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on Technology and Industrial Dynamics |
| By: | Irem Guceri; Li Liu |
| Abstract: | With growing academic and policy interest in research and development (R&D) tax incentives, the question about their effectiveness has become ever more relevant. In the absence of an exogenous policy reform, the simultaneous determination of companies’ tax positions and their R&D spending causes an identification problem in evaluating tax incentives. To overcome this identification challenge, we exploit a U.K. policy reform and use the population of corporation tax records that provide precise information on the amount of firm-level R&D expenditure. Using difference-in-differences and other panel regression approaches, we find a positive and significant impact of tax incentives on R&D spending, and an implied user cost elasticity estimate of around -1.6. This translates to more than a pound in additional private R&D for each pound foregone in corporation tax revenue. |
| Keywords: | Europe;United Kingdom;Tax incentives; corporation tax returns; quasi-experiment, Tax incentives, corporation tax returns, quasi-experiment, Business Taxes and Subsidies, Innovation and Invention: Processes and Incentives |
| Date: | 2017–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/84&r=tid |
| By: | M. Grazzi; C. Piccardo; C. Vergari |
| Abstract: | This paper illustrates the building procedure of a firm-level panel dataset that merges several sources of information concerning the various activities of business firms. The aim of this work is to achieve a detailed dataset able to shed light on firm demographics, in terms of survival, entry and exit processes, distinguishing between “voluntary" and “involuntary" exits. Moreover, the derived dataset allows to monitor the innovation activities of the firms and also to capture complementarities between two instruments of intellectual property rights (IPRs), namely granted patents and registered trademarks. We assess the validity of the proposed procedures resorting to the virtual universe of Italian limited liability companies as provided by Bureau van Dijk (BvD). The dataset covers more than 1 million companies operating in both manufacturing and service sectors and contain financial and economic information, as well as, among the others, the ownership structure and administrative procedures undergone by the firms, which may lead to firm exit. The main purpose of the paper is to provide a unified set of procedures to help the researcher dealing with the vast amount of information available on corporate firms and of ever increasing size. This will also facilitate the replication of empirical analyses, across researchers working on dataset with similar characteristics, although from different countries or data providers. |
| JEL: | C81 L60 L80 O14 O34 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp2003&r=tid |
| By: | Masatoshi Kato (School of Economics, Kwansei Gakuin University); Koichiro Onishi (Faculty of Intellectual Property, Osaka Institute of Technology); Yuji Honjo (Faculty of Commerce, Chuo University) |
| Abstract: | This study examines the role of patenting activities in new-firm survival, using a data set of firms founded from 2003 to 2010 in the Japanese manufacturing and software sectors. In particular, we distinguish the effects of patenting activities of chief executive officers (CEOs) from those of patenting activities of firms, taking into account exit routes: bankruptcy, voluntary liquidation, and merger. It is found that firms that engaged in patenting activities after start-up are less likely to go bankrupt. It is also found that firms whose CEOs have experience in patenting activities before start-up are less likely to go bankrupt. In contrast, we provide evidence that CEOs' involvement in patenting activities after start-up are not helpful for survival. Furthermore, the results based on subsamples according to firm age show that while firms' patenting activities do not increase the probability of survival in the early years since start-up, they help new firms surviving after a certain period of time since start-up. While CEOs' pre-entry patenting activities have a significant explanatory power in reducing the probability of bankruptcy within a certain period of time since start-up, they have no longer significant effect afterwards. Further, CEOs' patenting activities after start-up increase the probability of exit through bankruptcy and voluntary liquidation especially after a certain period of time since start-up. |
| Keywords: | New firm, patenting, chief executive officer, survival, firm age |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:159&r=tid |
| By: | Michael Koch (University of Bayreuth, Germany); Marcel Smolka (Department of Economics and Business Economics, Aarhus University, Denmark) |
| Abstract: | Understanding the effects of foreign direct investment and the behavior of multinational enterprises (MNEs) is a core issue in the study of international economics. We exploit within-firm variation in ownership structure induced by foreign acquisitions in Spain to provide a new angle on the relationship among foreign ownership, technology, and skills. We first develop a model in which heterogeneous firms decide endogenously about the level of technology, the share of high-skilled workers, and the level of worker training. Foreign-owned firms implement better technology than domestically owned firms due to access to foreign markets through the foreign parent. This market size effect, coupled with a technology-skill complementarity, raises the demand for high-skilled workers as well as worker training upon acquisition. The largest productivity gains predicted by the model accrue to those firms that optimally combine better technology with a larger share of high-skilled workers in production and a better trained workforce. We test these predictions on a longitudinal data set of Spanish manufacturing firms. Combining firm fixed effects with a suitable propensity score weighting estimator, we find empirical evidence that foreign-acquired firms, not only increase their technology level, but also engage in skill upgrading upon acquisition (through both hiring and training). Moreover, we show that these changes are driven by the market size effect, and not by changes in the ownership structure per se. Finally, we reveal a technology-skill complementarity in the data implying that the productivity gains associated with better technology are magnified for firms actively engaging in skill upgrading. Overall, our paper provides strong evidence for the notion that foreign MNEs "inject" skill-biased technological change into their affiliated firms. |
| Keywords: | Multinational Enterprises, Mergers and Acquisitions, Skill-biased Technological Change, Worker Training Productivity |
| JEL: | D22 D24 F23 G34 |
| Date: | 2017–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2017-04&r=tid |
| By: | Andersson, Martin (Blekinge Institute of Technology); Larsson, Johan P. (Swedish Entrepreneurship Forum); Wernberg, Joakim (CIRCLE) |
| Abstract: | As cities increasingly become centers of economic growth and innovation, there is a need to understand their inner workings and organization in greater detail. We use ge-coded firm-level panel data at the sub-city level to assess the long-standing question whether agglomeration economies derive from specialization (within-industry) or diversity (between-industry). We show that these two types of externalities co-exist, but differ in their spatial distribution and attenuation within cities. There are robust positive effects of diversity and specialization on firms’ TFP growth at the local within-city neighborhood level, especially for firms in high-tech and knowledge-intensive activities. While specialization effects are bound to the local sub-city level, we demonstrate a positive effect of overall diversity also at the city-wide level. The results resonate with the idea that urban economies provide a mix of industrial diversity and specialisation. A location in a within-city industry cluster in a diversified, large city appears to let firms enjoy the benefits of local industry-specific externalities, while reaping the general city-wide benefits of a diversified city. |
| Keywords: | Productivity; Diversity; Specialization; Externalities; Knowledge spillovers; Attenuation; Agglomeration economies; Geocoding |
| JEL: | D24 L23 R12 |
| Date: | 2017–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1167&r=tid |
| By: | Michael E. Waugh |
| Abstract: | This paper shows how the dynamics of the firm yield new insights into the short- and long-run economic outcomes from changes in immigration policy. I quantitatively illustrate these insights by evaluating two policies: an expansion of and the elimination of the H-1B visa program for skilled labor. A change in policy changes firms’ entry and exit decisions as they dynamically respond to changes in market size. The dynamic response of firms amplifies changes in relative wages as labor demand shifts with the distribution of firms. Firms’ responses also lead to the rapid accrual of aggregate gains/losses in output and consumption. The welfare implications of policy changes depend critically on who bears the burden of creating new firms. |
| JEL: | A1 D92 F22 J61 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23387&r=tid |
| By: | Orazbayev, Sultan |
| Abstract: | This document describes a dataset of estimated bilateral flows and stocks of students and researchers (including some other types of high-skilled workers) for more than 200 countries (and territories) since 1990. The data is derived by analysing education and employment histories of more than 650 thousand individuals registered with ORCID. Comparison with independent data sources supports technical validity and representativeness of this data. The dataset provides new measures of the geography of a subset of high-skilled labour and opens opportunities for exploring hypotheses related to migration and agglomeration, impact of immigration policy, scientific production and development, academic mobility, and brain drain. |
| Keywords: | high-skilled migration; high-skilled diasporas; student mobility; scientific mobility; ORCID |
| JEL: | F2 F20 F22 O15 |
| Date: | 2017–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79242&r=tid |
| By: | Yu Wang (School of Economics, Nanjing University); Yu Chen (University of Graz); Bonwoo Koo (University of Waterloo) |
| Abstract: | This study analyzes a firm's decision to adopt an open source strategy in the development of a primary system product that has an indirect network effect on complementary accessory products, and evaluates its impact on market competition and social welfare. It shows that open source systems can drive proprietary systems out of the market if system development costs are high and the network effect is strong. This study also shows that the presence of open source systems can benefit proprietary firms due to consumers' higher willingness-to-pay for accessory products, and increase total industry profit and social welfare. |
| Keywords: | Hotelling model, packaged goods, network effect, horizontal product differentiation |
| JEL: | L14 L15 L17 L86 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2017-03&r=tid |
| By: | Prakash Loungani; Saurabh Mishra; Chris Papageorgiou; Ke Wang |
| Abstract: | Using a newly constructed dataset on trade in services for 192 countries from 1970 to 2014, this paper shows that services currently constitute one-fourth of world trade and an increasingly important component of global production. A detailed analysis of patterns and stylized facts reveals that exports of services are not only gaining strong momentum and catching up with exports of goods in many countries, but they could also trigger a new wave of trade globalization. Research applications of the trade in service dataset on structural transformation, resilience, labor reallocation, and income distribution are outlined. |
| Keywords: | Economic growth;Globalization;Trade in services, sector-level data, technology, Country and Industry Studies of Trade, Economic Growth of Open Economies, General, Macroeconomic Analyses of Economic Development, One, Two, and Multisector Growth Models |
| Date: | 2017–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/77&r=tid |
| By: | Adriaan R. Soetevent (University of Groningen); Tadas Bruzikas (University of Groningen) |
| Abstract: | In the last decade, many European countries have seen a sharp increase in the number of automated fueling stations. We study the effect of this process innovation on prices at stations that are automated and their competitors using a difference-in-differences matching strategy. Our estimates show that prices at automated stations drop by 1.0 to 2.1% immediately after conversion and stabilize at this lower level. We find no indication of competitive spillover effects to neighboring sites at the conventional significance levels. Other than previous studies, our estimates do not reveal a difference in impact between early and later adopters of automation. |
| Keywords: | technology adoption; retail gasoline; pricing; competition |
| JEL: | C22 D4 L13 L81 |
| Date: | 2017–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170045&r=tid |
| By: | Stephen Gibbons; Teemu Lyytikäinen; Henry Overman; Rosa Sanchis-Guarner |
| Abstract: | This paper estimates the impact of new road infrastructure on employment and labour productivity using plant level longitudinal data for Britain. Exposure to transport improvements is measured through changes in accessibility, calculated at a detailed geographical scale from changes in minimum journey times along the road network. These changes are induced by the construction of new road link schemes. We deal with the potential endogeneity of scheme location by identifying the effects of changes in accessibility from variation across small-scale geographical areas close to the scheme. We find substantial positive effects on area level employment and number of plants. In contrast, for existing firms we find negative effects on employment coupled with increases in output per worker and wages. A plausible interpretation is that new transport infrastructure attracts transport intensive firms to an area, but with some cost to employment in existing businesses. |
| Keywords: | productivity, employment, accessibility, transport |
| JEL: | D24 O18 R12 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0214&r=tid |