nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2018‒05‒21
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Finding Needles in Haystacks: Artificial Intelligence and Recombinant Growth By Ajay Agrawal; John McHale; Alex Oettl
  2. The Political Economy of Automation: Occupational Automatability and Preferences for Redistribution By van Hoorn, Andre
  3. The Impact of Exports on Innovation: Theory and Evidence By Philippe Aghion, Antonin Bergeaud, Matthieu Lequien, Marc J. Melitz
  4. Recent US Manufacturing Employment: The Exception that Proves the Rule By Lawrence, Robert Z.
  5. Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle By Rebecca Riley; Ana Rincon-Aznar; Lea Samek
  6. Structural Change in Investment and Consumption: A Unified Approach By Berthold Herrendorf; Richard Rogerson; Ákos Valentinyi
  7. Reallocation and productivity during the Great Recession:evidence from French manufacturing firms By Giacomo Domini; Daniele Moschella
  8. Climate Agreement and Technology Diffusion: Impact of the Kyoto Protocol on International Patent Applications for Renewable Energy Technologies By Mai Miyamoto; Kenji Takeuchi
  9. Job creation and economic impact of renewable energy in Netherlands By Tatyana Bulavskaya; Frédéric Reynés
  10. Technology and Skill: Twin Engines of Growth By Nancy L. Stokey

  1. By: Ajay Agrawal; John McHale; Alex Oettl
    Abstract: Innovation is often predicated on discovering useful new combinations of existing knowledge in highly complex knowledge spaces. These needle-in-a-haystack type problems are pervasive in fields like genomics, drug discovery, materials science, and particle physics. We develop a combinatorial-based knowledge production function and embed it in the classic Jones growth model (1995) to explore how breakthroughs in artificial intelligence (AI) that dramatically improve prediction accuracy about which combinations have the highest potential could enhance discovery rates and consequently economic growth. This production function is a generalization (and reinterpretation) of the Romer/Jones knowledge production function. Separate parameters control the extent of individual-researcher knowledge access, the effects of fishing out/complexity, and the ease of forming research teams.
    JEL: O3 O33 O4
    Date: 2018–04
  2. By: van Hoorn, Andre
    Abstract: Although the importance of technological change for increasing prosperity is undisputed and economists typically deem it unlikely that labor-saving technology causes long-term employment losses, people’s anxiety about automation and its distributive consequences can be an important shaper of economic and social policies. This paper considers the political economy of automation, proposing that individuals in occupations that are more at risk of losing their job to automation have stronger preferences for government redistribution. Analysis of cross-national individual-level survey data from three different sources confirms the effect of occupational automation risk on redistribution preferences. The same effect is found when considering indirect exposure to automation risk through the occupation of one’s spouse or partner and using the automatability of individuals’ own occupation as a generic control variable. In addition, the effect is not limited to the preference for redistribution in general but extends to a preference for a specific policy with redistributive consequences, namely the preference for government support of declining industries.
    Keywords: Preferences for redistribution; automation; social insurance; robotization; task content; welfare state; routineness
    JEL: J23 J24 J31 O14
    Date: 2018–05–02
  3. By: Philippe Aghion, Antonin Bergeaud, Matthieu Lequien, Marc J. Melitz
    Abstract: This paper investigates the effect of export shocks on innovation. On the one hand a positive shock increases market size and therefore innovation incentives for all firms. On the other hand it increases competition as more firms enter the export market. This in turn reduces profits and therefore innovation incentives particularly for firms with low productivity. Overall the positive impact of the export shock on innovation is magnified for high productivity firms, whereas it may negatively affect innovation in low productivity firms. We test this prediction with patent, customs and production data covering all French manufacturing firms. To address potential endogeneity issues, we construct firm-level export proxies which respond to aggregate conditions in a firm's export destinations but are exogenous to firm-level decisions. We show that patenting robustly increases more with export demand for initially more productive firms. This effect is reversed for the least productive firms as the negative competition effect dominates.
    Keywords: Innovation, trade, export, demand shocks, patents
    JEL: D21 F13 F14 F41 O30 O47
    Date: 2018
  4. By: Lawrence, Robert Z. (Harvard University)
    Abstract: This Working Paper challenges two widely held views: first that trade performance has been the primary reason for the declining share of manufacturing employment in the United States, and second that recent productivity growth in manufacturing has actually been quite rapid but is not accurately measured. The paper shows that for many decades, faster productivity growth interacting with unresponsive demand has been the dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies. It also shows that since 2010, however, the relationship has been reversed and slower productivity growth in manufacturing has been associated with more robust performance in manufacturing employment. These contrasting experiences suggest a tradeoff between the ability of the manufacturing sector to contribute to productivity growth and its ability to provide employment opportunities. While some blame measurement errors for the recently recorded slowdown in manufacturing productivity growth, spending patterns in the United States and elsewhere suggest that the productivity slowdown is real and that thus far fears about robots and other technological advances in manufacturing displacing large numbers of jobs appear misplaced.
    JEL: D24 F16 J21 O14
    Date: 2018–01
  5. By: Rebecca Riley; Ana Rincon-Aznar; Lea Samek
    Abstract: We analyse new industry-level data to re-examine the UK productivity puzzle. We carry out an accounting exercise that allows us to distinguish general macroeconomic patterns from sector trends and idiosyncrasies, providing a roadmap for anyone interested in explaining the puzzle. We focus on the UK market sector. Average annual labour productivity growth was 2.5 percentage points lower during the period 2011-2015 than in the decade before the financial crisis that began in 2007. We find that several years on from the financial crisis stagnation remains widespread across detailed industry divisions, pointing to economy-wide explanations for the puzzle. With some exceptions, labour productivity growth lost most momentum in those industries that experienced strong growth before the crisis. Three fifths of the gap is accounted for by a few industries that together account for less than one fifth of market sector value added. In terms of why we observe continued stagnation, we find that capital shallowing has become increasingly important in explaining the labour productivity growth gap in service sectors, as the buoyancy of the UK labour market has not been sufficiently matched by investment, although our figures suggest that the majority of the productivity gap is accounted for by a TFP gap. The collapse in labour productivity growth has been more pronounced in the UK than elsewhere, but the broad sector patterns of productivity stagnation are in many respects similar across other advanced economies, emphasising the importance of global explanations for the puzzle. UK industries that saw the biggest reductions in productivity growth tended to be internationally competitive and more dependent on global demand than other industries. They were also industries where productivity is difficult to measure.
    Keywords: productivity, competitiveness, sector studies
    JEL: E22 E23 L60 L70 L80 L90 O47
    Date: 2018–05
  6. By: Berthold Herrendorf; Richard Rogerson; Ákos Valentinyi
    Abstract: Existing models of structural change typically assume that all of investment is produced in manufacturing. This assumption is strongly counterfactual: in the postwar US, the share of services value added in investment expenditure has been steadily growing and it now exceeds 0.5. We build a new model, which takes a unified approach to structural change in investment and consumption. Our unified approach leads to three new insights: technological change is endogenously investment specific; having constant TFP growth in all sectors is inconsistent with structural change and aggregate balanced growth occurring jointly; the sector with the slowest TFP growth absorbs all resources asymptotically. We also provide empirical support from the postwar US for the first and third insight.
    JEL: O11 O14
    Date: 2018–05
  7. By: Giacomo Domini; Daniele Moschella
    Abstract: According to the `cleansing hypothesis', recessions are periods in which productivity-enhancing reallocation intensifies, shifting resources away from less efficient to more efficient firms at a greater pace. Does the Great Recession of 2008-2010 fit this view? We address this question, studying the case of the French manufacturing sector. Based on a panel of firms, built by matching data from several sources, we investigate the contribution of productivity to firm growth and survival over the period 2002-2013. Our results show that, during the recent global crisis, more productive firms decreased their advantage with respect to less productive firms, in terms of both employment growth and probability to survive, in disagreement with the cleansing hypothesis.
    Keywords: firm productivity, selection, employment growth, global crisis
    Date: 2018–05–15
  8. By: Mai Miyamoto (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: This paper examines the Kyoto Protocol's impact on the international diffusion of renewable energy technologies. Using patent application data from 133 countries from 1990 to 2013, we find that the Kyoto Protocol increased international patent applications from the countries with emission targets. When we focus on countries with more stringent targets, the effect of the Kyoto Protocol is even stronger. We find a similar effect in international patent applications to four developing countries that are large emitters of greenhouse gases (GHGs): China, India, Brazil, and Mexico. These results suggest that the Kyoto Protocol stimulated international patenting activities from countries that are committed to stringent targets for climate mitigation.
    Keywords: Renewable energy; Kyoto Protocol; International patent applications
    JEL: F14 O33 Q55
    Date: 2018–05
  9. By: Tatyana Bulavskaya (The Netherlands Organisation for Applied Scientific Research (TNO)); Frédéric Reynés (Observatoire français des conjonctures économiques)
    Abstract: This study evaluates the economic impact of a shift towards renewable electricity mix in the Netherlands using the neo-Keynesian CGEM ThreeME (Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy). This scenario has been inspired by the Urgenda's report ‘Energy 100% Sustainable in the Netherlands by 2030’, which have been quantified using the Energy Transition Model (ETM) developed by Quintel. Using the output of the ETM regarding the change in the electricity generation shares as input in ThreeME, we derive the impact in terms of key economic variables (GDP, employment, investment, value-added, prices, trade, tax revenue, etc.). We find that transition to renewable energy may have a positive impact on the Dutch economy, creating almost 50 000 new jobs by 2030 and adding almost 1% of gross domestic product
    Keywords: Energy transition; Climate policy; Energy-economy modeling; Netherlands
    JEL: E12 E17 E27 E47 D57 D58
    Date: 2018–04
  10. By: Nancy L. Stokey
    Abstract: A model is developed in which two complementary forms of investment contribute to growth—technology and skill acquisition, and growth takes two forms—TFP and variety growth. The rate of TFP growth depends more heavily on the parameters governing skill accumulation, while variety growth depends, roughly, on the difference between the parameters governing technology and skill accumulation. Conditions for the existence of a BGP are established, and the effects of various parameters are characterized. In an example, subsidies to skill acquisition (technology acquisition) are powerful tools for stimulating TFP growth (variety growth). Investment incentives off the BGP are also explored.
    JEL: O30 O33 O34 O40
    Date: 2018–05

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