nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒06‒24
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Embodied and disembodied technological change: the sectoral patterns of job-creation and job-destruction By Dosi, Giovanni; Piva, Mariacristina; Virgillito, Maria Enrica; Vivarelli, Marco
  2. Employment Effect of Innovation By Kancs, d'Artis; Siliverstovs, Boriss
  3. The employment impact of product innovations in sub-Saharan Africa: Firm-level evidence By Avenyo, Elvis; Konte, Maty; Mohnen, Pierre
  4. Global Value Chains and Domestic Innovation By ITO Keiko; IKEUCHI Kenta; Chiara CRISCUOLO; Jonathan TIMMIS; Antonin BERGEAUD
  5. Firm Heterogeneity and the Aggregate Labour Share By Richiardi, Matteo G.; Valenzuela, Luis
  6. Migrant inventors and the technological advantage of nations By Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
  7. The Role of Obstacles to Innovation on Innovative Activities: An Empirical Analysis By Zahler, Andrés; Goya, Daniel; Caamaño, Matías
  8. Migration and Production Structure in Europe with a Labor Task Approach. By Stefania Borelli; Giuseppe De Arcangelis; Majlinda Joxhe
  9. Networks of international patent citations: pattern of growth, self-organization and change By Jorge Nogueira de Paiva Britto; Leonardo Costa Ribeiro; Eduardo da Motta e Albuquerque
  10. Missing Growth in the Lost Decade By KODAMA Naomi; Huiyu LI
  11. Market power and innovation in the intangible economy By de Ridder, Maarten
  12. Technology Gaps, Trade and Income By Thomas Sampson
  13. Global production networks and the evolution of industrial capabilities: Does production sharing warp the Product Space? By Russell Thomson; Prema-chandra Athukorala
  14. Productive Performance and Technology Gaps using a Bayesian Metafrontier Production Function: A cross-country comparison. By Economou, Polychronis; Malefaki, Sonia; Kounetas, Konstantinos

  1. By: Dosi, Giovanni (Institute of Economics, Scuola Superiore Sant’Anna, Pisa); Piva, Mariacristina (Department of Economic Policy, Università Cattolica del Sacro Cuore, Piacenza); Virgillito, Maria Enrica (Department of Economic Policy, Università Cattolica del Sacro Cuore, Milano); Vivarelli, Marco (UNU-MERIT, Department of Economic Policy, Università Cattolica del Sacro Cuore, Milano, and IZA, Bonn)
    Abstract: This paper addresses, both theoretically and empirically, the sectoral patterns of job creation and job destruction in order to distinguish the alternative effects of embodied vs disembodied technological change operating into a vertically connected economy. Disembodied technological change turns out to positively affect employment dynamics in the "upstream'' sectors, while expansionary investment does so in the "downstream'' industries. Conversely, the replacement of obsolete capital vintages tends to exert a negative impact on labour demand, although this effect turns out to be statistically less robust.
    Keywords: Innovation, disembodied and capital-embodied technological change, employment, job-creation, job-destruction, sectoral interdependencies
    JEL: O14 O31 O33
    Date: 2019–06–04
  2. By: Kancs, d'Artis (European Commission – JRC); Siliverstovs, Boriss (KOF Swiss Economic Institute)
    Abstract: We provide a novel evidence about the innovation-employment nexus by decomposing it by R&D intensity in a continuous setup and relaxing the linearity assumption. Using a large international firm-level panel data set for OECD countries and employing a flexible semi-parametric method – the generalised propensity score – allows us to recover the full functional relationship between the R&D-driven innovation and firm employment as well as address important econometric issues, which is not possible in the standard estimation approach used in the previous literature. Our results confirm that the relationship between innovation and employment entails important non-linearities responsible for significant differences in employment response to innovation at different R&D intensity levels.
    Keywords: R&D investment, employment, propensity score, firm-level data
    JEL: C14 C21 F23 J20 J23 O30 O32 O33
    Date: 2019–04
  3. By: Avenyo, Elvis (UNU-MERIT); Konte, Maty (UNU-MERIT); Mohnen, Pierre (UNU-MERIT)
    Abstract: Innovation has become a key interest in sub-Saharan Africa (SSA), as it is argued to be pervasive, and play eminent role in generating employment. There is, however, a dearth of empirical evidence assessing the impact of innovation on firm employment for SSA. This paper investigates the impact of product innovations on job creation using data from the recent waves of the Enterprise Survey merged with Innovation Follow-Up Survey for SSA countries for which both surveys are available. We apply the Dose Response Model under continuous and heterogeneous responses to treatment. The results reveal a positive impact of product innovations on total employment. This result is, however, found to hold only at specific intervals of product innovation intensities. Our analyses also show that product innovations tend to create both temporary and permanent jobs as well as skilled and unskilled jobs. However, the positive impact of product innovations on temporary and unskilled employment tends to outweigh that of permanent and skilled employment, raising questions about the security and quality of the new jobs generated by product innovations.
    Keywords: Employment, Product Innovations, Dose Response Model, sub-Saharan Africa
    JEL: J23 J3 O31 O33 L10
    Date: 2019–06–04
  4. By: ITO Keiko; IKEUCHI Kenta; Chiara CRISCUOLO; Jonathan TIMMIS; Antonin BERGEAUD
    Abstract: This paper explores how changes in both position and participation in Global Value Chain networks affect firm innovation. The analysis combines matched patent-firm data for Japan with measures of GVC network centrality and GVC participation utilizing the OECD Inter-Country Input-Output Tables for the period 1995 to 2011. We find that Japan's position in the GVCs has shifted from being at the core of Asian value chains towards the periphery relative to other countries in the network, i.e. becoming less "central". We use China's WTO accession as an instrumental variable for changes in Japanese centrality. Our analysis shows that increases in forward centrality – as a key supplier - tends to be positively associated with increasing firm patent applications. Firms in key hubs within GVCs, more specifically as key suppliers, appear to benefit from knowledge spillovers from various customers and downstream markets.
    Date: 2019–04
  5. By: Richiardi, Matteo G.; Valenzuela, Luis
    Abstract: Using a static model of firm behaviour with imperfect competition on the product and labour markets, we quantify the effect of firm heterogeneity in total factor productivity, market power, capital, wages and prices on the aggregate labour share. In particular, we suggest a new decomposition of the aggregate labour share in terms of the first moments of the joint distribution of these variables across firms, providing a bridge between the micro and the macro approach to functional distribution. We provide an application of our method to the UK manufacturing sector, using firm-level data for the period 1998-2014. The analysis confirms that heterogeneity matters: in an economy populated only by representative firms, the labour share would be 10 percentage points lower. Among all the dimensions studied, heterogeneity in total factor productivity and labour market power are the most relevant ones, whereas heterogeneity in product market power matters the least, with wages and prices in between. However, the observed fall in the aggregate labour share over the period is mostly explained by a widening of the disconnect between average productivity and real wages, with a smaller role for an increase in the average product and labour market power of firms after the Great Recession, while changes in the dispersion of these variables mostly offset each other.
    Keywords: labour share, firm heterogeneity, market power, firm level data
    JEL: D20 D33 D42 D43 E25 L10
    Date: 2019–06–04
  6. By: Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
    Abstract: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors “import” knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
    Keywords: innovation, migration, patent, technology, knowledge
    JEL: O31 O33 F22
    Date: 2019
  7. By: Zahler, Andrés; Goya, Daniel; Caamaño, Matías
    Abstract: We study the effect of different types of barriers to innovation (financial, demand, knowledge, market, cooperation, and regulatory barriers) on firm level innovation inputs and outputs. Using a pooled sample of three Chilean innovation surveys, based on an instrumental variables approach, we find that the probability of generating innovation outcomes is signficantly reduced by demand and financial barriers. Regarding inputs for innovation, we find a clear negative relationship between financial and demand obstacles and the propensity to incur (non-R&D) innovation expenditures, but not with its intensity. We also provide evidence of heterogeneous effects across sectors, finding that knowledge obstacles are relevant for manufacturing and market structure obstacles for services, while demand and financial obstacles appear to matter across the board.
    JEL: O31 O32 D22
    Date: 2019–06
  8. By: Stefania Borelli (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Giuseppe De Arcangelis (Department of Social Sciences and Economics, Sapienza University of Rome (IT).); Majlinda Joxhe (CREA-University of Luxembourg.)
    Abstract: We assess the effect of migration on the production structure in a selection of European countries for the pre-Great Recession period 2001-2009. We propose a labor-task approach where the infl ow of migrants raises the relative supply of manual-physical (or simple) tasks and therefore favors simple-task intensive sectors. We use the US O*NET database in conjunction with European labor data to calculate the index of simple-task intensity at the industry and country level. The analysis confirms that a rise in employment migration rates has a generalized positive impact, but that value added increases significantly more in sectors that use more intensively simple tasks. A traditional shift-share instrument is used to overcome possible endogeneity problems.
    Keywords: International Migration, Labor Tasks, ONET, Rybczynski Effect.
    JEL: F22 C25 J24
    Date: 2019–06
  9. By: Jorge Nogueira de Paiva Britto (Universidade Federal Fluminense); Leonardo Costa Ribeiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG)
    Abstract: This paper investigates networks of cross-border patent citations - the patent assignee as a node and an international patent citation as a link. The data (patents and their international citations, selected years between 1991 and 2009) show a network growing over time - more institutions, more links and more countries - and preserving its scale-free properties, a self-organized system with changes in technological specialization. This firm-led network is compared to a network of international colaboration in science - a university-led network. The overlaping of those two international self-organized systems might be a source of an emerging international system of innovation.
    Keywords: Patent Citations; International Knowledge flows; Innovation Systems
    Date: 2019–06
  10. By: KODAMA Naomi; Huiyu LI
    Abstract: Standard measurement often impute innovation from creative destruction and new varieties using surviving products. This can lead to an understatement of growth, if surviving products improve less than creatively destroyed products and new varieties. This paper estimates this bias for Japan using establishment-level data from the Japanese Census which covers all private businesses. We find that the correction increases Japan's productivity growth by 0.39 percentage points per year between 1997 and 2009 with most of the missing growth coming from non-manufacturing industries. As this bias is smaller than the bias found for the U.S., our results imply 0.23 percentage points per year bigger difference between productivity growth rates in the U.S. and Japan. The larger difference mostly stems from a larger difference in productivity growth rates for non-manufacturing industries.
    Date: 2019–04
  11. By: de Ridder, Maarten
    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
    JEL: J1
    Date: 2019–03–29
  12. By: Thomas Sampson
    Abstract: This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level technology investments. The theory characterizes how innovation and learning determine technology gaps, trade and global income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries where the advantage of backwardness is lower and knowledge spillovers are more localized. I estimate R&D efficiency by country and innovation-dependence by industry from R&D and bilateral trade data. Calibrating the model implies technology gaps, due to cross-country differences in R&D efficiency, account for around one-quarter to one-third of nominal wage variation within the OECD.
    Keywords: technology gaps, trade, technology investment, Ricardian comparative advantage, international income inequality
    JEL: F11 F43 O14 O41
    Date: 2019–06
  13. By: Russell Thomson; Prema-chandra Athukorala
    Abstract: Do production capabilities of countries evolve from existing capabilities or emerge de novo? The Product Space approach developed by Hidalgo, Klinger, Barabási & Hausmann (2007) postulates that a country’s existing industrial structure largely determines its opportunities for industrial upgrading. However, this is difficult to reconcile with the export dynamism of many developing countries such as Thailand, Malaysia, Costa Rica and Vietnam that transformed from primary commodity dependence to exporters of dynamic manufactured products. In each of these cases, global production sharing facilitated industrial transition. In this paper, we advance the Product Space approach to accommodate the role of global production sharing. Using a newly constructed multi-country dataset of manufacturing exports that distinguishes between trade within global production networks and traditional horizontal trade, we find that that existing industrial structure has smaller impact, but trade openness has greater impact, on industrial upgrading within vertically integrated global industries.
    Keywords: industrialization, product space, global production sharing, fragmentation
    JEL: L60 O14 F14
    Date: 2019
  14. By: Economou, Polychronis; Malefaki, Sonia; Kounetas, Konstantinos
    Abstract: Growth theory argues on the role of heterogeneity that can lead to multiple regimes examining countries’ performance. A meta-production stochastic function under a Bayesian perspective has been developed to estimate technical efficiencies across countries over a time period. The metafrontier model is used to highlight heterogeneity among cluster of countries revealing catch up phenomena. The estimation procedure relies on the solution of an optimization problem and on the concept of the upper orthant order of two multinormal random variables. The proposed models are applied in a real dataset consisting of 109 countries for a 20-year period from 1995-2014. The productive performance differential and the associated technology gaps were investigated using two distinct frontiers (OECD vs non-OECD countries). Empirical results reveal that heterogeneity indeed plays a significant and distinctive role in determining technological gaps.
    Keywords: Technological heterogeneity,Bayesian approach, Metafrontier, Spillovers,
    JEL: C11 C23 C51 D24 O10
    Date: 2019–06–13

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