nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒08‒26
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Automation Impacts on China's Polarized Job Market By Haohui 'Caron' Chen; Xun Li; Morgan Frank; Xiaozhen Qin; Weipan Xu; Manuel Cebrian; Iyad Rahwan
  2. Robots at Work: Automatable and Non Automatable Jobs By Josten, Cecily; Lordan, Grace
  3. The Digitalisation of Future Work and Employment. Possible impact and policy responses By Chris Warhurst; Wil Hunt
  4. Are they coming for us? Industrial robots and the mental health of workers By Abeliansky, Ana Lucia; Beulmann, Matthias
  5. Labour Markets, Trade and Technological Progress: A Meta-Study By Nikos Terzidis; Steven Brakman; Raquel Ortega-Argiles
  6. The Impact of State-Level R&D Tax Credits on the Quantity and Quality of Entrepreneurship By Catherine Fazio; Jorge Guzman; Scott Stern
  7. Geopolitical Risk and R&D investment By Wei-Fong Pan
  8. Diversifying in green technologies in European regions: does political support matter? By Artur Santoalha; Ron Boschma
  9. Incentive effects of R&D tax incentives - A meta-regression analysis focusing on R&D policy designs By Pöschel, Carla
  10. Direct and Network Effects of Idiosyncratic TFP Shocks By Kristina Barauskaite; Anh D. M. Nguyen
  11. Technology Gaps, Trade and Income By Thomas Sampson
  12. What drives the location choice of new manufacturing plants in Germany? By Krenz, Astrid
  13. China's Industrial Policy: an Empirical Evaluation By Jia Barwick, Panle; Kalouptsidi, Myrto; Zahur, Nahim
  14. Friends like this: The impact of the US-China trade war on global value chains By Mao, Haiou; Görg, Holger

  1. By: Haohui 'Caron' Chen; Xun Li; Morgan Frank; Xiaozhen Qin; Weipan Xu; Manuel Cebrian; Iyad Rahwan
    Abstract: When facing threats from automation, a worker residing in a large Chinese city might not be as lucky as a worker in a large U.S. city, depending on the type of large city in which one resides. Empirical studies found that large U.S. cities exhibit resilience to automation impacts because of the increased occupational and skill specialization. However, in this study, we observe polarized responses in large Chinese cities to automation impacts. The polarization might be attributed to the elaborate master planning of the central government, through which cities are assigned with different industrial goals to achieve globally optimal economic success and, thus, a fast-growing economy. By dividing Chinese cities into two groups based on their administrative levels and premium resources allocated by the central government, we find that Chinese cities follow two distinct industrial development trajectories, one trajectory owning government support leads to a diversified industrial structure and, thus, a diversified job market, and the other leads to specialty cities and, thus, a specialized job market. By revisiting the automation impacts on a polarized job market, we observe a Simpson's paradox through which a larger city of a diversified job market results in greater resilience, whereas larger cities of specialized job markets are more susceptible. These findings inform policy makers to deploy appropriate policies to mitigate the polarized automation impacts.
    Date: 2019–08
  2. By: Josten, Cecily (London School of Economics); Lordan, Grace (London School of Economics)
    Abstract: This study builds on Autor and Dorn's (2013) classification of automatable work at the three-digit occupation code level to identify additional jobs that will be automatable in the next decade by drawing on patent data. Based on this new classification the study provides estimates of the share of jobs that expected to be automatable in the EU and across 25 individual countries. The study highlights that aspects of 47% of jobs will be automatable over the next decade, with 35% of all jobs being fully automatable. It also provides some evidence that 'thinking' and 'people' skills will become increasingly important for the fourth industrial revolution. The study puts emphasis on the fact that these estimates are based on static models. Assuming that some of the rents from labor technology will filter back into the economy it is expected that other occupations will expand in number as people consume more goods and services.
    Keywords: robots, labor markets, skills
    JEL: J23 J24
    Date: 2019–07
  3. By: Chris Warhurst (Warwick Institute for Employment Research, University of Warwick); Wil Hunt (Warwick Institute for Employment Research, University of Warwick)
    Abstract: This Working Paper outlines claims about the ‘future of work’ (as the shorthand for work and employment) and the policy responses to those claims. It is based on a review of the academic and grey literatures on digitalisation and the future of work. The paper first explains the two main developments by which the new digital technologies are shaping work and employment – Industrie 4.0 and Uberisation, and the claims of the death of work and the death of employment arising respectively from these developments. It then examines the policy responses to each development, finding responses to the first to be centred on welfare rights and the second to be centred on labour rights. It also examines past and newly emerging empirical evidence about the future of work, including other trends that are impacting this future. The review suggests that digital technology will not deterministically shape the future of work but that options and choices exist over what and how technology is implemented and with what effects. It concludes by offering a number of policy pointers about how the future of work and its understanding can be better developed.
    Keywords: digitalisation, future of work, labour rights, technological determinism, welfare rights
    Date: 2019–08
  4. By: Abeliansky, Ana Lucia; Beulmann, Matthias
    Abstract: We investigate how an increase in the robot intensity (the ratio of industrial robots over employment) affects the self-reported mental health of workers in Germany. To do so, we combine individual mental health data from the German Socioeconomic Panel with the deliveries of robots to 21 German manufacturing sectors provided by the International Federation of Robotics for the period 2002-2014 (every two years). Controlling for a range of individual and sectoral characteristics, and employing individual-, time- and sectoral fixed effects, we find that an increase in robot intensity of 10% is associated with an average decrease of 0.59% of the average mental health standard deviation. This suggests that in a fast automating sector (i.e. rubber and plastics), where the robot intensity increased by approximately 2000%, mental health would have decreased by 118% of one standard deviation. This effect seems to be driven by job security fears of individuals working in noninteractive jobs and the fear of a decline in an individual's economic situation. Moreover, further sample divisions into low, middle and high occupational groups shows that the negative effects are affecting mostly the middle-level occupational group. Splitting the sample according to different age groups shows that the mental health of younger workers is the most vulnerable to an increase in automation. Results are also robust to instrumenting the stock of robots, and to different changes in the sample.
    Keywords: Mental Health,Industrial Robots,Germany,Job Loss Fear,Job Polarization
    JEL: I10 O30 I31 J6
    Date: 2019
  5. By: Nikos Terzidis; Steven Brakman; Raquel Ortega-Argiles
    Abstract: Technological progress and trade potentially affect wages and employment. Technological progress can make jobs obsolete and trade can increase unemployment in import competing sectors. Empirical evidence suggests that both causes are important to explain recent labour market developments in many OECD countries. Both causes are often mentioned in tandem, but the relative contribution of each cause is less clear. This study presents a meta-analysis to shed light on the relative contribution of technological progress and trade in recent labour market developments and allows us to identify the winners and losers of automation and globalization. Using a sample of 77 studies and 1158 estimates, we find that both effects are important. Automation is beneficial at the firm level, and is more likely to displace low-skilled employment. Trade is more likely to benefit high-skilled employment and affects industry negatively. Somewhat surprisingly, given the consensus in the literature, automation has a positive effect for estimates considering the period before 1995, and trade a negative effect. We also find some evidence of publication biases.
    Keywords: labour markets, technological progress, trade, meta-study
    JEL: F23 J31 J63 O11
    Date: 2019
  6. By: Catherine Fazio; Jorge Guzman; Scott Stern
    Abstract: The acceleration of start-up activity is often cited as a rationale for the R&D tax credit, a key innovation policy instrument adopted increasingly by US states over the past quarter century. While there is a strong empirical base linking the R&D tax credit to increased R&D expenditures and innovation, prior work has not provided causal evidence that this policy effects the rate of formation and growth potential of new businesses. This paper combines data from the US Startup Cartography Project with the Panel Database on Incentives and Taxes to implement a difference-in-differences estimate of the impact of the R&D tax credit on the quantity and quality-adjusted quantity of entrepreneurship. Our key finding is that the R&D tax credit is associated with a significant long-term impact on both the overall quantity and quality-adjusted quantity of entrepreneurship, with the bulk of the effect materializing more than five years after the policy is enacted. These findings stand in contrast to an analysis of the adoption of state-level investment tax credits. There, we observe no long-term impact on the quantity of entrepreneurship but a marked decline in the rate of formation of growth-oriented startups over time. Combined with other evidence regarding the efficacy of R&D tax credits in spurring innovative investment, our results shed light on the potential for this fiscal policy to also stimulate the formation of growth-oriented start-ups.
    JEL: H25 L26
    Date: 2019–07
  7. By: Wei-Fong Pan (Department of Economics, University of Reading)
    Abstract: Although most empirical studies conclude that uncertainty delays firms' investments based on real options theory, empirical evidence regarding the impact of uncertainty on innovation is mixed. This study examines the impact of geopolitical risk (GPR) on corporate research and development (R&D) investment using newly developed indices. We find a negative relationship between GPR and R&D investment. The R&D investment rapidly drops and rebounds several quarters after high GPR. The impact of GPR is most significant for high-tech firms, small firms, and firms with high growth options. However, when GPRs are realised, these significant and negative effects disappear. These results are shown to be robust after controlling for firm characteristics, macroeconomic environment, other uncertainty measures, time, and alternative GPR and R&D measures, as well as considering the simultaneity and endogeneity issues. Overall, our study suggests that GPR plays a key role in determining R&D investment.
    Keywords: R&D, Political uncertainty, Geopolitical risk, Innovation
    JEL: D80 H56 O31
    Date: 2019–07
  8. By: Artur Santoalha (University of Oslo, TIK); Ron Boschma (Utrecht University, Department of Human Geography and Planning, University of Stavanger, UiS Business School)
    Abstract: Regional diversification is a process characterized by past and place dependence: new activities tend to emerge and develop in a region in technological or industrial fields closely related to existing local activities. Recently, the relatedness concept has also been applied successfully to studies on green diversification of regions, providing new insights to the transition literature that is primarily focused on disruptive change. What has received little attention is a systematic approach that assesses the role of political support for the ability of regions to diversify into new green activities. This paper makes a first attempt to test the impact of regional capabilities and political support for environmental policy at the national and regional scale on the ability of 95 regions in 7 European countries to diversify into new green technologies during the period 2000-2012. We find evidence that related capabilities rather than political support in a region is associated with green diversification of regions in Europe. However, political support tends to moderate the role of regional capabilities.
    Date: 2019–08
  9. By: Pöschel, Carla
    Abstract: Despite the growing literature on the effectiveness of R&D tax incentives, little is known about differing design aspects of the underlying R&D tax policies. In this paper, I apply sophisticated meta-regression methodology to separate the distinct provisions through which various R&D tax policies affect firms' R&D expenditure. My results indicate on average larger input additionality effects of hybrid tax regimes compared to volume-based schemes, while incremental tax measures seem to provide the lowest incentives for firms. My findings are particularly important for policy makers optimizing the design of an R&D tax policy.
    Keywords: R&D Tax Policy,Design Aspects,Input Additionality Effects,Meta-Regression Analysis
    Date: 2019
  10. By: Kristina Barauskaite (Bank of Lithuania & ISM University of Management and Economics); Anh D. M. Nguyen (Bank of Lithuania & Vilnius University)
    Abstract: This study investigates the direct and intersectoral network effects of idiosyncratic TFP shocks on sectors’ growth in the context of US manufacturing industries. To deal with the potential endogeneity of TFP, we propose a novel set of instruments for contemporaneous regressors. These instruments are technology shocks identified via sign restriction from sectoral SVAR models. Using US input-output tables and industry-level data, we quantify direct and network-based effects of the shocks. Our results show that idiosyncratic technology shocks propagate mostly downstream the network. In addition, we capture strong contemporaneous direct effects of the shocks.
    Keywords: Input-Output Linkages, Network, Instrumental Variables, Idiosyncratic TFP Shocks, Sectoral Growth, US Manufacturing Industry
    JEL: C36 C67 D24 E32
    Date: 2019–08–13
  11. 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 wage inequality
    JEL: F11 F43 O14 O41
    Date: 2019
  12. By: Krenz, Astrid
    Abstract: About 30 years after German reunification a persistent gap in different firm performance measures exists between East and West Germany. In this paper I focus on the differences in new German manufacturing plants' location choices across the German district-free cities and districts and investigate its regional determinants. For that purpose, I construct a novel, rich regional- and firm-level dataset based on the Official Firm Statistics from the German Federal Statistical Office and the Offices of the Laender. The analysis provides first time evidence how in particular the location decision of firms in the German economy is influenced by regional road infrastructure as well as regional structural funding. The effects are economically important and significant. The results reveal that a 10 percent increase in firm agglomeration increases the odds of a new plant to locate in the region by 12 percent. A 10 percent decrease of travel time on roads increases the odds of a plant to locate by 4 percent in overall Germany, by 7.6 percent among East German regions and by 26.5 percent in particular for large plants in the East German regions. A 10 percent larger population increases the odds to locate by 8.7 percent. A 10 percent increase in regional structural funding for infrastructure purposes increases the odds to locate in a region in East Germany by 8.3 percent in particular for large plants. Policy implications emerge that address in particular the improvement of infrastructure and support to reap off benefits that arise from agglomeration externalities.
    Keywords: firm location choice,regional road infrastructure,Germany,agglomeration economies,regional structural funding,East-West gap,conditional logit,nested logit
    JEL: D22 L25 R11 R12
    Date: 2019
  13. By: Jia Barwick, Panle; Kalouptsidi, Myrto; Zahur, Nahim
    Abstract: Despite the historic prevalence of industrial policy and its current popularity, few empirical studies directly evaluate its welfare consequences. This paper examines an important industrial policy in China in the 2000s, aiming to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness. The effectiveness of different policy instruments is mixed: production and investment subsidies can be justified by market share considerations, but entry subsidies are wasteful. Finally, the distortions could have been significantly reduced by implementing counter-cyclical policies and by targeting subsidies towards more productive firms.
    Keywords: China; dynamics; industrial policy; investment; welfare
    JEL: L1 L5 L6 O2
    Date: 2019–07
  14. By: Mao, Haiou; Görg, Holger
    Abstract: This paper considers the indirect impact the recent tariff increases between the US and China can have in third countries through links in global supply chains. We combine data from input-output relationships, imports and tariffs, to calculate the impact of the tariff increases by both the US and China on cumulative tariffs for other countries and thus hurt trade partners further downstream in global supply chains. We also show that this is particularly important for tariff increases on Chinese imports in the US. These are likely to be used as intermediates in production in the US, which are then re-exported to third countries. The most heavily hit third countries are the closest trade partners, namely Canada and Mexiko. We estimate that the tariffs impose additional burden of around 500 to 600 million US dollars on these two countries. China's tariffs on US imports have less of an effect.
    Keywords: trade war,cumulative tariffs,indirect tariffs
    JEL: F1
    Date: 2019

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