American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Small Steps for Workers, a Giant Leap for Productivity
American Economic Journal: Applied Economics
vol. 6,
no. 1, January 2014
(pp. 73–90)
Abstract
We document the evolution of productivity in a steel mini mill with fixed capital, producing an unchanged product with Leontief technology working 24/7. Despite—almost—unchanged production conditions, output doubled within the sample period (12 years). We decompose the gains into downtime reductions, more rounds of production per time, and more output per run. After attributing productivity gains to investment and an incentive plan, we are left with a large unexplained component. Learning by experimentation, or tweaking, seems to be behind the continual and gradual process of productivity growth. The findings suggest that capacity is not well defined, even in batch-oriented manufacturing.Citation
Hendel, Igal, and Yossi Spiegel. 2014. "Small Steps for Workers, a Giant Leap for Productivity." American Economic Journal: Applied Economics, 6 (1): 73–90. DOI: 10.1257/app.6.1.73Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D83 Search; Learning; Information and Knowledge; Communication; Belief
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- L23 Organization of Production
- L61 Metals and Metal Products; Cement; Glass; Ceramics
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