nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒04‒15
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Does Low Skilled Immigration Increase Profits? Evidence from Italian Local Labour Markets By Brunello, Giorgio; Lodigiani, Elisabetta; Rocco, Lorenzo
  2. Market Power and Innovation in the Intangible Economy By Maarten de Ridder
  3. Measuring Entrepreneurship: Do Established Metrics Capture High-Impact Schumpeterian Entrepreneurship? By Henrekson, Magnus; Sanandaji, Tino
  4. FIRM OWNERSHIP AND GREEN PATENTS. DOES FAMILY INVOLVEMENT IN BUSINESS MATTER? By Francesco Aiello; Paola Cardamone; Lidia Mannarino; Valeria Pupo
  5. Does combining different types of collaboration always benefit firms? Collaboration, complementarity and product innovation in Norway By Silje Haus-Reve; Rune Dahl Fitjar; Andrés Rodríguez-Pose
  6. The Enabling Technologies of Industry 4.0: Examining the Seeds of the Fourth Industrial Revolution By Arianna Martinelli; Andrea Mina; Massimo Moggi
  7. Do Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives By Button, Patrick
  8. Which firms survive in a crisis? Corporate dynamics in Greece 2001-2014 By Christos Axioglou; Nicos Christodoulakis
  9. The impact of new drug launches on hospitalization in 2015 for 67 medical conditions in 15 OECD countries: a two-way fixed-effects analysis By Frank R. Lichtenberg
  10. Network dynamics in collaborative research in the EU, 2003-2017 By Pierre-Alexandre Balland; Ron Boschma; Julien Ravet
  11. The Race against the Robots and the Fallacy of the Giant Cheesecake: Immediate and Imagined Impacts of Artificial Intelligence By Naudé, Wim
  12. Global innovation networks for Chinese high tech small and medium enterprises: the supportive role of highly skilled migrants and returnees By Lin, Jingyi; Plechero, Monica

  1. By: Brunello, Giorgio (University of Padova); Lodigiani, Elisabetta (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: We estimate the (causal) effects of low skill immigration on the performance of Italian manufacturing firms. We find that an increase of the local supply of low skilled immigrants by one thousand units – which corresponds to 8.5 percent of the mean value - raises profits on average by somewhat less than half a percentage point, reduces average labour costs by about 0.1 percent and has no effect on TFP. The positive effects on profits are larger for small firms operating in low tech sectors and for firms located in areas specializing in low skill productions. Our evidence suggests that the recent waves of low skilled immigration in Italy may have hampered the transition to an economic structure characterized by high productivity and wage growth.
    Keywords: low skilled immigration, profits, Italy
    JEL: J61
    Date: 2019–03
  2. By: Maarten de Ridder (Centre for Macroeconomics (CFM); University of Cambridge)
    Abstract: Productivity growth has stagnated over the past decade. This paper argues that the rise of intangible inputs (such as information technology) can cause a slowdown of growth through the effect it has on production and competition. I hypothesize that intangibles cause a shift from variable costs to endogenous fixed costs, and use a new measure to show that the share of fixed costs in total costs rises when firms increase ICT and software investments. I then develop a quantitative framework in which intangibles reduce marginal costs and endogenously raise fixed costs, which gives firms with low adoption costs a competitive advantage. This advantage can be used to deter other firms from entering new markets and from developing higher quality products. Paradoxically, the presence of firms with high levels of intangibles can therefore reduce the rate of creative destruction and innovation. I calibrate the model using administrative data on the universe of French firms and find that, after initially boosting productivity, the rise of intangibles causes a 0.6 percentage point decline in long-term productivity growth. The model further predicts a decline in business dynamism, a fall in the labor share and an increase in markups, though markups overstate the increase in firm profits.
    Keywords: Business dynamism, Growth, Intangibles, Productivity, Market power
    Date: 2019–03
  3. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Sanandaji, Tino (Institute for Economic and Business History Research (EHFF), Stockholm School of Economics)
    Abstract: Are quantitative measures driven by small business activity also valid proxies for high-impact Schumpeterian entrepreneurship? We compile four hand-collected measures of high-impact Schumpeterian entrepreneurship (VC-funded IPOs, self-made billionaire entrepreneurs, unicorn start-ups, and young top global firms founded by individual entrepreneurs) and six measures dominated by small business activity as well as institutional and economic variables for 64 countries. Factor analysis reveals that much of the variation is accounted for by two distinct factors: one relating to high-impact Schumpeterian entrepreneurship and the other relating to small business activity. Except for the World Bank measure of firm registration of limited liability companies quantity-based measures tend to be inappropriate proxies for high-impact Schumpeterian entrepreneurship.
    Keywords: illionaire entrepreneurs; High-impact entrepreneurship; Innovation; Institutions; Schumpeterian entrepreneurship; Self-employment
    JEL: L50 M13 O31 P14
    Date: 2019–04–03
  4. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This paper investigates how family and non-family firms differ in terms of their capability to introduce environmental innovation, which is measured by green patents. The analysis is carried out using a large patenting data set related to the inventions produced by about 4200 Italian manufacturing firms over the period 2009–2017. The results show that family firms are less likely than non-family firms to implement innovations in green technologies. Moreover, the role played by the stock of knowledge and the environmental management system certification differs across firm type.
    Keywords: eco-innovation, green patent, family firms
    JEL: O31 C23 G34
    Date: 2019–03
  5. By: Silje Haus-Reve; Rune Dahl Fitjar; Andrés Rodríguez-Pose
    Abstract: Product innovation is widely thought to benefit from collaboration with both scientific and supply-chain partners. The combination of exploration and exploitation capacity, and of scientific and experience-based knowledge, are expected to yield multiplicative effects. However, the assumption that scientific and supply-chain collaboration are complementary and reinforce firm-level innovation has not been examined empirically. This paper tests this assumption on an unbalanced panel sample of 8337 firm observations in Norway, covering the period 2006?2010. The results of the econometric analysis go against the orthodoxy. They show that Norwegian firms do not benefit from doing "more of all" on their road to innovation. While individually both scientific and supply-chain collaboration improve the chances of firm-level innovation, there is a significant negative interaction between them. This implies that scientific and supply-chain collaboration, in contrast to what has been often highlighted, are substitutes rather than complements. The results are robust to the introduction of different controls and hold for all tested innovation outcomes: product innovation, new-to-market product innovation, and share of turnover from new products.
    Keywords: Innovation, firms, scientific and supply-chain collaboration, interaction, Norway
    JEL: O31 O32 O33
    Date: 2019–04
  6. By: Arianna Martinelli; Andrea Mina; Massimo Moggi
    Abstract: Technological revolutions mark profound transformations in socio-economic systems. They are associated with the diffusion of general purpose technologies that display very high degrees of pervasiveness, dynamism and complementarity. This paper provides an in-depth examination of the technologies underpinning the øfactory of the futureù as profiled by the Industry 4.0 paradigm. It contains an exploratory comparative analysis of the technological bases and the emergent patterns of development of Internet of Things (IoT), big data, cloud, robotics, artificial intelligence and additive manufacturing. By qualifying the øenablingù nature of these technologies, it explores to what extent their diffusion and convergence can be configured as the trigger of a fourth industrial revolution, and identifies key themes for future research on this topic from the viewpoint of industrial and corporate change.
    Keywords: Industry 4.0; technological paradigm; enabling technology; general purpose technology; disruptive innovation.
    Date: 2019–04–11
  7. By: Button, Patrick (Tulane University)
    Abstract: I estimate the impacts of recently-popular U.S. state film incentives on filming location, film industry employment, wages, and establishments, and spillover impacts on related industries. I compile a detailed database of incentives, matching this with TV series and feature film data from the Internet Movie Database (IMDb) and Studio System, and establishment and employment data from the Quarterly Census of Employment and Wages and Country Business Patterns. I compare these outcomes in states before and after they adopt incentives, relative to similar states that did not adopt incentives over the same time period (a panel difference-in-differences). I find that TV series filming increases by 6.3 to 55.4% (0.67 to 1.50 additional TV series) after incentive adoption. However, there is no meaningful effect on feature films, and employment, wages, and establishments in the film industry and in related industries. These results show that the ability for tax incentives to affect business location decisions and economic development is mixed, suggesting that even with aggressive incentives, and "footloose" filming, incentives can have little impact.
    Keywords: economic development, tax incentives, state taxation, business location, film industry
    JEL: H25 H71 R38 L82 Z11
    Date: 2019–03
  8. By: Christos Axioglou; Nicos Christodoulakis
    Abstract: Using a panel dataset of more than 40,000 Greek corporations over the period 2001- 2014, the paper examines how their size measured by past turnover affects survival prospects and turnover growth. The analysis is carried out along three dimensions: (a) time-wise, by looking at the dynamics before and after the crisis in 2010; (b) sector-wise, by grouping firms in six areas of economic activity, namely manufacturing, construction, trade, recreation, real-estate, and the combined sectors of transport & communications; (c) region-wise, by examining firms in Northern Greece, the wider Attiki region, and the rest of the country. Other firm’s characteristics like age, market share, leverage, and fixed asset ratio are also used as explanatory variables in the econometric estimation. Investigation takes place in the framework known in the literature as the Gibrat’s Law, according to which market turnover is a random walk process and larger-size firms belong to the same population with smaller ones. Our findngs suggest that in Greece larger-size firms were, in general, more likely to survive in the market than smaller ones and this relative advantage grew stronger during the crisis. Focusing on sectors, it is established that large companies in the manufacturing sector are by far more robust over the cycle, while those in the Real Estate and construction sectors manifest the highest extinction rate. Moreover, the rate of turnover growth for those firms survived is found to be negatively associated with their size, thus not confirming Gibrat’s Law in Greece.
    Keywords: Industrial organisation, market share, manufacturing sector, crisis
    Date: 2019–02
  9. By: Frank R. Lichtenberg
    Abstract: There are two types of prescription drug cost offsets. The first type of cost offset—from prescription drug use—is primarily about the effect of changes in drug quantity (e.g. due to changes in out-of-pocket drug costs) on other medical costs. The second type of cost offset—the cost offset from prescription drug innovation—is primarily about the effect of prescription drug quality on other medical costs. Two previous studies found that pharmaceutical innovation reduced hospitalization, and that the reduction in hospital cost from the use of newer drugs was considerably greater than the innovation-induced increase in pharmaceutical expenditure. In this study, we reexamine the impact that pharmaceutical innovation has had on hospitalization, employing a different type of 2-way fixed effects research design. We estimate the impact that new drug launches that occurred during the period 1982-2015 had on hospitalization in 2015 for 67 diseases in 15 OECD countries. Our models include both country fixed effects and disease fixed effects, which control for the average propensity of people to be hospitalized in each country and from each disease. The number of hospital discharges and days of care in 2015 is significantly inversely related to the number of drugs launched during 1982-2005, but not significantly related to the number of drugs launched after 2005. (Utilization of drugs during the first few years after they are launched is relatively low, and drugs for chronic conditions may have to be consumed for several years to achieve full effectiveness.) The estimates imply that, if no new drugs had been launched after 1981, total days of care in 2015 would have been 163% higher than it actually was. The estimated reduction in 2015 hospital expenditure that may be attributable to post-1981 drug launches was 5.3 times as large as 2015 expenditure on those drugs.
    JEL: I10 L65 O33
    Date: 2019
  10. By: Pierre-Alexandre Balland; Ron Boschma; Julien Ravet
    Abstract: A key objective of the EU Framework Programmes for Research and Innovation is the creation of cross-country research networks. We make use of Social Network tools to describe the evolution of the EU research network across countries on the basis of unique data covering collaborative projects launched during the first four years of implementation of Horizon 2020 and its predecessor programmes, the Sixth and Seventh Framework Programme. We describe the positioning of all EU-countries in the collaborative research network, the positioning of the older member EU-15 and the newer member EU-13 countries in particular, and to what extent the network has been subject to change during the period 2003-2017. EU-15 and EU-13 countries have become more integrated, and some organizations fulfil a bridging function in the EU research network. EU-13 countries are more heavily engaged in parts of the programme on lower complexity research activities.
    Keywords: collaborative research network, European Union, Horizon 2020, Framework Programme, social network analysis, bridging, complexity
    JEL: D85 O33 O38
    Date: 2019–04
  11. By: Naudé, Wim (Maastricht University)
    Abstract: After a number of AI-winters, AI is back with a boom. There are concerns that it will disrupt society. The immediate concern is whether labor can win a 'race against the robots' and the longer-term concern is whether an artificial general intelligence (super-intelligence) can be controlled. This paper describes the nature and context of these concerns, reviews the current state of the empirical and theoretical literature in economics on the impact of AI on jobs and inequality, and discusses the challenge of AI arms races. It is concluded that despite the media hype neither massive jobs losses nor a 'Singularity' are imminent. In part, this is because current AI, based on deep learning, is expensive and difficult for (especially small) businesses to adopt, can create new jobs, and is an unlikely route to the invention of a super-intelligence. Even though AI is unlikely to have either utopian or apocalyptic impacts, it will challenge economists in coming years. The challenges include regulation of data and algorithms; the (mis-) measurement of value added; market failures, anti-competitive behaviour and abuse of market power; surveillance, censorship, cybercrime; labor market discrimination, declining job quality; and AI in emerging economies.
    Keywords: technology, articial intelligence, productivity, labor demand, innovation, inequality
    JEL: O47 O33 J24 E21 E25
    Date: 2019–03
  12. By: Lin, Jingyi (Lund University); Plechero, Monica (University of Florence)
    Abstract: Literature investigating highly skilled Chinese migrants has so far focused on their role as drivers of new entrepreneurship as well as innovation in firms and regions, although their role in supporting small and medium enterprises (SMEs) engagement in global innovation networks (GINs) is still underexplored. The participation in GINs is key for high tech SMEs, which rely on sophisticated knowledge but may not have the same absorptive capacity of large firms and multinational corporations. Based on primary data from a case study on 19 SMEs in the IT and new media industry in Beijing, this paper investigates the role of returnees and highly skilled migrants in supporting the engagement of Chinese high-tech SMEs in GINs. The results reveal the important role of those individuals in bringing SMEs in former international knowledge networks and establishing new linkages for sourcing key knowledge.
    Keywords: lobal innovation networks; GIN; knowledge sourcing; small and medium enterprises; SMEs; Beijing; China; highly skilled migrants; returnees; IT and new media industry
    JEL: F20 O30
    Date: 2019–04–04

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