nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒08‒17
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Technology Adoption and Productivity Growth: Evidence from Industrialization in France By Réka Juhász; Mara P. Squicciarini; Nico Voigtländer
  2. Software Development and Innovation ‒ Exploring the Software Shift in Innovation in Swedish Firms By Andersson, Martin; Kusetogullari, Anna; Wernberg, Joakim
  3. Transatlantic Technologies: The Role of ICT in the Evolution of U.S. and European Productivity Growth By Robert J. Gordon; Hassan Sayed
  4. The Geography of Business Dynamism and Skill Biased Technical Change By Hannah Rubinton
  5. A global decline in research productivity? Evidence from China and Germany By Böing, Philipp; Hünermund, Paul
  6. Capital Market Financing and Firm Growth By Didier Brandao,Tatiana; Levine,Ross Eric; Llovet Montanes,Ruth; Schmukler,Sergio L.
  7. Dream jobs By Luca David Opromolla; Giordano Mion; Gianmarco I.P. Ottaviano
  8. The labour market impact of robotisation in Europe By Jose-Ignacio Anton; David Klenert; Enrique Fernandez-Macias; Maria Cesira Urzi Brancati; Georgios Alaveras
  9. Invention and Collaboration Networks in Latin America: Evidence from Patent Data By Carlos Bianchi; Pablo Galaso; Sergio Palomeque
  10. The innovation premium to soft skills in low-skilled occuptions By Aghion, Philippe; Bergeaud, Antonin; Blundell, Richard; Griffith, Rachel
  11. Measuring Energy-saving Technological Change: International Trends and Differences By Emiko Inoue; Hiroya Taniguchi; Ken Yamada
  12. Killer acquisitions and beyond: policy effects on innovation strategies By Igor Letina; Armin Schmutzler; Regina Seibel
  13. The Effects of Digital-Technology Adoption on Productivity and Factor Demand : Firm-level Evidence from Developing Countries By Cusolito,Ana Paula; Lederman,Daniel; Pena,Jorge O.
  14. Tech Clusters By William R. Kerr; Frédéric Robert-Nicoud
  15. The political economy of public research, or why some governments commit to research more than others By Filippetti, Andrea; Vezzani, Antonio

  1. By: Réka Juhász; Mara P. Squicciarini; Nico Voigtländer
    Abstract: We construct a novel dataset to examine the process of technology adoption during a period of rapid technological change: The diffusion of mechanized cotton spinning during the Industrial Revolution in France. Before mechanization, cotton spinning was performed in households, while production in firms only emerged with the new technology around 1800. This allows us to isolate the firm productivity distribution of new technology adopters. We document several stylized facts that can explain the well-documented puzzle that major technological breakthroughs tend to be adopted slowly across firms and – even after being adopted – take time to be reflected in higher aggregate productivity: The productivity of firms in mechanized cotton spinning was initially highly dispersed. Over the subsequent decades, cotton spinning experienced dramatic productivity growth that was almost entirely driven by a disappearance of firms in the lower tail. In contrast, innovations in other sectors (with gradual technological progress) shifted the whole productivity distribution. We document rich historical and empirical evidence suggesting that the pattern in cotton spinning was driven by the need to re-organize production under the new technology. This process of ‘trial and error’ led to widely dispersed initial productivity draws, low initial average productivity, and – in the subsequent decades – to high productivity growth as new entrants adopted improved methods of production and organization.
    JEL: F63 N23 O14
    Date: 2020–07
  2. By: Andersson, Martin (Department of Industrial Economics Blekinge Institute of Technology (BTH)); Kusetogullari, Anna (Department of Industrial Economics Blekinge Institute of Technology (BTH)); Wernberg, Joakim (Swedish Entrepreneurship Forum)
    Abstract: Several scholars as well as industry professionals have claimed that there is a “software-biased shift” in the nature and direction of innovation in that software development is a core part of innovation activities in firms across a wide array of industries. Empirical firm-level evidence of such a shift is still scant. We employ new and unique firm-level survey data on the frequency and nature of software development among firms in Sweden, matched with the Community Innovation Survey (CIS). We find robust evidence supporting a software-bias in innovation in that software development is associated with a higher likelihood of introducing innovations as well as higher innovation sales among firms in both manufacturing and services industries. Furthermore, this positive relationship is stronger for firms employing in-house software developers than for those that only use external developers, suggesting that there is a hierarchy but possibly also a complementarity between internal and external software development. We also find support for complementarity between software-based technology and human capital; the estimated marginal effect of software development on innovation is particularly strong for firms that combine in-house software development with a highly educated workforce in STEM as well as in other disciplines.
    Keywords: Innovation; Software; Software development; Digitalization; Human capital; Software bias; Digital technology; Absorptive capacity
    JEL: L25 O15 O32 O33 O43
    Date: 2020–06–30
  3. By: Robert J. Gordon; Hassan Sayed
    Abstract: We examine the role of the ICT revolution in driving productivity growth behavior for the United States and an aggregate of ten Western European nations (the EU-10) from 1977 to 2015. We find that the standard growth accounting approach is deficient when it separates sources of growth between ICT capital deepening and TFP growth, because much of the effect of the ICT revolution was channeled through spillovers to TFP growth rather than being limited to the capital deepening pathway. Using industry-level data from EU KLEMS, we find that most of the 1995-2005 U.S. productivity growth revival was driven by ICT-intensive industries producing market services and computer hardware. In contrast the EU-10 experienced a 1995-2005 growth slowdown due to a paucity of ICT investment, a failure to capture the efficiency benefits of ICT, and performance shortfalls in specific industries including ICT production, finance-insurance, retail-wholesale, and agriculture. After 2005 both the U.S. and the EU-10 suffered a growth slowdown, indicating that the benefits of the ICT revolution were temporary rather than providing a new permanent era of faster productivity growth. This joint transatlantic post-2005 slowdown is consistent with the broader view that ongoing innovation has been less potent in boosting productivity growth compared to earlier decades of the postwar era.
    JEL: E01 E24 O33 O47 O51 O52
    Date: 2020–06
  4. By: Hannah Rubinton
    Abstract: This paper seeks to explain three key components of the growing regional disparities in the U.S. since 1980, referred to as the Great Divergence by Moretti (2012). Namely, big cities saw a larger increase in the relative wages of skilled workers, a larger increase in the relative supply of skilled workers, and a smaller decline in business dynamism. These trends can be explained by differences across cities in the extent to which firms adopt new skill-biased technologies. In response to the introduction of a new skill-biased, high fixed cost but low marginal cost technology, firms endogenously adopt more in big cities, in cities that offer abundant amenities for high-skilled workers and in cities that are more productive in using high-skilled labor. The differences in adoption can account for the increasing relationship between skill intensity and city size, the divergence of the city size wage premium by skill group and the changing cross sectional patterns of business dynamism. I document a new fact that firms in big cities invest more in Information and Communication Technology per employee than firms in small cities,consistent with patterns of technology adoption in the model.
    Keywords: Skill Biased Technical Change; Technology Adoption; Economic Geography
    JEL: R12 O33
    Date: 2020–07–21
  5. By: Böing, Philipp; Hünermund, Paul
    Abstract: In a recent paper, Bloom et al. (2020) find evidence for a substantial decline in research productivity in the U.S. economy during the last 40 years. In this paper, we replicate their findings for China and Germany, using detailed firm-level data spanning three decades. Our results indicate that diminishing returns in idea production are a global phenomenon, not just confined to the U.S.
    Keywords: Productivity,Growth,Innovation,R&D,Technological Change
    JEL: D24 E23 O31 O47
    Date: 2020
  6. By: Didier Brandao,Tatiana; Levine,Ross Eric; Llovet Montanes,Ruth; Schmukler,Sergio L.
    Abstract: This paper studies whether there is a connection between finance and growth at the firm level. It employs a new dataset of 150,165 equity and bond issuances around the world, matched with income and balance sheet data for 62,653 listed firms in 65 countries over 1990-2016. Three main patterns emerge from the analyses. First, firms that choose to issue in capital markets use the funds raised to grow by enhancing their productive capabilities, increasing their tangible and intangible capital and the number of employees. Growth accelerates as firms raise funds. Second, the faster growth is more pronounced among firms that are more likely to face tighter financing constraints, namely, small, young, and high-R&D firms. Third, capital market issuances are associated with faster growth among firms located in countries with more developed capital markets relative to banks. Capital markets are also comparatively effective at allowing financially constrained firms to raise capital.
    Keywords: Financial Sector Policy,Capital Markets and Capital Flows,Capital Flows,Financial Economics,Finance and Development,Mining&Extractive Industry (Non-Energy)
    Date: 2020–07–27
  7. By: Luca David Opromolla; Giordano Mion; Gianmarco I.P. Ottaviano
    Abstract: Understanding why certain jobs are 'better' than others and what implications they have for a worker's career is clearly an important but still relatively unexplored question. We provide both a theoretical framework and a number of empirical results that help distinguishing 'good' from 'bad' jobs in terms of their impact on a worker's lifetime wage income profile through wage jumps occurring upon changing job ('static effects') or through increases in the wage growth rate ('dynamic effects'). We find that the distinction between internationally active firms and domestic firms is a meaningful empirical dividing line between employers providing 'good' and 'bad' jobs. First, in internationally active firms the experience-wage profile is much steeper than in domestic firms, especially for managers as opposed to blue-collar workers. Second, the higher lifetime wage income for managers in internationally active firms relies on the stronger accumulation of experience that these firms allow for and on the (almost) perfect portability of the accumulated dynamic wage gains to other firms. Static effects are instead much more important for blue-collar workers. Finally, the distinction between internationally active and domestic firms is relevant also at a more aggregate level to explain cross-sectional differences in wages among workers and spatial differences in average wages across regions within a country.
    JEL: F16 J30 J62 M12
    Date: 2020
  8. By: Jose-Ignacio Anton (University of Salamanca, Spain); David Klenert (European Commission – JRC); Enrique Fernandez-Macias (European Commission - JRC); Maria Cesira Urzi Brancati (European Commission - JRC); Georgios Alaveras (European Commission - JRC)
    Abstract: This paper explores the impact of robot adoption on European regional labour markets between 1995 and 2015. Specifically, we look at the effect of the usage of industrial robots on jobs and employment structures across European regions. We regress the outcome of interest on the change in the exposure to robotisation in each regional labour market, based on the initial distribution of employment by industry across regions. Our estimates suggest that the effect of robots on employment tends to be mostly small and negative during the period 1995–2005 and positive during the period 2005–2015 for the overwhelming majority of model specifications and assumptions. Regarding the effects on employment structures, we find some evidence of a mildly polarising effect in the first period, but this finding depends to some extent on the model specifications. In sum, this paper shows that the impact of robots on European labour markets in the last couple of decades has been small and ambiguous. The strength and even the sign of this effect are sensitive to the specifications, as well as to the countries and periods analysed.
    Keywords: robots, employment, polarisation, robots and jobs, European Union
    Date: 2020–07
  9. By: Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Pablo Galaso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Sergio Palomeque (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración)
    Abstract: This research aims to analyze the collaboration networks associated with the processes of invention and patenting in Latin American countries between 1970 and 2017. To do so, we apply social network analysis techniques to a rich database containing information from patents developed by Latin American inventors and registered in the USPTO during such period. We build and analyze three types of collaboration networks: networks of inventors, networks of innovators (i.e. patent owners) and networks of countries in the region. The study of the structural properties and the evolution of such networks allow us to present unprecedented empirical evidence on the forms of interaction and collaboration to invent in Latin America. This evidence shows that collaboration networks in Latin America are highly fragmented and disconnected. Moreover, networks are notoriously foreign-oriented, i.e. the linkages with external nodes are critical compared to the low presence of local connections. Major differences among the countries of the region can be observed, which allow us to identify different behaviors according to how much they use the patent system and the relative development of the national networks. In a region which has been historically characterized by high heterogeneity, this research allows recognizing specific patterns of innovation at the national level. In sum, the contributions of the paper are three fold. First, it presents novel empirical findings with unique information on interaction patterns at the Latin American level. Second, it allows analyzing the whole region and the main trends in the light of the large research background on invention and development from this region. Finally, it discusses some stylized facts in national cases, with the aim of encouraging new research questions for further research agenda.
    Keywords: patents, invention, social network analysis, collaboration networks, Latin America
    JEL: O31 O54 P48
    Date: 2020–04
  10. By: Aghion, Philippe; Bergeaud, Antonin; Blundell, Richard; Griffith, Rachel
    Abstract: Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm's innovativeness is reflected in the degree of complementarity between workers in low-skill and high-skilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.
    Date: 2019–11
  11. By: Emiko Inoue; Hiroya Taniguchi; Ken Yamada
    Abstract: Technological change is essential for balancing economic growth and environmental sustainability. This study measures and documents energy-saving technological change to understand its trends in advanced countries over recent decades. We estimate aggregate production functions with factor-augmenting technology using cross-country panel data and shift-share instruments, thereby measuring and documenting energy-saving technological change. Our results show how energy-saving technological change varies across countries over time and the extent to which it contributes to economic growth in 12 OECD countries from the years 1978 to 2005.
    Date: 2020–08
  12. By: Igor Letina; Armin Schmutzler; Regina Seibel
    Abstract: This paper provides a theory of strategic innovation project choice by incumbents and start-ups. We show that prohibiting killer acquisitions strictly reduces the variety of innovation projects. By contrast, we find that prohibiting other acquisitions only has a weakly negative innovation effect, and we provide conditions under which the effect is zero. Furthermore, for both killer and other acquisitions, we identify market conditions under which the innovation effect is small, so that prohibiting acquisitions to enhance competition would be justified.
    Keywords: Innovation, killer acquisitions, merger policy, potential competition, start-ups
    JEL: O31 L41 G34
    Date: 2020–08
  13. By: Cusolito,Ana Paula; Lederman,Daniel; Pena,Jorge O.
    Abstract: This paper presents firm-level estimates of revenue-based total factor productivity premiums of manufacturing firms adopting digital technology in 82 developing economies over 2002?19. The paper estimates productivity using the control function approach and assuming an endogenous revenue-based total factor productivity process, which is a function of multiple firm-choice variables. It estimates the effects of digital technology adoption, learning by exporting, and managerial experience on revenue-based total factor productivity and factor demand. The results reject the null hypothesis of an exogenous revenue-based total factor productivity process, in favor of one in which digital technology adoption, along with the other choice variables, affects revenue-based total factor productivity and factor demand. The estimated premiums are positive for 67.3 (email adoption), 54.6 (website adoption), 59.4 (learning by exporting), and 60.6 (managerial experience) percent of the sample. The probability-adjusted median (log) revenue-based total factor productivity premium associated with email adoption is 1.6 percent and that of website adoption is 2.2 percent, with the latter being higher than the premiums corresponding to exporting and managerial experience. On average, changes in digital technology adoption, email, and website are labor and capital augmenting. The paper also explores the role of complementarities among the firm choice variables.
    Date: 2020–07–23
  14. By: William R. Kerr; Frédéric Robert-Nicoud
    Abstract: Tech clusters like Silicon Valley play a central role for modern innovation, business competitiveness, and economic performance. This paper reviews what constitutes a tech cluster, how they function internally, and the degree to which policy makers can purposefully foster them. We describe the growing influence of advanced technologies for businesses outside of traditional tech fields, the strains and backlash that tech clusters are experiencing, and emerging research questions for theory and empirical work.
    JEL: L26 M13 O30 O31 R11 R12
    Date: 2020–06
  15. By: Filippetti, Andrea (Italian National Research Council (CNR) and Birkbeck College, University of London); Vezzani, Antonio (University Roma Tre, Department of Economics)
    Abstract: The broad consensus about the benefits of public research is at odds with the fact that investment is in general declining but with different patterns across countries. This triggers our research question: why do some governments invest in public research more than others? By relying on political economy literature, we frame investment in public research as a political choice depending on the political institutions of countries. Based on an empirical analysis on 41 countries we find a robust relationship between public-funded research and political institutions. Countries with parliamentary forms of government, proportional electoral rules and bicameralism devote larger shares of GDP and of public expenditure to research. We also find a great role of encompassing civic society organizations in encouraging public research. Political economy offers a promising perspective to delve into the patterns of public research. As for policy implications, majoritarian-like reforms might discourage long-term policies and harm the long-term potential for economic growth.
    Keywords: public research, political economy, R&D, innovation policy
    JEL: O31 O33 O38 P16 P48
    Date: 2020–06–18

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