nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2018‒01‒22
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The Social Origins of Inventors By Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto
  2. A Tax Plan for Endogenous Innovation By Croce, Mariano; Karantounias, Anastasios G.; Raymond, Stephen; Schmid, Lukas
  3. Smart Specialisation, seizing new industrial opportunities By Antonio VEZZANI; Marco BACCAN; Alina CANDU; CASTELLI; Mafini DOSSO; Petros GKOTSIS
  4. Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies By Matteo Fiorini; Bernard Hoekman; Clément Malgouyres
  5. On the Measurement of Upstreamness and Downstreamness in Global Value Chains By Pol Antràs; Davin Chor
  6. Trade in Services versus Trade in Manufactures: The Relation between the Role of Tacit Knowledge, the Scope for Catch up, and Income Elasticity By Eddy Bekkers; Michael Landesmann; Indre Macskasi
  7. Supply-side labour market reforms: a neglected cause of the productivity crisis By Alfred Kleinknecht
  8. Structural Transformation of Occupation Employment By Georg Duernecker; Berthold Herrendorf
  9. The ‘China Shock’, Exports and U.S. Employment: A Global Input-Output Analysis By Robert C. Feenstra; Akira Sasahara
  10. Politicians and Creative Destruction By Salome Baslandze
  11. The organizational design of high-tech startups and product innovation By Grimpe, Christoph; Murmann, Martin; Sofka, Wolfgang

  1. By: Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto
    Abstract: In this paper we merge three datasets - individual income data, patenting data, and IQ data - to analyze the determinants of an individual's probability of inventing. We find that: (i) parental income matters even after controlling for other background variables and for IQ, yet the estimated impact of parental income is greatly diminished once parental education and the individual's IQ are controlled for; (ii) IQ has both a direct effect on the probability of inventing an indirect impact through education. The effect of IQ is larger for inventors than for medical doctors or lawyers. The impact of IQ is robust to controlling for unobserved family characteristics by focusing on potential inventors with brothers close in age. We also provide evidence on the importance of social family interactions, by looking at biological versus non-biological parents. Finally, we find a positive and significant interaction effect between IQ and father income, which suggests a misallocation of talents to innovation.
    Keywords: education; Innovation; inventors; IQ; parental background; Social mobility
    JEL: I24 J18 J24 O31
    Date: 2017–12
  2. By: Croce, Mariano (University of North Carolina at Chapel Hill,); Karantounias, Anastasios G. (Federal Reserve Bank of Atlanta); Raymond, Stephen (University of North Carolina at Chapel Hill); Schmid, Lukas (Duke University)
    Abstract: In times when elevated government debt raises concerns about dimmer global growth prospects, we ask: How can the government provide incentives for innovation in a fiscally sustainable way? We address this question by examining the Ramsey problem of finding optimal tax and subsidy schemes in a model in which growth is endogenously sustained by risky innovation. We characterize the shadow value of growth and entry in the innovation sector. We find that a profit tax is required to replicate the first-best in order to balance the externalities associated with innovative activity. At the second-best, the profit tax is designed to optimally respond to growth shocks above and beyond what is prescribed by the standard tax-smoothing incentives in economies with exogenous growth. The interplay of risk and innovation opens a new margin for optimal taxation.
    Keywords: innovation; R&D investment; endogenous growth; government debt; labor tax; subsidy; profit tax
    JEL: E32 E62 H21 H63 O3
    Date: 2017–11–01
  3. By: Antonio VEZZANI (European Commission - JRC); Marco BACCAN (Finlombarda S.p.A. (Italy)); Alina CANDU (Finlombarda S.p.A. (Italy)); CASTELLI (Finlombarda S.p.A. (Italy)); Mafini DOSSO (European Commission - JRC); Petros GKOTSIS (European Commission - JRC)
    Abstract: This study offers a novel analytical approach to inform the regional search for new industrial opportunities, as promoted by smart specialisation in the EU Cohesion policy context. The analysis departs from the challenges of practicing smart specialisation and its entrepreneurial discovery process in a dynamic perspective. It argues that the adoption of a dynamic approach to identify new opportunities implies mapping regional business and innovation assets as well as, assessing their position within the global technological and industrial landscape. The study brings a case study of Lombardy region, spurring the S3 Lab initiative (in collaboration with Baden-Württemberg, Catalonia and Lapland), together with a comparative analysis of its technological profile. The empirical study combines patent data from OECD REGPAT and territorial proprietary micro-data from Lombardy region on firm creation in emerging industries (EI) – new industrial sectors or existing sectors evolving into new industries (European Cluster Observatory). These industries represent a priority area for Lombardy's innovation-led development strategy. The initial observations confirm the importance of such industries in the region; they represent more than one-third of employment, almost a half of the regional value-added and feature together the majority of start-ups, suggesting the relevance of the regional strategic development choices. Also, in terms of productive advantages, Lombardy ranks high in some key EI. The mapping of technological competences through patent indicators, e.g. specialisation, diversification and ability to specialise in fast-growing and niche fields gives relevant insights on the technological potential of the region, providing further guidance for better targeted interventions.
    Keywords: smart specialisation, emerging industries, regional search, technological specialisation
    JEL: O25 O33 O38 R58
    Date: 2017–11
  4. By: Matteo Fiorini (Robert Schuman Centre for Advanced Studies, European University Institute); Bernard Hoekman (Robert Schuman Centre for Advanced Studies, European University Institute); Clément Malgouyres (Banque de France)
    Abstract: Policy reforms targeting the services sectors are a neglected dimension of the process of structural transformation and economic development. The effects of such reforms on employment across industries as a function of their use of services as intermediate inputs are theoretically ambiguous and remain largely understudied. This paper uses sector-level data for 24 transition economies for the 1990-2012 period to assess the impacts of services policy reforms on downstream manufacturing employment. We find a negative effect of services reforms on manufacturing sector employment. This is mostly associated with the process of transition to a market-based economy. Controlling for transition-specific dynamics, the data suggest a neutral effect of progress towards adopting “best practice” policies for upstream services on employment in downstream manufacturing. Furthermore, in line with the extant literature, we confirm that services policy reforms enhance productivity of downstream manufacturing industries. Finally, we find that the negative effects on downstream employment are mitigated in countries with better economic governance and human capital.
    Date: 2017–09
  5. By: Pol Antràs; Davin Chor
    Abstract: This paper offers four contributions to the empirical literature on global value chains (GVCs). First, we provide a succinct overview of several measures developed to capture the upstreamness or downstreamness of industries and countries in GVCs. Second, we employ data from the World Input-Output Database (WIOD) to document the empirical evolution of these measures over the period 1995-2011; in doing so, we highlight salient patterns related to countries’ GVC positioning – as well as some puzzling correlations – that emerge from the data. Third, we develop a theoretical framework – which builds on Caliendo and Parro’s (2015) variant of the Eaton and Kortum (2002) model – that provides a structural interpretation of all the entries of the WIOD in a given year. Fourth, we resort to a calibrated version of the model to perform counterfactual exercises that: (i) sharpen our understanding of the independent effect of several factors in explaining the observed empirical patterns in the period 1995-2011; and (ii) provide guidance for how future changes in the world economy are likely to shape the positioning of countries in GVCs.
    JEL: D5 F1 F2
    Date: 2018–01
  6. By: Eddy Bekkers (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Indre Macskasi
    Abstract: We infer sectoral productivity from trade and production data and test the hypothesis that technological catch-up is slower in tacit knowledge intensive sectors, operationalised by measures of complex task intensity. Furthermore, we examine whether catch-up is slower in sectors with a large skill intensity, a high degree of export sophistication and high income elasticity. Employing Comtrade and UNIDO data between 1960 and 2000 covering manufacturing sectors, we find that catch-up is slower in more tacit knowledge intensive sectors, as well as in skill intensive and export sophisticated sectors. With more recent data from 1997 to 2011 from GTAP we find instead that catch-up is faster in more tacit knowledge intensive manufacturing sectors, whereas catch-up is slower in more tacit knowledge intensive services sectors. Catch-up is consistently faster in income elastic sectors, both for manufacturing and services.
    Keywords: sectoral TFP, tacit knowledge, technological catch-up
    JEL: F14 F43 I25
    Date: 2017–12
  7. By: Alfred Kleinknecht
    Abstract: In spite of impressive stories about a Second Machine Age or Industry 4.0, growth rates of labor productivity in the US, Japan and Western Europe declined, during the last 10-15 years, to their lowest levels since World War II. Recent contributions on the productivity slowdown by mainstream economists produced an impressive amount of statistical data that certainly add to our understanding, but they fail addressing the negative impact of supply-side labor market reforms on innovation and productivity. I present theoretical arguments of how labor market deregulation can negatively influence innovation and productivity growth and I review empirical evidence.
    Keywords: Varieties of capitalism; structural reforms of lab or markets; innovation; productivity crisis
    JEL: J53 K31 O31
    Date: 2017–12
  8. By: Georg Duernecker (University of Mannheim); Berthold Herrendorf (Arizona State University)
    Abstract: We provide evidence on structural transformation from censuses covering three quarters of the world population. As countries develop, the standard patterns of labor reallocation hold for broad categories of both industries ("sectors") and occupations while the employment shares of the service occupations rise in all sectors. We propose a model of structural transformation with sectors and occupations that is consistent with these patterns. The key ingredient of our model is uneven, occupation-specific technological progress. We show that our model is useful for predicting changes in the occupation composition and for understanding why sectoral labor productivity growth has slowed.
    Date: 2017
  9. By: Robert C. Feenstra; Akira Sasahara
    Abstract: We quantify the impact on U.S. employment from imports and exports during 1995-2011, using the World Input-Output Database. We find that the growth in U.S. exports led to increased demand for 2 million jobs in manufacturing, 0.5 million in resource industries, and a remarkable 4.1 million jobs in services, totaling 6.6 million. One-third of those service sector jobs are due to the intermediate demand from merchandise (manufacturing and resource) exports, so the total labor demand gain due to merchandise exports was 3.7 million jobs. In comparison, U.S. merchandise imports from China led to reduced demand of 1.4 million jobs in manufacturing and 0.6 million in services (with small losses in resource industries), with total job losses of 2.0 million. It follows that the expansion in U.S. merchandise exports to the world relative to imports from China over 1995-2011 created net demand for about 1.7 million jobs. Comparing the growth of U.S. merchandise exports to merchandise imports from all countries, we find a fall in net labor demand due to trade, but comparing the growth of total U.S. exports to total imports from all countries, then there is a rise in net labor demand because of the growth in service exports.
    JEL: F14 O19
    Date: 2017–11
  10. By: Salome Baslandze (EIEF - Einaudi Institute for Economics a)
    Abstract: Creative destruction and reallocation of resources from less to more productive firms are important drivers of productivity growth (Bartelsman and Doms (2000), Foster et al. (2001), Foster et al. (2008), Lentz and Mortensen (2008), Hsieh and Klenow (2009), etc). In this project, we study the role of frictions that are obstacles to such creative destruction and real-location in Italy. More specifically, inefficiencies of financial intermediation as well as existence of politically connected firms can affect selection of firms into market as well as lead to unequal access to further growth opportunities. This might have adverse effects on aggregate growth due to slower market churning and less competition in the market. Our goal is to understand quantitative importance of different channels through which these frictions shape firm dynamics and productivity growth in Italy. Starting point of our analysis is an empirical investigation of micro-level data from Italy. First, we match social security data on universe of workers from Italy’s Social Security Office (INPS) with firm-level balance sheet data from Centrale dei Bilanci to get a matched employer-employee dataset for the universe of workers in Italy in 1985-2014. To identify political connections at the firm level, we combine this matched employer-employee dataset with administrative data on local politicians from the Ministry of the Interior (RLP). To study firms’ innovation activities we combine the above firm-level data with patents and citations information from PATSTAT. We utilize this comprehensive micro-level dataset to document a set of motivating reduced-form evidence. In particular, among others, we analyze: 1) the characteristics of firms that have political connections in terms of a range of real outcomes, like investment, innovation behavior, productivity growth, etc. 2) firm dynamics in industries/locations where political connections are more prevalent, 3) the link between firms’ connections and ease of access to financing.
    Date: 2017
  11. By: Grimpe, Christoph; Murmann, Martin; Sofka, Wolfgang
    Abstract: We investigate whether appointing a middle management level affects startups' innovation performance. Additional hierarchical levels are often suspected to restrict innovative activities. However, founders' capacities for information processing and resource allocation are usually strongly limited while, at the same time, R&D decisions are among the most consequential choices of startups. We argue that middle management is positively related to introducing product innovations because it improves the success rates from recombining existing knowledge as well as managing R&D personnel. In addition, we suggest that the effectiveness of these mechanisms depends on the riskiness of a startup's business opportunity. Based on a sample of German high-tech startups, we find support for our conjectures.
    Keywords: middle management,innovation performance,R&D,startups,organizational design,R&D management
    Date: 2017

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