nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒09‒14
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The role of innovation in industrial dynamics and productivity growth: a survey of the literature By Ugur, Mehmet; Vivarelli, Marco
  2. Division of Labor in R&D? Firm Size and Specialization in Corporate Research By Annette Becker; Hanna Hottenrott; Anwesha Mukherjee
  3. Automation, globalisation and relative wages: An empirical analysis of winners and losers By Gravina, Antonio Francesco; Foster-McGregor, Neil
  4. Robots and the Gender Pay Gap in Europe By Aksoy, Cevat Giray; Ozcan, Berkay; Philipp, Julia
  5. R&D, Market Power and the Cyclicality of Employment By Uluc Aysun; Melanie Guldi; Adam Honig; Zeynep Yom
  6. The p-Innovation ecosystems model By R. Church; J. C. Duque; D. E. Restrepo
  7. Labour market power and between-firm wage (in)equality By Mertens, Matthias
  8. Venture Capital’s Role in Financing Innovation: What We Know and How Much We Still Need to Learn By Josh Lerner; Ramana Nanda
  9. Does gender matter for promotion in science? Evidence from physicists in France By Mairesse, Jacques; Pezzoni, Michele; Visentin, Fabiana
  10. The rise (and fall) of science parks By KICHKO Sergey,; LIANG Wen-Jung,; MAI Chao-Cheng,; THISSE Jacques-François,

  1. By: Ugur, Mehmet (Institute of Political Economy, Governance, Finance and Accountability, University of Greenwich); Vivarelli, Marco (UNU-MERIT, Maastricht University, Department of Economic Policy, Universita Cattolica del Sacro Cuore, and IZA, Bonn)
    Abstract: We review the theoretical underpinnings and the empirical findings of the literature that investigates the effects of innovation on firm survival and firm productivity, which constitute the two main channels through which innovation drives growth. We aim to contribute to the ongoing debate along three paths. First, we discuss the extent to which the theoretical perspectives that inform the empirical models allow for heterogeneity in the effects of R&D/innovation on firm survival and productivity. Secondly, we draw attention to recent modelling and estimation effort that reveals novel sources of heterogeneity, non-linearity and volatility in the gains from R&D/innovation, particularly in terms of its effects on firm survival and productivity. Our third contribution is to link our findings with those from prior reviews to demonstrate how the state of the art is evolving and with what implications for future research.
    Keywords: Innovation, R&D, Survival, Productivity
    JEL: O31 O32 O33 O40
    Date: 2020–09–03
  2. By: Annette Becker (Technical University of Munich, TUM School of Management, Dept. of Economics & Policy); Hanna Hottenrott (Technical University of Munich, TUM School of Management, Dept. of Economics & Policy; K.U.Leuven, Dept. of Managerial Economics, Strategy and Innovation; Centre for European Economic Research (ZEW)); Anwesha Mukherjee (Technical University of Munich, TUM School of Management, Dept. of Economics & Policy)
    Abstract: Corporate research and development constitutes one of the main sources of innovation. Recent research, however, discusses a decline in corporate research and its implications for technological progress. The contribution of this study is to model research & development (R&D) decisions in an R&D investment model that allows the analysis of firms’ engagement in research (R) as compared to development (D) activities. The model predicts higher investments in both activities for larger firms, but it also shows that research intensity, i.e. the R-share in R&D, declines with firm size. We test these propositions using data of R&D-active firms over the period from 2000 to 2015. Results from panel model estimations that account for unobserved heterogeneity across firms show that larger firms invest indeed more in both research and development whereas the relative focus on research decreases with firm size. In addition, the empirical results suggest that, since the returns to research decline with firm size, specialization maximizes productivity. We discuss policy implications based on these findings.
    Keywords: Corporate Research, R&D, Firm Size, Comparative Advantage, Productivity, Innovation Policy
    JEL: C14 C30 O31 O38
    Date: 2020–09
  3. By: Gravina, Antonio Francesco (Department of Law, University of Palermo, Italy and Department of Economics, University of Messina, Italy); Foster-McGregor, Neil (UNU-MERIT, Maastricht University)
    Abstract: In this paper, we study the effects of advances in robotics, tangible and intangible technologies, and trade openness and global value chain participation on relative wages, relying upon the skill-biased technical change and polarisation of the labour force frameworks. The empirical analysis is carried out using a panel dataset comprising 18 mostly advanced European economies and 6 industries, with annual observations spanning the period 2008-2017. Our findings suggest that intangible technologies - especially software & databases - significantly increase the wage premium for high relative to lower-skilled labour. Additionally, the tangible component of ICT primarily benefits lower-skilled workers, whereas R&D and trade openness produce polarising effects. The results are robust to the inclusion of sector-specific labour market regulations variables in the models.
    Keywords: Robots, Intangibles, Automation, ICT, Globalisation, Wage Differentials
    JEL: C01 F16 F63 J31 O11 O33 O43
    Date: 2020–09–03
  4. By: Aksoy, Cevat Giray (European Bank for Reconstruction and Development); Ozcan, Berkay (London School of Economics); Philipp, Julia (London School of Economics)
    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.
    Keywords: industrial robots, gender pay gap, automation, Europe
    JEL: J00 J31 J71
    Date: 2020–07
  5. By: Uluc Aysun (Department of Economics, College of Business Administration, University of Central Florida); Melanie Guldi (Department of Economics, College of Business Administration, University of Central Florida); Adam Honig (Department of Economics, Amherst College); Zeynep Yom (Department of Economics, Villanova 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
  6. By: R. Church; J. C. Duque; D. E. Restrepo
    Abstract: In this paper, we propose a spatially constrained clustering problem belonging to the family of "p-regions" problems. Our formulation is motivated by the recent developments of economic complexity on the evolution of the economic output through key interactions among industries within economic regions. The objective of this model consists in aggregating a set of geographic areas into a prescribed number of regions (so-called innovation ecosystems) such that the resulting regions preserve the most relevant interactions among industries. We formulate the p-Innovation Ecosystems model as a mixed-integer programming (MIP) problem and propose a heuristic solution approach. We explore a case involving the municipalities of Colombia to illustrate how such a model can be applied and used for policy and regional development.
    Date: 2020–08
  7. By: Mertens, Matthias
    Abstract: This study investigates how labour market power shapes between-firm wage differences using German manufacturing sector data from 1995 to 2016. Over time, firm- and employee-side labour market power, defined as the difference between wages and marginal revenue products of labour (MRPL), increasingly moderated rising between-firm wage inequality. This is because small, low-wage, low-MRPL firms possess no labour market power and pay wages equal to or even above their MRPL, whereas large, high-wage, high-MRPL firms possess high labour market power and pay wages below their MRPL. These wage-MRPL differences grow over time and compress the firm wage distribution compared to the counterfactualcompetitive labour market scenario. Particularly for the largest, highest-paying, and highest-MRPL firms, wage-MRPL differences strongly increase over time. This allows these firms to generate increasingly large labour market rents while being active on competitive product markets, providing novel insights on why such "superstar firms' are profitable and successful.
    Keywords: inequality,labour market power,monopsony,rent-sharing,large firms
    JEL: J31 J42 L10 L60
    Date: 2020
  8. By: Josh Lerner; Ramana Nanda
    Abstract: Venture capital is associated with some of the most high-growth and influential firms in the world. Academics and practitioners have effectively articulated the strengths of the venture model. At the same time, venture capital financing also has real limitations in its ability to advance substantial technological change. Three issues are particularly concerning to us: 1) the very narrow band of technological innovations that fit the requirements of institutional venture capital investors; 2) the relatively small number of venture capital investors who hold, and shape the direction of, a substantial fraction of capital that is deployed into financing radical technological change; and 3) the relaxation in recent years of the intense emphasis on corporate governance by venture capital firms. While our ability to assess the social welfare impact of venture capital remains nascent, we hope that this article will stimulate discussion of and research into these questions.
    JEL: G24 O31
    Date: 2020–07
  9. By: Mairesse, Jacques (UNU-MERIT, Maastricht University, EHESS and NBER); Pezzoni, Michele (GREDEG, CNRS, Université Côte d’Azur, OST, HCERES, and ICRIOS, Bocconi University); Visentin, Fabiana (UNU-MERIT, Maastricht University)
    Abstract: In this study, we investigate what are the factors of the promotion of female and male scientists at the French Institute of Physics (INP) at CNRS, one of the largest European public research organisations. We construct a long panel of INP physicists combining various data sources on their research activities and careers. Using event history analysis, we find that female and male physicists have the same rate of promotion from junior to senior positions when controlling for research productivity and a variety of other promotion factors. Our results also suggest that promotion factors such as family characteristics, mentoring, professional network, research responsibilities have different impacts on female and male researchers.
    Keywords: Gender disparity, Promotion, Research productivity, Family characteristics, Research Responsibilities, Mentoring activities, Panel Data, Event history analysis
    JEL: I23 J16 O15 O34
    Date: 2020–09–03
  10. By: KICHKO Sergey, (HSE University); LIANG Wen-Jung, (National Dong Hwa University); MAI Chao-Cheng, (Academia Sinica and Tamkang University); THISSE Jacques-François, (CORE, UCLouvain; HSE University and CEPR)
    Abstract: Science parks play a growing role in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by firms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistically competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a science park to emerge as an equilibrium outcome. We show that strongly localized knowledge spillovers, skilled labor abundance, and low commuting costs are key drivers for a science park to form. Not only is the productivity of the final sector higher when intermediate firms cluster, but a science park hosts more intermediate firms, more researchers and more production workers, and yields greater worker welfare, compared to a counterfactual flat city. With continual improvements in infrastructure and communication technology that lowers coordination costs, science parks will eventually be fragmented.
    Keywords: science park, knowledge spillovers, intermadiate firm clustering, land use, worker commuting, R&D
    JEL: D51 L22 O33 R13
    Date: 2020–02–11

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