaluate the usefulness of ex-post estimates to predict the effects of tax reforms ex-ante. These include whether the estimated policy change can...

The current recession has highlighted the potentially severe impact of shrinkages in demand and fiscal austerity upon firm entry and survival. Using data covering broad manufacturing and service sectors in 17 countries, this paper investigates how changes in fiscal policy and market size affect rates of firm entry and exit. We find that reductions...

The literatures testing for aggregate short-run or long‐run growth impacts of fiscal policy use quite different methodologies. The former generally focuses on temporary fiscal ‘shocks’; the latter typically have no short‐run dynamics or assume homogeneity. We use regression methods that treat heterogeneous short‐run dynamics explicitly within a lon...

This paper considers the implications of complementarity in private production and constraints on government for optimal fiscal policy. Using an endogenous growth model with public finance, it derives three central results which modify findings in the literature under standard assumptions. First, it shows that optimal public spending composition an...

Using rich data on the international transactions of intermediate inputs by French firms we investigate the determinants of the choice between vertical integration and outsourcing at the international level. Our results show that the probability of vertical integration is reduced by the extent of asset specificity of imported inputs and enhanced by...

This paper investigates why plants belonging to multi-plant firms are more likely to exit. Using Japanese plant data linked to firm data we study the process of plant closure among domestic multi-plant firms as well as multi-plant multinationals. As elsewhere in the literature these organisational forms are found to raise the probability of plant e...

Abstract In this paper we investigate the effect of exchange rate changes on the exports of UK manufacturing firms, but draw on the macro literature to consider the effects exchange rates have on imported intermediate inputs. Real exchange rate appreciations make the foreign export price of goods and services produced by domestic firms more expensi...

Abstract The question of learning versus self-selection has dominated the micro-econometric literature on firm export decisions without leading to any firm conclusions. In part this reflects the limited information content of the data typically used. In this paper we use survey data on UK firms to offer some new insights into this debate. We find t...

A key feature of the Swedish economy over the last two decades has been the rapid internationalisation of its economy, both A key feature of the Swedish economy over the last two decades has been the rapid internationalisation of its economy, both through FDI and exports. In this paper we consider their inter-relationship, examining whether there h...

Myriad hypotheses have been advanced to explain the dismal performance of the post-1990 Japanese economy. In this paper we use plant and firm data to investigate the issue. The low rate of productivity growth in Japan is also often seen as a product of Japanese MNEs offshoring production and shutting plants that are relative to others in their indu...

This paper uses an endogenous growth model with public finance to test whether alleviating the most binding constraint to growth corresponds to the optimal fiscal policy adjustment. It makes two contributions: first, it shows that this strategy is optimal if there is only one policy adjustment which alleviates the most binding constraint. When ther...

We examine the relationship between environmental regulations and innovation, using data from UK manufacturing industry during 2000-2006. We estimate a dynamic model of innovation behaviour, and explicitly account for the likely endogeneity of our measure of the burden of environmental regulations (pollution abatement costs). Our results indicate t...

We consider whether pollution-intensive FDI tends to outflow from a country which maintains stringent environmental regulations and into countries with weak environmental regulations. We consider this issue by incorporating the predictions from the recent heterogeneous firm models of international trade into an empirical model of outward FDI by UK...

This paper investigates why multinational ownership is found to increase the probability that a plant will exit. It does so by using Japanese plant data linked to firm data. Plants belonging to a multinational are 9 percentage points more likely to exit when plant, firm and industry characteristics are conditioned on. We find that the “footloose” e...

Each year around 8 per cent of Swedish manufacturing firms leave an industry. Of the exit routes available, the least likely is firm closure. Firms are more likely to merge, become acquired or switch to a new industry. We investigate the importance of various firm and industry characteristics for the exit decision of Swedish firms from 1980-1996. F...

This paper simultaneously explores the determinants of the developing countries' production frontier and these countries' 'efficiency' in using the available resources and technology. In doing so it allows for the transfer of (industrial country) technology in determining the frontier and for international trade's influence on absorptive capacity a...

We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. Then the economy trades with the rest of the world. Lastly, the government chooses a new education policy that maximizes welfare unde...

A key distinction which has emerged from heterogeneous firm models of international trade is that of exporting at the intensive and extensive margins. Empirically however, the two are often conflated, leading to biased estimates of the impact of falling trade costs. This paper exploits detailed firm level data, which includes information on the des...

Recent aggregate tests of the impact of taxes on long-run growth rates in OECD countries remain vulnerable to two criticisms. First, they typically use ‘an aggregate average rate, or constructed marginal rate, that probably does not affect the rate that any particular economic decision maker is facing’ (Myles, 2007, p.89). Second, despite increased...

During the 1980s and 1990s, Japanese manufacturers began to relocate production from sites in Japan to low-wage East Asian countries such as China, Malaysia and Thailand. Imports of manufacturing goods increased substantially over the same period. This rapid rise in imports, and proliferation of globalization, has led to concerns among policymakers...

Using data on UK manufacturing firms, we examine the effects of exchange rate uncertainty on firm decisions on export market entry and export intensity. The use of micro data and new measures of exchange rate uncertainty enable us to test for hysteresis effects in a new way and to test the sensitivity of results to a range of different measures. Th...

Recent models of international trade have identified product quality as an important determinant of bilateral trade flows. Yet relatively little is understood about the relationship between the characteristics of the export market and the quality of products. In this paper we examine this link using Chinese data. We find evidence that product unit...

Economic analysis of adjustment to globalisation has shifted from countries and industries to firms and plants. One particularly fruitful area for research has been aspects of entry to, participation in and exit from export markets. This paper contributes to that literature. Its focus is the exporting behaviour of manufacturing firms in the United...

There has been a long-held belief that there is an association between economic growth and increased levels of international trade. However, more recent work has questioned this hypothesis and the re-opening of the debate has identified two key areas of contention. One is the extent to which the effects of openness are conditional on factors omitte...

The recent microeconomic literature on international trade has highlighted the importance of firm characteristics and trade costs for exports. This study provides evidence on one type of those costs, the costs of doing business overseas, from a theoretical and empirical perspective. Controlling for firm- and industry-level covariates, we find that...

The objective of this paper is to analyze imported intermediate material and services on …rm level productivity. The analysis is based on an administrative dataset on Swedish …rms, 1997-2002. The results show that both material and service o¤shoring increase …rm level productivity. The largest productivity gain of imported intermediate material com...

Our focus is the effects of exchange rate movements on firm decisions on export market entry and export intensity. Using data on UK manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. We also investigate the effects of exchange rate movements on the...

This paper investigates the effects of international trade on firms' strategies for industry exit, either via closedown, switching industry or being acquired. We use a rich dataset of Swedish firms that extends over two decades to track firm choices between alternative strategies. We find that higher levels of international competition increase the...

The 'compensation' and 'efficiency' hypotheses propose that globalization affects both the total, and composition of, public expenditures in different ways. Under the former, economic insecurity leads to expanding public sectors and social expenditures, whereas under the efficiency hypothesis, demands for lower taxes encourage smaller public sector...

In an endogenous growth model, the government officials are given the task of procuring public goods that are used as productive inputs in the production. Due to the information asymmetry between the government and the bureaucracy, the bureaucrats can falsely report of high quality-high cost procurement, while providing low quality-low cost product...

The recent microeconomic literature on international trade has highlighted the importance of firm characteristics and trade costs for exports. This study provides evidence on one type of those costs, the costs of doing business overseas, from a theoretical and empirical perspective. Controlling for firm- and industry-level covariates, we find that...

Empirical questions surrounding the effect of regional trade agreements on international trade have typically been answered with reference to macro-level gravity equations. Prominent within this has been whether they create or divert trade. In this paper, motivated by the recent development of theories of export-platform FDI, we use micro-level dat...