nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒08‒31
sixteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Firm’s innovation strategies and employment: new evidence from Uruguay By Carlos Bianchi; Hugo Laguna
  2. The Scientific Output of a Database on Commercialized Patents By Svensson, Roger
  3. Are Green Inventions really more complex? Evidence from European Patents. By Fusillo, Fabrizio
  4. Heterogeneous Paths of Industrialization By Federico Huneeus
  5. Does Emigration Drain Entrepreneurs? By Massimo Anelli; Gætano Basso; Giuseppe Ippedico; Giovanni Peri
  6. Does Innovation Affect the Demand for Employment and Skilled Labor? By Adriana Peluffo
  7. Robots and the Gender Pay Gap in Europe By Aksoy, Cevat Giray; Ozcan, Berkay; Philipp, Julia
  8. Labor Supply and Automation Innovation By Danzer, Alexander M.; Feuerbaum, Carsten; Gaessler, Fabian
  9. Robots and Employment: Evidence from Japan, 1978-2017 By ADACHI Daisuke; KAWAGUCHI Daiji; SAITO Yukiko
  10. R&D, Market Power and the Cyclicality of Employment By Adam Honig; Zeynep Yom
  11. Substituting Clean for Dirty Energy: A Bottom-Up Analysis By Fabian Stöckl; Alexander Zerrahn
  12. Characteristics of Firms Transmitting Data Across Borders: Evidence from Japanese Firm-level Data By TOMIURA Eiichi; ITO Banri; KANG Byeongwoo
  13. Vertical vs. Horizontal Policy in a Capabilities Model of Economic Development By Alje van Dam; Koen Frenken
  14. Technological novelty and productivity growth: a cliometric approach. By Marianna Epicoco; Magali Jaoul-Grammare; Anne Plunket
  15. Productive efficiency, technological change and catch up within Africa By Mensah, Emmanuel B.; Owusu, Solomon; Foster-McGregor, Neil
  16. De-routinization of Jobs and Polarization of Earnings – Evidence from 35 Countries By Maximilian Longmuir; Carsten Schröder; Matteo Targa

  1. By: Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Hugo Laguna (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración)
    Abstract: A large and rich body of literature has shown that the relationship between innovation and employment is complex and dynamic in nature. From a firm’s level analysis, recent researches have shown heterogeneous empirical patterns for developed and developing countries. This paper contributes by inquiry in the role of innovation strategies as determinants of the firm’s employment growth in a Latin American small middle-income country. Adapting econometric structural models currently in vogue, we discuss the effects of three innovation strategies (Make, Buy, Make&Buy) on the firm’s workforce growth. In line with the literature, we identify a significant positive relation between product innovation associated with Make and Make&Buy strategies, however, on the contrary to most recent research we find a positive and significant effects of process innovation associated to Buy strategies. Considering technological, sectoral and firm characteristics, our findings show a clear positive effect of any innovation strategy in the growth of the firm’s workforce. Meanwhile, no innovative strategies negatively affect workforce growth. Our findings contribute by deepening the understanding of the firm level determinants of employment in developing countries. We analyze our result in the light of a recent but extensive evidence on the relationship between innovation and employment at firm’s level in Uruguay. In particular, we discuss the traditional explanation on the firm’s technological behavior in Latin America, to discuss the effects on employment of integrative innovation strategies in Uruguay.
    Keywords: innovation strategies, employment, Latin America, Uruguay
    JEL: O33 D22 J23
    Date: 2020–05
  2. By: Svensson, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: The purpose of this study is to present a unique database on commercialized patents and to illustrate how it can be used to analyze the commercialization process of patents. The dataset is based on a survey of Swedish patents owned by inventors and small firms with a remarkably high response rate of 80 percent. It contains some key variables on commercialization not found anywhere else, including whether, when and how (acquisition, licensing, existing or new firm) patents were commercialized as well as whether this commercialization was profitable or not. Thus, this patent database measures technological innovation. The dataset is complemented with indicators of patent quality (patent renewal, forward citations, and patent family) from archive sources. Basic statistics for the key variables are described. Finally, the scientific output in terms of published articles in peer-reviewed journals shows how this database can be used to analyze the commercialization process of patents. The dataset has, for instance, been used to 1) evaluate government loan programs for inventors; 2) analyze the different roles of the inventor and the Schumpeterian entrepreneur during commercialization; 3) estimate the transfer of tacit knowledge when patents are sold or licensed; and 4) analyze the entry strategy among inventors in oligopolistic markets.
    Keywords: Patents; Commercialization; Innovation; Small firms; Inventors; Acquisition; Licensing; New start-up firms; Forward citations; Renewal; Patent equivalents; Financing; Entry strategy; Venture capital
    JEL: G24 G34 L10 L20 M13 O30 O31 O32 O34 O38
    Date: 2020–08–12
  3. By: Fusillo, Fabrizio (University of Turin)
    Abstract: A large body of existing literature extensively studied the economic deter-minants and effects of environmental innovations. However, only a few studiesanalyzed the specific features of green technologies in the early phasesof theinvention process. The aim of this paper is to investigate knowledgerecombi-nation patterns in the green domain. The focus is on identifying whether andhow different bodies of technology are combined and integrated. Exploitinga large sample of European patent data, from 1980 to 2012, the paper inves-tigates the degree of diversity in the knowledge sources and the generationphase of green inventions. Using the Integration Score as an index of techno-logical diversity we compare the recombinant features of Green Technologieswith a control sample of “Traditional Technologies†, accurately drawn fromthe universe of all patent applications. Empirical results suggest that, aftercontrolling for a number of typical characteristics which may affect diversity,Green Technologies systematically show a higher degree of diversitywhencompared to non-green ones.
    Date: 2020–06
  4. By: Federico Huneeus (Central Bank of Chile; Princeton University)
    Abstract: Industrialization experiences differ significantly across countries. We use a benchmark model of structural change to shed light on the sources of this heterogeneity and, in particular, the phenomenon of premature deindustrialization. Our analysis leads to three key findings. First, benchmark models of structural change robustly generate hump-shaped patterns for the evolution of the manufacturing sector. Second, heterogeneous patterns of catch-up in sectoral productivities across countries can generate variation in industrialization experiences similar to those found in the data, including premature deindustrialization. Third, differences in the rate of agricultural productivity growth across economies can account for a large share of the variation in peak manufacturing employment shares.
    Keywords: Structural transformation, Productivity growth, Industrialization
    JEL: E24 O11 O13 O14 O33 O41
    Date: 2020–08
  5. By: Massimo Anelli; Gætano Basso; Giuseppe Ippedico; Giovanni Peri
    Abstract: Emigration of young, motivated individuals may deprive countries-of-origin of entrepreneurs. We isolate exogenous variation in a large emigration wave from Italy between 2008 and 2015 by interacting diaspora networks with economic pull factors in destination countries, and find that larger emigration rates reduced firm creation and innovative start-ups. We estimate that for every 100 emigrants, 26 fewer firms were created. An accounting exercise shows that 37 percent of the effect was due to the disproportionate loss of young people. The remaining effect was due to selection into emigration of highly entrepreneurial individuals, as well as negative spillovers on firm creation.
    Keywords: emigration, demography, brain drain, entrepreneurship, innovation, EU integration
    JEL: J61 H70 O30 M13
    Date: 2020
  6. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: The objective of this work is to analyze the effect of innovation on labor demand, particularly, the level of employment and the skills composition of the labor force, in level and growth rates. Additionally, we analyze the ratio of skilled to unskilled labor and wages. The data for this study come from the Innovation Surveys for Uruguayan manufacturing and service firms over the 2000-2015 period matched with the Industrial Surveys of Economic Activity. We analyze the whole sample and each sector according to technological/knowledge intensity and firm size. Our results for ordinary least squares, instrumental variables, and generalized method of moments show positive effects of innovation in the level of total employment and skilled workers, its rate of growth, and wages. Product and Enhancing productivity innovation show positive impact on employment. Splitting by manufacturing firms we observe that product innovation affect growth in employment for high-tech firms while organizational innovation and productivity enhancing innovation affects growth in skilled labor with a greater effect for low-tech firms, while organizational innovation affects growth in skilled labor and in the share of skilled labor. Small manufacturing and service firms are less responsive to innovation. Growth in employment of service firms are affected mainly by organizational innovation and productivity enhancing innovation. Thus, enhancing productivity innovation and its component of organizational innovation seems to play an important role on employment growth.
    Keywords: Employment, Skilled Labor, Product Innovation, Process Innovation
    JEL: D2 J23 L1 O31 O33
    Date: 2020–07
  7. By: Aksoy, Cevat Giray; Ozcan, Berkay; Philipp, Julia
    Abstract: Could robotization make the gender pay gap worse? We provide the first large-scale evidence on the impact of industrial robots on the gender pay gap using data from 20 European countries. We show that robot adoption increases both male and female earnings but also increases the gender pay gap. Using an instrumental variable strategy, we find that a ten percent increase in robotization leads to a 1.8 percent increase in the gender pay gap. These results are mainly driven by countries with high levels of gender inequality and outsourcing destination countries. We then explore the mechanisms behind this effect and find that our results can be explained by the fact that men at medium- and high-skill occupations disproportionately benefit from robotization (through a productivity effect). We rule out the possibility that our results are driven by mechanical changes in the gender composition of the workforce nor by inflows or outflows from the manufacturing sector.
    Date: 2020–07–10
  8. By: Danzer, Alexander M. (Catholic University of Eichstätt-Ingolstadt); Feuerbaum, Carsten (Catholic University of Eichstätt-Ingolstadt); Gaessler, Fabian (Max Planck Institute for Innovation and Competition)
    Abstract: While economic theory suggests substitutability between labor and capital, little evidence exists regarding the causal effect of labor supply on inventing labor-saving technologies. We analyze the impact of exogenous changes in regional labor supply on automation innovation by exploiting an immigrant placement policy in Germany during the 1990s and 2000s. Difference-in-differences estimates indicate that one additional worker per 1,000 manual and unskilled workers reduces automation innovation by 0.05 patents. The effect is most pronounced two years after immigration and confined to industries containing many low-skilled workers. Labor market tightness and external demand are plausible mechanisms for the labor-innovation nexus.
    Keywords: labor supply, automation, innovation, patents, labor market tightness, quasiexperiment
    JEL: O31 O33 J61
    Date: 2020–06
  9. By: ADACHI Daisuke; KAWAGUCHI Daiji; SAITO Yukiko
    Abstract: We study the impacts of industrial robots on employment in Japan, the country with the longest tradition of robot adoption. We employ a novel data set of robot shipments by destination industry and robot application (specified task) in quantity and unit values. These features allow us to use an identification strategy leveraging the heterogeneous application of robots across industries and heterogeneous price changes across applications. For example, the price drop of the welding robot relative to the assembling robot induced faster adoption of robots in the automobile industry that intensively uses welding processes than in the electric machine industry that intensively uses assembling processes. Our industrial-level and commuting zone-level analyses both indicate that the decline of robot prices increased the number of robots as well as employment, suggesting that robots and labor are gross complementary in the production process. We compare our estimates with those reported by existing studies and propose a mechanism that explains apparent differences between the results.
    Date: 2020–05
  10. By: Adam Honig (Amherst College, Amherst, MA); Zeynep Yom (School of Business, Villanova University)
    Abstract: This paper provides a first look into the joint effects of research and development (R&D) and market power on the cyclicality of employment. It presents a theoretical model with R&D and monopolistically competitive firms which shows that firms smooth their R&D activities when they face large R&D adjustment costs. This smoothing behavior comes at the expense of higher labor volatility, and it is stronger for firms with high R&D intensity and low market power. Firm-level data support these predictions. Dynamic panel estimations reveal that employment at competitive firms engaging in a high level of R&D is more procyclical.
    Keywords: R&D, employment volatility, firm-level data, COMPUSTAT
    JEL: E30 E32 O30 O33
    Date: 2020–08
  11. By: Fabian Stöckl; Alexander Zerrahn
    Abstract: We fit CES and VES production functions to data from a numerical bottom-up optimization model of electricity supply with clean and dirty inputs. This approach allows for studying high shares of clean energy not observable today and for isolating mechanisms that impact the elasticity of substitution between clean and dirty energy. Central results show that (i) dirty inputs are not essential for production. As long as some energy storage is available, the elasticity of substitution between clean and dirty inputs is above unity; (ii) no single clean technology is indispensable, but a balanced mix facilitates substitution; (iii) substitution is harder for higher shares of clean energy. Finally, we demonstrate how changing availability of generation and storage technologies can be implemented in macroeconomic models.
    Keywords: Elasticity of substitution, clean and dirty energy, electricity production, decarbonization, green growth
    JEL: O44 Q42 Q43 Q55
    Date: 2020
  12. By: TOMIURA Eiichi; ITO Banri; KANG Byeongwoo
    Abstract: Cross-border data flows are increasingly critical for our economies in the digital age, but only a limited fraction of firms regularly transfer data across national borders or collect data from overseas. Based on our unique survey on cross-border data transfers linked with firm-level data derived from official statistics in Japan, we find that high-productivity firms tend not only to be active in global activities, such as exporting and foreign direct investment, but also to intensively transmit data across borders. Globalized and productive firms are also more likely to introduce 3D printers.
    Date: 2020–05
  13. By: Alje van Dam; Koen Frenken
    Abstract: Against the background of renewed interest in vertical support policies targeting specific industries or technologies, we investigate the effects of vertical vs. horizontal policies in a combinatorial model of economic development. In the framework we propose, an economy develops by acquiring new capabilities allowing for the production of an ever greater variety of products with an increasing complexity. Innovation policy can aim to expand the number of capabilities (vertical policy) or the ability to combine capabilities (horizontal policy). The model shows that for low-income countries, the two policies are complementary. For high-income countries that are specialised in the most complex products, focusing on horizontal policy only yields the highest returns. We reflect on the model results in the light of the contemporary debate on vertical policy.
    Keywords: capabilities, the hump, complexity, innovation policy, vertical policy, innovation system, general purpose technologies, systemic policy, mission-oriented innovation policy
    Date: 2020–08
  14. By: Marianna Epicoco; Magali Jaoul-Grammare; Anne Plunket
    Abstract: This paper aims at providing further empirical evidence on the long-run relationship between technology and productivity by using a cliometric approach based on Granger’s causality. We test, for the first time, the sign and direction of causality between technological novelty, which is an important driver of radical technological innovations, and productivity, for the whole 20th century. Technological novelty is here proxied by the degree of component recombination of inventions. We find that both the flow and stock of Technologically Novel Inventions (TNI) have an important, but temporary, positive impact on productivity, and that these inventions are originated by a handful of leading technological fields, mainly concentrated in the sectors of specialized suppliers of capital equipment and in science based sectors. Our results also show that, at the aggregate level, there is no causal relationship running from productivity to TNI, which suggests that radical technologies are exogenous, i.e., independent of productivity variations. However, we also find that, at technological field level, productivity has a positive or negative impact on TNI, depending on the field. This instead suggests that some radical technologies are endogenous. We conclude by discussing implications of these results on the productivity stagnation since the 1970s and the current productivity slowdown.
    Keywords: Technological novelty; Radical technologies; Productivity; Component recombination; Cliometrics; Granger’s causality.
    JEL: O33 O40 C32 N12
    Date: 2020
  15. By: Mensah, Emmanuel B. (Maastricht University, UNU-MERIT); Owusu, Solomon (Maastricht University, UNU-MERIT); Foster-McGregor, Neil (Maastricht University, UNU-MERIT)
    Abstract: The peculiar nature of African development presents unique technological challenges. This often requires African-induced innovation or a combination of frontier and local technologies to solve problems unique to Africa. However, most researchers study technological change in Africa in relation to some globally defined technology frontier. The diffusion of knowledge from this global frontier to other regions however decreases in intensity with geographic and relational distance. Given that African countries are geographically and relationally close to each other, this paper makes a departure from this existing literature and studies technological change and technological catch up within African by considering catch-up with respect to an African technology leader. We do this by using structural methods (Shift and Share catch-up decomposition) and nonparametric methods (Data Envelopment Analysis) to estimate an African production frontier. We further measure productivity change in sub-Saharan Africa and disentangle the change due to general technological progress and efficiency change using the Malmquist Productivity Index (MPI). Our results show that Botswana and Mauritius are the only two countries in Africa which have converged to the productivity level as well as the efficiency level of the frontier. This successful convergence is driven more by efficiency catch-up and less by technological change. We explore the special role of efficiency catch-up by decomposing it into within-sector convergence, between -sector convergence and initial specialization. The results highlight the special role of structural change in catch-up. This paper contributes to recent evidence suggesting that countries can climb up the income ladder at a faster rate through a two-pronged transformation – i.e. structural change and technological catch-up.
    Keywords: Africa, Technological change, Technological Catch-up, Economic Growth
    JEL: O30 O47 N17
    Date: 2020–08–04
  16. By: Maximilian Longmuir; Carsten Schröder; Matteo Targa
    Abstract: The job polarization hypothesis suggests a U-shaped pattern of employment growth along the earnings/skill distribution, which is driven by simultaneous growth in the employment of high-skill/high-earnings and low-skill/low-earnings occupations due to Routine-Biased Technological Change (RBTC) [Acemoglu and Autor, 2011]. An aspect of both high social and political relevance is the implications of job polarization and technological change for earnings distributions. In this paper, we put the RBTC trend into perspective by decomposing earnings growth into parts attributable to job polarization and other components. Using a novel harmonized dataset provided by the Luxembourg Income Study and the Economic Research Forum, we find evidence for employment polarization in 30 out of the 35 countries under analysis, in both developed and developing economies. However, the effects of this displacement in the workforce have no polarizing effect on the earnings distribution in 33 countries, once we account for between and within variation in occupational classes returns.
    JEL: D3 J3 J8
    Date: 2020–06

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