nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒09‒28
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Growing Like China: Firm Performance and Global Production Line Position By Davin Chor; Kalina Manova; Zhihong Yu
  2. How Robots Change Within-Firm Wage Inequality By Barth, Erling; Roed, Marianne; Schone, Pal; Umblijs, Janis
  3. Stagnant manufacturing growth in India: The role of the informal economy By Djidonou, Gbenoukpo Robert; Foster-McGregor, Neil
  4. The Geography of New Technologies By Nicholas Bloom; Tarek A. Hassan; Aakash Kalyani; Josh Lerner; Ahmed Tahoun
  5. Uncertainty and Firms' Labour Decisions. Evidence from European Countries By Martinez-Matute, Marta; Urtasun, Alberto
  6. How Important are Local Knowledge Spillovers of Public R&D and What Drives Them? By Leonie Koch; Martin Simmler
  7. Entry of malls and exit of stores - The role of distance and economic geography By Klaesson, Johan; Nilsson, Helena
  8. Finance and Innovation in the Production Network By Brancati, Emanuele; Minetti , Raoul; Zhu, Susan Chun
  9. Tracing the Linkages Between Scientific Research and Energy Innovations: A Comparison of Clean and Dirty Technologies By Robert K. Perrons; Adam B. Jaffe; Trinh Le
  10. R&D Spillovers through RJV Cooperation By Albert Banal-Estañol; Tomaso Duso; Jo Seldeslachts; Florian Szücs
  11. Data-intensive Innovation and the State: Evidence from AI Firms in China By Martin Beraja; David Y. Yang; Noam Yuchtman
  12. Patents in the Long Run: Theory, History and Statistics By Claude Diebolt; Karine Pellier

  1. By: Davin Chor; Kalina Manova; Zhihong Yu
    Abstract: Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines and how this evolves with productivity and performance over the firm lifecycle. We document a sharp rise in the upstreamness of imports, stable positioning of exports, and rapid expansion in production stages conducted in China over the 1992-2014 period, both in the aggregate and within firms over time. Firms span more stages as they grow more productive, bigger and more experienced. This is accompanied by a rise in input purchases, value added in production, and fixed cost levels and shares. It is also associated with higher profits though not with changing profit margins. We rationalize these patterns with a stylized model of the firm lifecycle with complementarity between the scale of production and the scope of stages performed.
    JEL: F10 F14 F23
    Date: 2020–09
  2. By: Barth, Erling (Institute for Social Research, Oslo); Roed, Marianne (Institute for Social Research, Oslo); Schone, Pal (Institute for Social Research, Oslo); Umblijs, Janis (Institute for Social Research, Oslo)
    Abstract: Using novel matched employer-employee register data with firm-level information on the introduction of industrial robots, this paper analysis the impact of robots on the wages of workers in the manufacturing sector. The results show that industrial robots increase wages for high-skilled workers relative to low-skilled workers, hence robots increases the skill-premium within firms. Furthermore, we find that employees in managerial positions benefit more from robotisation than those in STEM or professional occupations. Overall, our results suggest that the introduction of industrial robots has a positive effect on the average wages of manufacturing workers in Norway.
    Keywords: automation, robotisation, labour economics, wages, technological change
    JEL: J01 J08 O33 E24
    Date: 2020–08
  3. By: Djidonou, Gbenoukpo Robert (UNU-MERIT, Maastricht University); Foster-McGregor, Neil (UNU-MERIT, Maastricht University)
    Abstract: The growth of the manufacturing sector is important for overall productivity growth. Indeed, the rising importance of the manufacturing sector at early levels of development is considered one of the stylised facts of development. Recently, several developing countries have skipped this step however, with stagnant growth of the manufacturing sector. In this paper, we investigate the role of the informal segment in the stagnant growth of the manufacturing sector in the context of India. To do so, we initially compute the drag imposed by informality on the productivity growth of the manufacturing sector before investigating whether the movement of workers between the formal and informal segments of the manufacturing sector is having an impact on manufacturing productivity growth using a relatively long time series of data for the period 1980-2011. We find that the informal segment is harmful to the growth in productivity of the manufacturing sector. Using a modified shift-share analysis with the introduction of the informal segment, we find that labour reallocation to the informal segment of the manufacturing sector is growth reducing in the Indian manufacturing sector. The main source of this growth reduction is the within sub-sector structural change effect, indicating that workers move on average from productive formal to less productive informal employment within sub-sectors. In terms of movements across sub-sectors, there has been a movement towards more productive informal activities, but this has not been enough to offset the negative within sub-sector effect. Mainly, we have seen limited growth-reducing structural change after the 1994 liberalisation, implying that employment has moved to less productive informal firms after liberalisation.
    Keywords: Manufacturing, stagnation, formal economy, informal economy, productivity, worker's movement, India
    JEL: E26 L16 L60 O14 O17 O47 O53
    Date: 2020–09–08
  4. By: Nicholas Bloom (Stanford University); Tarek A. Hassan (Boston University); Aakash Kalyani (Boston University); Josh Lerner (London Business School); Ahmed Tahoun (Harvard University)
    Abstract: We identify novel technologies using textual analysis of earnings conference calls, newspapers, announcements, and patents. Our approach enables us to document the rollout of 20 new technologies across firms and labor markets in the U.S. Four stylized facts emerge from our data. First, as technologies develop, the number of new positions related to them grows, but the average education requirements and wage levels of the positions drop. Second, as technologies develop, their employment impact diffuses across the country: initially, technologies are concentrated in local hubs, but over time, their adoption diffuses geographically. Third, despite this diffusion, the initial hubs retain a disproportionate share of employment in the technology, particularly at the high-skill end of the spectrum. Finally, technology hubs are more likely to arise in areas with universities and high skilled labor pools.
    Keywords: Technology, Geography, Employment, Innovation, R and D
    JEL: O31 O32
    Date: 2020–06–15
  5. By: Martinez-Matute, Marta (Universidad Autónoma de Madrid); Urtasun, Alberto (Banco de España)
    Abstract: Uncertainty affects employers' decisions on labour workforce, as it does on capital. We exploit differences on how firms adjust their labour work-force when uncertainty increases. Using data from the Wage Dynamic Network Survey for 25 European countries, we first construct, opposite to usual aggregate indicators, a set of uncertainty indicators exploiting firms' microeconomic environment. We combine variability from the country, sector and size of the firm. Secondly, we investigate the effect of uncertainty on firms' strategies to adjust labour through hirings and rings. Results reveal that firms reduce hiring decisions and recur to individual layos more frequently when uncertainty increases. An increase of one point in the uncertainty indicator increases the probability of having frozen hiring in between 21% to 39%. We also find more significant effects when firms are facing credit constraints and labour adjustment costs are higher.
    Keywords: uncertainty, labour adjustment, firms' labour decisions, freeze hirings, layoffs
    JEL: D22 D81 J21 J23
    Date: 2020–08
  6. By: Leonie Koch; Martin Simmler
    Abstract: This paper analyzes the magnitude of local knowledge spillovers of public R&D in Germany and its determinants using patent application data. We identify three distinct transmission channels. First, firms file more patent applications when collaborating with (local) public institutions. Second, arms file more patent applications when citing a public patent. Third, local public R&D seems to increase the number of patent applications by local firms also via nonspecific knowledge spillovers. Using a fixed effect instrumental variable regression approach, we find evidence for substantial local spillovers and that these are driven by non-specific knowledge spillovers.
    Date: 2020
  7. By: Klaesson, Johan (Center for Entrepreneurship and Spatial Economics); Nilsson, Helena (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: The empirical literature on the effects of external malls on incumbent stores is inconclusive, and quantitative research on this topic is limited. In an attempt to add to the literature, this study examines the effect of the entry of external retail malls on store survival. Using a full firm population panel dataset at the store level covering the period 2000-2014, we examine the effect of a change in the distance to an external retail mall on the probability of retail store exit. In doing this we explicitly model the economic geography. We measure the economic activity in the location where these stores are situated using a market potential measure to gauge the economic density. The main result of this study is that the effects differ depending on where the incumbent firm is located. The effects on firms located in low-density areas and those on firms located in high-density areas differ dramatically. In low-density areas we find complementary effects which means that the probability of incumbent store exit is lesser. In high-density areas the estimated effect is the opposite, the entry of a new external mall increases the probability of incumbent store exit. The strength of the effects is dependent on the distance between the incumbent firm and the newly established external mall. Additionally, the size of effects differs between different parts of the retail sector. Effects remain over a number of years after entry of external malls but become smaller over time.
    Keywords: external shopping malls; complements; retail; panel-data; firm-exit; market potential
    JEL: C33 D22 L81 P25
    Date: 2020–08–31
  8. By: Brancati, Emanuele (University of Rome, La Sapienza); Minetti , Raoul (Michigan State University, Department of Economics); Zhu, Susan Chun (Michigan State University, Department of Economics)
    Abstract: Disruptions of the production network, such as that triggered by the 2020 global crisis, can spill over to firms’ financing and investment processes. This paper studies the role of the production network in the nexus between finance and investment in innovation. Using matched firm-bank data on 25,000 Italian businesses over the 2011-2017 period, we find that firms’ participation in supply chains significantly attenuates the negative effect of bank credit constraints on innovation. A disruption of 25% of the supply chain linkages is predicted to magnify the impact of credit constraints on innovation by about 17%. The support of supply chains to credit constrained innovators reflects not only liquidity pooling in supply chains but also the substitution of liquidity-intensive innovations with transfers of knowledge along R&D-oriented chains. The support fails however to materialize for radical innovations.
    Keywords: Banks; Financial Constraints; Innovation; Supply Chains
    JEL: G21 O30
    Date: 2020–09–08
  9. By: Robert K. Perrons; Adam B. Jaffe; Trinh Le
    Abstract: The challenge of mitigating climate change has focused recent attention on basic scientific research feeding into the development of new energy technologies (Popp, 2017). Energy innovation tends to consist of a series of partially overlapping processes involving: (1) the production of scientific and technological knowledge, (2) the translation of that knowledge into working technologies or artifacts, and (3) the introduction of the artifacts into the marketplace, where they are matched with users’ requirements. However, relatively little data are available showing how long each of these processes takes for energy technologies. Here we combine information from patent applications with bibliographic data to shine light on the second process—that is, the translation of scientific knowledge into working prototypes. Our results show that “clean” energy technologies are more dependent on underlying science than “dirty” technologies, and that the average lag between publication of scientific findings and the incorporation of those findings in clean energy patents has risen from about five to about eight years since the 1980s. These findings will help policymakers to devise more effective mechanisms and strategies for accelerating the overall rate of technological change in this domain.
    JEL: O13 O31
    Date: 2020–09
  10. By: Albert Banal-Estañol; Tomaso Duso; Jo Seldeslachts; Florian Szücs
    Abstract: We investigate the dimensions through which R&D spillovers are propagated across firms via cooperation through Research Joint Ventures (RJVs). We build on the framework developed by Bloom et al. (2013) which considers the opposing effects of technology spillovers and product market rivalry, and extend it to account for RJVs. Our main findings are that the adverse effects of product market rivalry are mitigated if firms cooperate in RJVs and that R&D spending is reduced among technologically close RJV participants.
    Keywords: spillovers, R&D, research joint ventures, market value, patents
    JEL: L24 L44 K21 O32
    Date: 2020
  11. By: Martin Beraja; David Y. Yang; Noam Yuchtman
    Abstract: Data-intensive technologies, like AI, are increasingly widespread. We argue that the direction of innovation and growth in data-intensive economies may be crucially shaped by the state because: (i) the state is a key collector of data and (ii) data is sharable across uses within firms, potentially generating economies of scope. We study a prototypical setting: facial recognition AI in China. Collecting comprehensive data on firms and government procurement contracts, we find evidence of economies of scope arising from government data: firms awarded contracts providing access to more government data produce both more government and commercial software. We then build a directed technical change model to study the implications of government data access for the direction of innovation, growth, and welfare. We conclude with three applications showing how data-intensive innovation may be shaped by the state: both directly, by setting industrial policy; and indirectly, by choosing surveillance levels and privacy regulations.
    JEL: E0 H4 L5 L63 O25 O30 O40 P00 P16 Z21
    Date: 2020–08
  12. By: Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Karine Pellier
    Abstract: This paper examines the structural and spatial dynamics of patents in France, Germany, Japan, the United Kingdom and the United States. The time series are extracted from international, comparative and historical databases on the long-term evolution of patents in 40 countries from the 17th century to 1945 and in more than 150 countries from 1945 to present (Diebolt and Pellier 2010). We have found strong evidence of infrequent large shocks resulting essentially from the major economic and political events formed by the two World Wars in the 20th century. Our results question the autonomous process, i.e. the internal dynamic of the patent systems. Wars seem to drive innovation and, finally, the very process of economic growth. We further investigated the role of innovation in economic growth through a causality analysis between patents and GDP per capita. Our major findings support the assumption that the accumulation of innovations was a driving force only for France, the United Kingdom and the United States during the post-World War II period.
    Keywords: database,cliometrics,shock analysis,patents,causality,outliers,comparisons in time and space
    Date: 2020

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