nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒07‒27
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Inventing the Endless Frontier: The Effects of the World War II Research Effort on Post-war Innovation By Daniel P. Gross; Bhaven N. Sampat
  2. Productivity Growth and Value Chains in Four European Countries By Izabela Karpowicz; Nujin Suphaphiphat
  3. How novel is Transformative Innovation Policy? By Grillitsch, Markus; Hansen, Teis; Madsen, Stine
  4. Cloud Computing and Firm Growth By Timothy DeStefano; Richard Kneller; Jonathan Timmis
  5. Mapping General Purpose Technologies with Patent Data By Sergio Petralia;
  6. GLOBAL CONNECTIONS AND THE STRUCTURE OF SKILLS IN LOCAL CO-WORKER NETWORKS By László Lõrincz; Guilherme Kenji Chihaya; Anikó Hannák; Dávid Takács; Balázs Lengyel; Rikard Eriksson
  7. UK Regions in Global Value Chains By Pieter IJtsma; Bart Los
  9. Total factor productivity and the measurement of neutral technology By Alban Moura
  10. Income-Driven Labor-Market Polarization By Diego Comin; Ana Danieli; Martí Mestieri
  11. Growth, Automation and the Long Run Share of Labor By Mookherjee, Dilip; Ray, Debraj
  12. Blinder-Oaxaca Approach to Identify Innovation Differences in Transition Countries By Raul Caruso; Antonella Biscione; Dorothée Boccanfuso; Annunziata de Felice
  13. Agglomeration Effects in a Developing Economy: Evidence from Turkey By Cem Özgüzel
  14. Macroeconomic Policy, Product Market Competition, and Growth: The Intangible Investment Channel By JaeBin Ahn; Romain A Duval; Can Sever

  1. By: Daniel P. Gross; Bhaven N. Sampat
    Abstract: During World War II, the U.S. government launched an unprecedented effort to mobilize science for war: the newly-established Office of Scientific Research and Development (OSRD) entered thousands of R&D contracts with industrial and academic contractors, spending one to two orders of magnitude more than what the government was previously investing in science. In this paper, we study the long-run effects of the OSRD-supported research effort on U.S. invention. Using data on all OSRD contracts, we show that these investments had large effects on the direction and location of U.S. invention and high-tech industrial employment, setting in motion agglomeration forces which shaped the technology clusters of the postwar era. Our results demonstrate the effects of a large, mission-driven government R&D program on the growth of domestic technology clusters and long-run technological progress.
    JEL: H56 N42 N72 O31 O32 O33 O38 R11
    Date: 2020–06
  2. By: Izabela Karpowicz; Nujin Suphaphiphat
    Abstract: Advanced economies have been witnessing a pronounced slowdown of productivity growth since the global financial crisis that is accompanied in recent years by a withdrawal from trade integration processes. We study the determinants of productivity slowdown over the past two decades in four closely integrated European countries, Austria, Denmark, Germany and the Netherlands, based on firm-level data. Participation in global value chains appears to have affected productivity positively, including through its effect on TFP when facilitated by higher investment in intangible assets, a proxy for firm innovation. Other contributors to productivity growth in firms are workforce aging, access to finance, and skills mismatches.
    Keywords: Total factor productivity;Real sector;Gross domestic product;Labor productivity;Financial crises;Productivity,firms,GVC,WP,TFP,productivity growth,selected country,advanced economy,intermediate input
    Date: 2020–01–31
  3. By: Grillitsch, Markus (Lund University); Hansen, Teis (Lund University); Madsen, Stine (Lund University)
    Abstract: The focus and instruments of innovation policy have changed fundamentally over the last decades. Recently transformative innovative policy has caught the attention of scholars and policy makers, arguing that this is a new shift in the policy discourse. Even though grand challenges such as global warming and migration flows, as well as technological change such as artificial intelligence and industry 4.0 have fired the debate on transformative innovation policies in recent years, it has a long history – even going back to Schumpeter. This book chapter unfolds the historical and conceptual roots of transformative innovation policy, compares critically the different strands of literature, and discusses important questions for future research.
    Keywords: Innovation policy; transformative innovation policy; mission-oriented innovation policy; innovation systems policy; system failures; transformative challenges
    JEL: O30 O38
    Date: 2020–07–06
  4. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: Cloud computing enables a shift in the costs of ICT adoption from investment in fixed capital to pay-on-demand services allowing firms to scale and reorganize. Using new firm-level data we examine the impact of cloud on firm growth, using zip-code-level instruments of the timing of high-speed fiber availability and speeds. Cloud leads to the growth of employment and revenue for young firms, but they become concentrated in fewer establishments. For incumbents, we find smaller scale effects but dispersed activity through closing establishments and moving employment farther from the headquarters. Moreover, cloud adoption leads to worker relocation across establishments within firms.
    Keywords: cloud, digital, productivity, firms
    JEL: J23 J24 L20 O33
    Date: 2020
  5. By: Sergio Petralia;
    Abstract: This article develops a three-dimension indicator to capture the main features of General Purpose Technologies (GPTs) in patent data. Technologies are evaluated based on their scope for improvement and elaboration, the variety of products and processes that use them, and their complementarity with existing and new technologies. Technologies’ scope for improvement is measured using patenting growth rates. The range of its uses is mapped by implementing a text-mining algorithm that traces technology-specific vocabulary in the universe of all available patent documents. Finally, complementarity with other technologies is measured using the co-occurrence of technological claims in patents. These indicators are discussed and evaluated using widely studied examples of GPTs such as Electric & Electronic (at the beginning of the 20th century) and Computer & Communications. These measures are then used to propose a simple way of identifying GPTs with patent data. It is shown there exist a positive association between the rate of adoption of GPTs in sectors, measured in terms of the number of GPT patents, and their growth.
    Keywords: Technological Change, General Purpose Technologies, Disruptive Technologies
    JEL: O33 O34
    Date: 2020–07
  6. By: László Lõrincz (Centre for Economic- and Regional Studies, Institute of Economics, Budapest and Networks, Technology and Innovation Lab, Corvinus University of Budapest); Guilherme Kenji Chihaya (Department of Geography, Umea University;); Anikó Hannák (Department of Information Science, University of Zurich); Dávid Takács (Department of Geography, Umea University); Balázs Lengyel (Centre for Economic- and Regional Studies, Institute of Economics, Budapest; Networks, Technology and Innovation Lab, Corvinus University of Budapest;Agglomeration and Social Networks Lendület Research Group, Hungarian Academy of Sciences); Rikard Eriksson (Department of Geography, Umea University; Center for Regional Science, Umea University)
    Abstract: Social connections that reach distant places are advantageous for individuals and firms by providing access to new skills and knowledge. However, systematic evidence on how firms work up global knowledge access is still missing. In this paper, we analyse how global work connections relate to differences in the skill composition of employees within companies. We gather survey data from 10% of workers in a local industry in Sweden and complement this with digital trace data to map co-worker networks and skill composition. This unique combination of data and features allows us to quantify global connections of employees and measure the degree of skill-similarity and skill-relatedness to co-workers. We find that the workers with extensive local networks typically have related skills to others in the region and to their co-workers. Workers with more global ties typically bring in less related skills to the region. These results provide new insights to the composition of skills within knowledge intensive irms by connecting the geography of networks contacts to the diversity of skills accessible through them.
    Keywords: Co-worker networks, skills, relatedness, global connections, survey, online social network
    JEL: D85 J24 J61
    Date: 2020–07
  7. By: Pieter IJtsma; Bart Los
    Abstract: The nature of international trade has changed in the first decade of the 21st century. Many production processes have become organized in internationally dispersed supplier networks, so-called global value chains (GVCs). This tendency has implications for the competitiveness of countries and regions. This paper uses the regionalized world input output tables from the EUREGIO-database, for 2000 and 2010. These give quantitative descriptions of the world production structure, and the linkages between regions and countries regarding the sourcing of raw materials, parts, components and (business) services. Linking regional data on employment by industry to these tables allows us to quantify differences in the extent to which UK regions were contributing to GVCs. It also presents indications of changes in regional competitiveness and numerical evidence on regional Brexit risks for regional employment.
    Keywords: technological progress, telecommunications, deflators
    JEL: R11 R15 F62
    Date: 2020–06
  8. By: Teresa Farinha; ; Raphaël
    Abstract: Workers that become automated may transfer productivity gains to their co-workers or make it easier to automate their jobs too. In this paper, I empirically investigate how automatable jobs have diffused impacts to neighbouring jobs in North American cities between 2007 and 2016. Results indicate that jobs that share similarities with neighbouring high-risk jobs grew less, even when controlling for their own technical risk of automation. Conversely, jobs that share complementarities with neighbouring high-risk jobs grew faster, possibly indicating productivity gains from working with recently automated jobs. In addition to the analysis in this paper, I provide an adjusted index of job automation risk that accounts for local diffusion of impacts (negative and positive) in US cities.
    Keywords: automation, diffusion, jobs, cities, similarity, complementarity
    JEL: J21 O20 O33 R10
    Date: 2020–07
  9. By: Alban Moura
    Abstract: TFP measures constructed from chain-aggregated output, such as those published by the Bureau of Labor Statistics or Fernald (2014), confound contributions from neutral and sector-specifc technology. Therefore, they should not be used to infer the path of neutral technology in presence of investment-specific technical change. Two theory-consistent, utilization-adjusted measures of neutral technology at the quarterly frequency are proposed for the US business sector. Both indicate that neutral technology progress declined dramatically after the mid-1970s. In particular, its contribution to US growth fell from more than 85% before 1973 to less than 25% afterward. The associated welfare loss is enormous: if neutral technology had continued on its pre-1970s trend, 2017 US output would have been 70% higher.
    Keywords: total factor productivity, neutral technology, investment-specific technology, sources of growth.
    JEL: E22 E23 E32 O41 O47
    Date: 2020–05
  10. By: Diego Comin; Ana Danieli (Northwestern University); Martí Mestieri (Northwestern University)
    Abstract: We propose a mechanism for labor-market polarization based on the nonhomotheticity of demand that we call the income-driven channel. Our mechanism builds on a novel empirical fact: expenditure elasticities and production intensities in low- and high-skill occupations are positively correlated across sectors. Thus, as income grows, demand shifts towards expenditure-elastic sectors, and the relative demand for low- and high-skill occupations increases, causing labor-market polarization. A calibrated general-equilibrium model suggests this mechanism accounts for 90% and 35% of the increase in the wage-bill share of low- and high-skill occupations observed in the US during 1980-2016, and for 64% and 28% of the rise in the employment shares of low- and high-skill occupations. This mechanism is similarly important for the polarization of labor markets in Western Europe during 1980-2016, as well as in the US during earlier decades and, possibly, the near future.
    Keywords: labor-market polarization, nonhomothetic demand
    JEL: E21 E23 J23 J31
    Date: 2020–06
  11. By: Mookherjee, Dilip; Ray, Debraj
    Abstract: We provide an argument for long-term automation and decline in the labor income share, driven by capital accumulation rather than technical progress or rising markups. We emphasize a fundamental asymmetry across physical and human capital. An individual can indefinitely replicate her claims on the former, but --- after a point --- her human endowment cannot be cloned and rescaled in the same way. Then ongoing capital accumulation gives rise to progressive automation, and the share of labor income converges to zero. The displacement of human labor is gradual, and real wages could rise indefinitely. The results extend to endogenous technical change.
    Date: 2020–01
  12. By: Raul Caruso (Department of Economic Policy and CSEA, Catholic University of Sacred Heart; CESPIC, Catholic University "Our Lady of Good Counsel"); Antonella Biscione (CESPIC, Catholic University "Our Lady of Good Counsel"); Dorothée Boccanfuso (Faculté de Gouvernance, Sciences Economiques et Sociales, Université Mohammed VI Polytechnique); Annunziata de Felice (Department of Law, University of Bari Aldo Moro)
    Abstract: By the use of firm-level data coming from the Business Environment and Enterprise Performance Survey (BEEPS V) conducted in 2012-2014, this paper aims to investigate the sources of the possible gender ownership gap in innovativeness in a set of Transition economies. Through the Blinder-Oaxaca decomposition that allows us to define the factors responsible for the differences in the propensity to innovate between female-owned and male-owned firms, we find that the innovation disparity between firms with females among their owners and those having only male owners is mainly due to the differences in endowment effects. Tangible and intangible assets affect the innovation gap between the two groups of firms.
    Keywords: Blinder-Oaxaca decomposition; non-linear model; gender ownership; innovation gap; Transition Countries
    JEL: O32 J12 P23
    Date: 2020–04
  13. By: Cem Özgüzel (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Productivity differences across Turkish provinces is one of the highest among the OECD countries. In this paper, I estimate agglomeration effects for Turkish provinces to shed light on the causes of productivity differences and provide evidence on the importance of such effects in a developing country context which literature needs. I use a novel administrative dataset recently made available at NUTS-3 level, for 81 provinces of Turkey for the period 2008-2013 and carry out a two-step estimation. Using a variety of panel data techniques and historical instruments to deal with estimation concerns, I estimate an elasticity of labor productivity with respect to the density of 0.057-0.06, which is higher than in developed countries and around the levels observed in developing countries. I find that domestic market potential matters even more than density and is the most significant determinant of the productivity differences across Turkish provinces. Finally, in stark contrast with the evidence coming from developed countries, I do not find any effects for positive sorting of workers across provinces. This finding suggests that urbanisation patterns may be operating differently in developing countries, indicating the need for further evidence from such countries.
    Keywords: local labor markets,spatial wage disparities,developing country,Turkey
    Date: 2020–06
  14. By: JaeBin Ahn; Romain A Duval; Can Sever
    Abstract: While there is growing evidence of persistent or even permanent output losses from financial crises, the causes remain unclear. One candidate is intangible capital – a rising driver of economic growth that, being non-pledgeable as collateral, is vulnerable to financial frictions. By sheltering intangible investment from financial shocks, counter-cyclical macroeconomic policy could strengthen longer-term growth, particularly so where strong product market competition prevents firms from self-financing their investments through rents. Using a rich cross-country firm-level dataset and exploiting heterogeneity in firm-level exposure to the sharp and unforeseen tightening of credit conditions around September 2008, we find strong support for these theoretical predictions. The quantitative implications are large, highlighting a powerful stabilizing role for macroeconomic policy through the intangible investment channel, and its complementarity with pro-competition product market deregulation.
    Keywords: Financial crises;Supply and demand;Economic theory;Economic growth;Economic policy;Financial frictions,Intangible investment,Competition,Product Market,Monetary policy,Growth,Hysteresis,WP,pre-crisis,counter-cyclical,post-crisis,Aghion,macroeconomic policy
    Date: 2020–02–07

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