nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒08‒14
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Depreciation of Business R&D Capital By Wendy C.Y. Li; Bronwyn H. Hall
  2. Education, Participation, and the Revival of U.S. Economic Growth By Dale W. Jorgenson; Mun S. Ho; Jon D. Samuels
  3. Six Centuries of British Economic Growth: a Time-Series Perspective By Crafts, Nicholas; Mills, Terence C.
  4. Bridging the Gap: Do Fast Reacting Fossil Technologies Facilitate Renewable Energy Diffusion? By Elena Verdolini; Francesco Vona; David Popp
  5. Measures, Drivers and Effects of Green Employment: Evidence from US Local Labor Markets, 2006-2014 By Vona, Francesco; Marin, Giovanni; Consoli, Davide
  6. Employment Growth in Europe: The Roles of Innovation, Local Job Multipliers and Institutions By Maarten Goos; Joep Konings; Marieke Vandeweyer
  7. Science, university-firm R&D collaboration and innovation across Europe By Barra, Cristian; Maietta, Ornella Wanda; Zotti, Roberto
  8. The Economic Impact of Universities: Evidence from Across the Globe By Anna Valero; John Van Reenen
  9. Numerical labor flexibility and innovation outcomes of start-up firms: A panel data analysis By Masatoshi Kato; Haibo Zhou
  10. Do tax Incentives for Research Increase Firm Innovation? An RD Design for R&D By Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  11. TED: Stata Module for Testing Stability of Regression Discontinuity Models By Giovanni Cerulli
  12. Product Mix and Firm Productivity Responses to Trade Competition By Thierry Mayer; Marc J. Melitz; Gianmarco I.P. Ottaviano

  1. By: Wendy C.Y. Li; Bronwyn H. Hall
    Abstract: We develop a forward-looking profit model to estimate the depreciation rates of business R&D capital. By using data from Compustat, BEA, and NSF between 1987 and 2008, and the newly developed model, we estimate both constant and time-varying industry-specific R&D depreciation rates. The estimates are the first complete set of R&D depreciation rates for major U.S. high-tech industries. They align with the main conclusions from recent studies that the rates are in general higher than the traditionally assumed 15 percent and vary across industries. The relative ranking of the constant R&D depreciation rates among industries is consistent with industry observations and the industry-specific time-varying rates are informative about the dynamics of technological change and the levels of competition across industries. Lastly, we also present a cross-country comparison of the R&D depreciation rates between the U.S. and Japan, and find that the results reflect the relative technological competitiveness in key industries.
    JEL: D20 G12 L20 O30 O32
    Date: 2016–07
  2. By: Dale W. Jorgenson; Mun S. Ho; Jon D. Samuels
    Abstract: Labor quality growth captures the upgrading of the labor force through higher educational attainment and greater experience. Our first finding is that average levels of educational attainment of new entrants will remain high, but will no longer continue to rise, so that growing educational attainment will gradually disappear as a source of U.S. economic growth. Our second finding is that the investment boom of 1995-2000 drew many younger and less-educated workers into employment. Participation rates for these workers declined during the recovery of 2000-2007 and dropped further during the Great Recession of 2007-2009. In order to assess the prospects for recovery of participation as a potential source U.S. economic growth, we project the participation rates of each age-gender-education group. Our third finding is that the recovery of participation rates will provide an important opportunity for the revival of U.S. economic growth. Participation rates for less-educated workers are unlikely to recover the peak levels that followed the investment boom of 1995-2000. However, these rates can achieve the levels that preceded the Great Recession. While labor quality will grow more slowly, hours worked will grow much faster.
    JEL: E01 E24 O4 O47
    Date: 2016–07
  3. By: Crafts, Nicholas (University of Warwick); Mills, Terence C. (Loughborough University)
    Abstract: This paper provides a time-series analysis of recent annual estimates of real GDP and industrial output covering 1270 to 1913. We show that growth can be regarded as a segmented trend stationary process. On this basis, we find that trend growth of real GDP per person was zero prior to the 1660s but then experienced two significant accelerations, pre- and post-industrial revolution. We also find that the hallmark of the industrial revolution is a substantial increase in the trend rate of growth of industrial output rather than being an episode of difference stationary growth.
    Keywords: growth reversal; industrial revolution; Malthusian model; trend growth JEL Classification: N13; O47
    Date: 2016
  4. By: Elena Verdolini; Francesco Vona; David Popp
    Abstract: The diffusion of renewable energy in the power system implies high supply variability. Lacking economically viable storage options, renewable energy integration has so far been possible thanks to the presence of fast-reacting mid-merit fossil-based technologies, which act as back-up capacity. This paper discusses the role of fossil-based power generation technologies in supporting renewable energy investments. We study the deployment of these two technologies conditional on all other drivers in 26 OECD countries between 1990 and 2013. We show that a 1% percent increase in the share of fast-reacting fossil generation capacity is associated with a 0.88% percent increase in renewable in the long run. These results are robust to various modifications in our empirical strategy, and most notably to the use of system-GMM techniques to account for the interdependence of renewable and fast-reacting fossil investment decisions. Our analysis points to the substantial indirect costs of renewable energy integration and highlights the complementarity of investments in different generation technologies for a successful decarbonization process.
    JEL: O33 Q42 Q48 Q55
    Date: 2016–07
  5. By: Vona, Francesco; Marin, Giovanni; Consoli, Davide
    Abstract: This paper explores the nature and the key empirical regularities of green employment in US local labor markets between 2006 and 2014. We construct a new measure of green employment based on the task content of occupations. Descriptive analysis reveals the following: 1. the share of green employment oscillates between 2 and 3 percent, and its trend is strongly pro-cyclical; 2. green jobs yield a 4 percent wage premium; 3. despite moderate catching-up across areas, green jobs remain more geographically concentrated than similar non-green jobs; and 4. the top green areas are mostly high-tech. As regards the drivers, changes in environmental regulation are a secondary force compared to the local endowment of green knowledge and resilience in the face of the great recession. To assess the impact of moving to greener activities, we estimate that one additional green job is associated with 4.2 (2.4 in the crisis period) new jobs in non-tradable activities in the local economies.
    Keywords: Green Employment, Local Labor Markets, Environmental Regulation, Environmental Technologies, Local Multipliers, Labor and Human Capital, J23, O33, Q52, R23,
    Date: 2016–07–31
  6. By: Maarten Goos; Joep Konings; Marieke Vandeweyer
    Abstract: This paper shows that high-tech employment - broadly defined as all workers in high-tech sectors but also workers with STEM degrees in low-tech sectors - has increased in Europe over the past decade. Moreover, we estimate that every high-tech job in a region creates five additional low-tech jobs in that region because of the existence of a local high-tech job multiplier. The paper also shows how the presence of a local high-tech job multiplier results in convergence between Europe's regions. That is, employment in Europe's lagging regions is becoming more similar to Europe's high-tech hubs. However, our estimates suggest that this convergence is happening at a glacial pace, and some suggestive evidence is presented that lifting several institutional barriers to innovation in Europe's lagging regions would speed up convergence leading to faster high-tech as well as overall employment while also addressing Europe's regional inequalities.
    Date: 2015
  7. By: Barra, Cristian; Maietta, Ornella Wanda; Zotti, Roberto
    Abstract: According to the National Innovation System (NIS) approach, the innovative capabilities of a firm are explained by its interactions with other national agents involved in the innovation process and by formal and informal rules that regulate the system. This paper intends to verify how product and process innovation in the European food and drink industry are affected by: i) the NIS structure in terms of universities vs public research labs, faculties/department mix and size; ii) the NIS output in terms of WoS indexed publications vs the supply of graduates; iii) the NIS fragmentation and coordination and iv) the NIS scientific impact and specialisation.The source of data on firm innovation is the EU-EFIGE/Bruegel-UniCredit dataset supplemented by information from the International Handbook of Universities, Eurostat and the bibliometric analysis of academic research quality. The results obtained suggest that large size of public research institutions are detrimental to interactions between university and industry and the indicators used for public research assessment are not appropriate proxies of local knowledge spillovers.
    Keywords: university–industry interaction, firm R&D collaboration, product and process innovation, academic research quality, university education, Research and Development/Tech Change/Emerging Technologies, O3, I23, D22, R1,
    Date: 2016–06–17
  8. By: Anna Valero; John Van Reenen
    Abstract: We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that doubling the number of universities per capita is associated with 4% higher future GDP per capita. Furthermore, there appear to be positive spillover effects from universities to geographically close neighbouring regions. We show that the relationship between growth and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation (although the magnitudes are not large). We find that within countries, higher historical university presence is associated with stronger pro-democratic attitudes.
    Keywords: universities, growth, human capital, innovation
    JEL: I23 I25 J24 O10 O31
    Date: 2016–08
  9. By: Masatoshi Kato (School of Economics, Kwansei Gakuin University); Haibo Zhou (Faculty of Economics and Business, University of Groningen)
    Abstract: Using a panel data set based on repeated questionnaire surveys in Japan, this study examines the effects of numerical labor flexibility on innovation outcomes of start-up firms, a topic that has not been well examined in the literature. Using a random-effects probit model, the estimation results indicate that the use of temporary employees significantly increases the probability of product innovation. In addition, numerical flexibility, measured as external labor turnover of regular employees, initially increases and then decreases the probability of patent application. The implications of our findings are discussed.
    Keywords: start-up firm, numerical flexibility, regular employee flexibility, nonregular employee flexibility, innovation outcome, panel data
    JEL: M13 M50 J63 O32
    Date: 2016–08
  10. By: Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
    Abstract: We present evidence of a causal impact of research and development (R&D) tax incentives on innovation. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting (even when quality-adjusted). R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population of smaller firms and subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design. Over the 2006-11 period aggregate business R&D would be around 10% lower in the absence of the tax relief scheme. We also show that the R&D generated by the tax policy creates positive spillovers on the innovations of techno-logically related firms.
    JEL: O31
    Date: 2016–07
  11. By: Giovanni Cerulli (CNR - IRCrES)
    Abstract: Regression discontinuity (RD) models are commonly used to nonparametrically identify and estimate a local average treatment effect (LATE). Dong and Lewbel (2015) show how a derivative of this LATE can be estimated. They use their Treatment Effect Derivative (TED) to estimate how the LATE would change if the RD threshold changed. We argue that their estimator should be employed in most RD applications, as a way to assess the stability and hence external validity of RD estimates. Closely related to TED, Cerulli et al. (2016) define the Complier Probability Derivative (CPD). Just as TED measures stability of the treatment effect, the CPD measures stability of the complier population in fuzzy designs. In this article, we provide the Stata module “ted†that can be used to easily implement TED and CPD estimation, and we apply it to some real data sets.
    Date: 2016–08–10
  12. By: Thierry Mayer; Marc J. Melitz; Gianmarco I.P. Ottaviano
    Abstract: We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multi-product firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets – and the induced product mix reallocations – induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial – and explain an important share of aggregate productivity fluctuations for French manufacturing.
    JEL: D24 F12
    Date: 2016–07

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