High Tech Firms in Israeli Industry

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The main purpose of this study is to characterize and analyze high technology industrial firms in Israel. We are able to advance beyond previous empirical studies of high technology because we have access to a unique individual firm data set, a sample of 670 establishments in Israel for the year 1982. Not only do we have basic production data at the individual firm level, but also each firm's capital stock revalued to 1982 dollars. A technology index is constructed from three technological indicators -- substantial R&D investment, a high proportion of the work force consisting of engineers and technicians, and a high proportion of the capital stock being of recent vintages. This technology index is used to classify firms. The largest concentration of High Tech firms are found in electronics and transport equipment industries, and the lowest in textiles and clothing. High Tech firms appear to be more productive, pay higher wages, and earn higher rates of return. Part of the higher wages to workers in High Tech firms accrue in the form of rents whereby workers in these firms exappropriate a portion of monopoly profits, a phenomenon which does not appear to be the case for Low Tech firms.

Published: "High Tech and Productivity: Evidence from Israeli Industrial Firms," European Economic Review, Vol. 35, pp. 1199-1221, (1991).

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