nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒09‒02
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Who Is Afraid of Machines? By Blanas, Sotiris; Gancia, Gino; Lee, Sang Yoon (Tim)
  2. Chaebols and firm dynamics in Korea By Aghion, Philippe; Guriev, Sergei; Jo, Kangchul
  3. China’s Industrial Policy: an Empirical Evaluation By Panle Jia Barwick; Myrto Kalouptsidi; Nahim Bin Zahur
  4. Baumol versus Engel: Accounting for 100 years (1885‒1985) of Structural Transformation in Japan By Fukao, Kyoji; Paul, Saumik
  5. Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective. By Kjetil Storesletten; Bo Zhao; Fabrizio Zilibotti
  6. Innovation Activities and Integration through Vertical Acquisitions By Laurent Frésard; Gerard Hoberg; Gordon M. Phillips
  7. Launch of a product and patents: evidence from the US cardiovascular pharmaceutical sector By Francesca Di Iorio; Maria Letizia Giorgietti
  8. Motivating employees through career paths By Bar-Isaac, Heski; Levy, Raphaël
  9. Technology Gaps, Trade and Income By Sampson, Thomas
  10. STRUCTURAL CHANGE IN CITY SYSTEMS EVOLUTION: CITY GROWTH IN SWEDEN 1810-2010 By Andersson, Martin; Johansson, Börje; Niedomysl, Thomas

  1. By: Blanas, Sotiris; Gancia, Gino; Lee, Sang Yoon (Tim)
    Abstract: We study how various types of machines, namely, information and communication technologies, software, and especially industrial robots, affect the demand for workers of different education, age, and gender. We do so by exploiting differences in the composition of workers across countries, industries and time. Our dataset comprises 10 high-income countries and 30 industries, which span roughly their entire economies, with annual observations over the period 1982-2005. The results suggest that software and robots reduced the demand for low and medium-skill workers, the young, and women - especially in manufacturing industries; but raised the demand for high-skill workers, older workers and men - especially in service industries. These findings are consistent with the hypothesis that automation technologies, contrary to other types of capital, replace humans performing routine tasks. We also find evidence for some types of workers, especially women, having shifted away from such tasks.
    Keywords: automation; employment; labor demand; Labor Income Share; robots
    JEL: J21 J23 O33
    Date: 2019–06
  2. By: Aghion, Philippe; Guriev, Sergei; Jo, Kangchul
    Abstract: We study firm dynamics in Korea before and after the 1997-98 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labor productivity and TFP of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. Finally, after the crisis, the non-chaebol firms also significantly increased their patenting activity (relative to non-chaebol firms). These results are in line with a neo-Schumpeterian view of transition from a growth model based on investment in existing technologies to an innovation-based model.
    Keywords: Asian crisis; chaebols; Schumpeterian Growth
    JEL: L25 O43
    Date: 2019–06
  3. By: Panle Jia Barwick; Myrto Kalouptsidi; Nahim Bin Zahur
    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.
    JEL: L1 L5 L6 O2
    Date: 2019–07
  4. By: Fukao, Kyoji; Paul, Saumik
    Abstract: This paper examines the drivers of the long-run structural transformation in Japan. We use a dynamic input-output framework that decomposes the reallocation of the total output across sectors into two components: the Engel effect (demand side) and the Baumol effect (supply side). To perform this task, we employ 13 seven-sector input-output tables spanning 100 years (1885 to 1985). The results show that the Engel effect was the key explanatory factor in more than 60% of the sector-period cases in the pre-WWII period, while the Baumol effect drove structural transformation in more than 75% of such cases in the post-WWII period. Detailed decomposition results suggest that in most of the sectors (agriculture, commerce and services, food, textiles and transport, communication and utilities), changes in private consumption were the dominant force behind the demand-side explanations. The Engel effect was found to be the strongest in the commerce and services sector, which contributed to the rapid growth of GDP in Japan throughout the 20th century.
    Keywords: long-run structural transformation, the Engel effect, Baumol's cost disease effect, sectoral productivity growth
    JEL: O40 O10
    Date: 2019–06
  5. By: Kjetil Storesletten; Bo Zhao; Fabrizio Zilibotti
    Abstract: We document that the nature of business cycles evolves over the process of development and structural change. In countries with large declining agricultural sectors, aggregate employment is uncorrelated with GDP. During booms, employment in agriculture declines while labor productivity increases in agriculture more than in other sectors. We construct a unified theory of business cycles and structural change consistent with the stylized facts. The focal point of the theory is the simultaneous decline and modernization of agriculture. As capital accumulates, agriculture becomes increasingly capital intensive as modern agriculture crowds out traditional agriculture. Structural change accelerates in booms and slows down in recessions. We estimate the model and show that it accounts well for both the structural transformation and the business cycle fluctuations of China.
    JEL: E32 O11 O13 O14 O41 O53 Q11
    Date: 2019–08
  6. By: Laurent Frésard (Universita della Svizzera italiana (USI Lugano); Swiss Finance Institute); Gerard Hoberg (University of Southern California - Marshall School of Business - Finance and Business Economics Department); Gordon M. Phillips (Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER))
    Abstract: We examine the determinants of vertical acquisitions using product text linked to product vocabulary from the input-output tables. We find that the stage of innovation is important in understanding vertical integration. R\&D-intensive firms are less likely to become targets in vertical acquisitions. In contrast, firms with patented innovation are more likely to sell to vertically-related buyers. Firms' R&D intensity is a more important deterrent to their vertical acquisitions when the provision of innovation incentives by potential acquirers is more difficult. The role of patents in fostering vertical acquisitions is more prevalent when potential buyers face a higher risk of hold-up.
    Keywords: Mergers and Acquisitions, Vertical Mergers, Vertical Integration
    JEL: G34
    Date: 2019–07
  7. By: Francesca Di Iorio (Università di Napoli Federico II); Maria Letizia Giorgietti (Università di Milano)
    Abstract: Recent literature on the role of patents in shaping competition between incumbents and new entrants shows mixed evidence, as patents can discourage entry into markets but may also encourage potential entrants by increasing profitability from research and development. The increasing use of patents as strategic weapons motivates this investigation of the impact of innovation on competition. In a case study of US pharmaceutical cardiovascular submarkets over the period 1988-1998, we use a panel probit model to study the impact of a firm’s patents and rivals’ patents in the firm’s decision to launch new products. Our results show that the number of a firm’s lagged patents encourages the firm’s entry with new products, while rivals’ initial stock of patents discourages entry, but more recent patents promote entry by opening new technological opportunities.
    Keywords: Entry, Patents, Panel data, Probit model, Submarkets
    JEL: L11 L65 C11 C23 C25
    Date: 2019–02
  8. By: Bar-Isaac, Heski; Levy, Raphaël
    Abstract: Firms have discretion over task allocations, which may dampen employees' career prospects, and, hence, motivation. Task assignments and worker motivation interact through the extent of labor market competition; that is, the possibility of moving to another firm. More competition enhances motivation but decreases firms' incentives to assign workers to informative tasks. One consequence is that competitive firms sometimes choose strategies that lead to intermediate competition. When the employee pool is heterogeneous, firms might choose different human resources practices that attract different kinds of workers, and differentiate themselves through the career opportunities within and beyond the firms that they offer.
    Keywords: career concerns; Labour market competition; professional service firms; task assignments
    JEL: J32 J33 M12 M5
    Date: 2019–06
  9. By: Sampson, Thomas
    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: International wage inequality; Ricardian comparative advantage; Technology gaps; Technology investment; Trade
    JEL: F11 F43 O14 O41
    Date: 2019–06
  10. By: Andersson, Martin (Department of Industrial Economics, Blekinge Institute of Technology (BTH), Karlskrona, and CIRCLE, Lund University); Johansson, Börje (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS)); Niedomysl, Thomas (Department of Human Geography, Lund University)
    Abstract: This paper analyses city system dynamics, based on a theoretical framework relating interaction potentials to agglomeration economies and density externalities. It employs new historical time series data on population size of cities in Sweden over two centuries (1810-2010) and introduces two schematic growth factors: (i) the intra-city potential and (ii) the extra-city potential located in in rings encircling each city. The first factor is measured by each city’s population size, while the second is a vector of distance discounted population size for each of a city’s urban rings. In this way we can explain a city’s growth as a function of its interaction potential inside the city, s well as inside the first, second hand third ring. A robust finding is that cities with large ring potentials follow different development paths than those with small ring potentials. We also find clear evidence of structural change between the two centuries (1810-1910 and 1910-2010. In the first period, city growth is positively impacted by the size of the intra-city potential, whereas the same potential dampens or reduces the growth in the second period. Moreover, the Ring I and Ring II potentials tend to switch from having negative growth stimulation in the first period to having positive stimulation in the second period. The regressions are checked for robustness by yielding consistent results when growth is measured as relative as well as absolute change.
    Keywords: city systems; evolution; urban growth; size distribution; spatial interaction; spatial interdependence; city networks
    JEL: C21 L84 R11 R12 R30
    Date: 2019–05–01

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