nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒11‒30
eighteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Job Creation in the Wind Power Sector Through Marshallian and Jacobian Knowledge Spillovers By Aldieri, Luigi; Grafström, Jonas; Paolo Vinci, Concetto
  2. Public Policies And The Art Of Catching Up: Matching The Historical Evidence With A Multi-Country Agent-Based Model By Giovanni Dosi; Andrea Roventini; Emmanuele Russo
  3. Anatomy of Green Specialization: Evidence from EU Production Data, 1995-2015 By Filippo Bontadini; Francesco Vona
  4. Skill Endowment, Routinisation and Digital Technologies: Evidence from U.S. Metropolitan Areas. By Consoli, Davide; Fusillo, Fabrizio; Orsatti, Gianluca; Quatraro, Francesco
  5. Growing Through Spinoffs: Corporate Governance, Entry, And Innovation By Maurizio Iacopetta; Raoul Minetti; Pierluigi Murro
  6. Adjusting to China Competition: Evidence from Japanese Plant-product-level Data By Flora Bellone; Cilem Selin Hazir; Toshiyuki Matsuura
  7. Credit Constraints, Labor Productivity and the Role of Regional Institutions: Evidence from Manufacturing Firms in Europe By Andres Rodriguez-Pose; Roberto Ganau; Kristina Maslauskaite; Monica Brezzi;
  8. Free movement of inventors: open-border policy and innovation in Switzerland By Cristelli, Gabriele; Lissoni, Francesco
  9. What Are the Labor and Product Market Effects of Automation?: New Evidence from France By Philippe Aghion; Céline Antonin; Simon Bunel; Xavier Jaravel
  10. Towards a holistic user innovation policy By Bengtsson, Lars; Edquist, Charles
  11. Firm Heterogeneity in Skill Returns By Michael J. Böhm; Khalil Esmkhani; Giovanni Gallipoli
  12. Corporate Governance And Industrialization By Maurizio Iacopetta; Pietro Peretto
  13. Are firms withdrawing from basic research? An analysis of firm-level publication behaviour in Germany By Krieger, Bastian; Pellens, Maikel; Blind, Knut; Schubert, Torben
  14. Does mission-oriented funding stimulate private R&D? Evidence from military R&D for US states By Gianluca Pallante; Emanuele Russo; Andrea Roventini
  15. Labor market reform and innovation: Evidence from Spain By García-Vega, María; Kneller, Richard; Stiebale, Joel
  16. The Role of Collaboration Networks for Innovation in Immigrant-Owned New Technology-Based Firms By Scandura, Alessandra; Bolzani, Daniela
  17. Idea Diffusion and Property Rights By Boyan Jovanovic; Zhu Wang
  18. Addressing the productivity paradox with big data: A literature review and adaptation of the CDM econometric model By Schubert, Torben; Jäger, Angela; Türkeli, Serdar; Visentin, Fabiana

  1. By: Aldieri, Luigi (University of Salerno); Grafström, Jonas (The Ratio Institute); Paolo Vinci, Concetto (University of Salerno)
    Abstract: The empirical evidence concerning the job-creation impact of wind power technology through knowledge spillovers is yet poor. Our objective is to contribute to the literature and bridge this gap. Specifically, our analysis explores to what extent investments in innovation activities of one firm affect the neighbouring firms’ generation of knowledge spillovers in the same sector (intra-industry) or to different sectors (inter-industry) and how this complex knowledge diffusion process impacts the employment dynamics. The econometric analysis relies on a sector-based panel dataset for the USA, Europe, and Japan between 2002 and 2017. The empirical findings suggest that there were negative employment spillovers from the same technology sector (Marshallian externalities) while the spillovers from more diversified activity (Jacobian externalities) have a positive impact on job-creation. The findings have relevant policy implications for governments who are developing an industrial strategy for wind power technology.
    Keywords: Employment; knowledge spillovers; patents; renewable energy; wind power
    JEL: J21 O33 Q20 Q40 Q42
    Date: 2020–11–11
  2. By: Giovanni Dosi (Laboratory of Economics and Management); Andrea Roventini; Emmanuele Russo (Scuola Superiore Sant'Anna)
    Abstract: In this paper, we study the effects of industrial policies on international convergence using a multi-country agent-based model which builds upon Dosi et al. (2019b). The model features a group of microfounded economies, with evolving industries, populated by heterogeneous firms that compete in international markets. In each country, technological change is driven by firms’ activities of search and innovation, while aggregate demand formation and distribution follows Keynesian dynamics. Interactions among countries take place via trade flows and international technological imitation. We employ the model to assess the different strategies that laggard countries can adopt to catch up with leaders: market-friendly policies;industrial policies targeting the development of firms’ capabilities and R&D investments, as well as trade restrictions for infant industry protection; protectionist policies focusing on tariffs only. We find that markets cannot do the magic: in absence of government interventions, laggards will continue to fall behind. On the contrary, industrial policies can successfully drive international convergence among leaders and laggards, while protectionism alone is not necessary to support catching up and countries get stuck in a sort of middle-income trap. Finally, in a global trade war, where developed economies impose retaliatory tariffs, both laggards and leaders are worse off and world productivity growth slows down.
    Keywords: Endogenous growth; Catching up; Technology-gaps; Industrial policies; Agent-based models
    JEL: F41 F43 O4 O3
    Date: 2020–05–06
  3. By: Filippo Bontadini; Francesco Vona (Observatoire français des conjonctures économiques)
    Abstract: We study green specialization across EU countries and detailed 4-digit industrial sectors over the period of 1995-2015 by harmonizing product-level data (PRODCOM). We propose a new list of green goods that refines lists proposed by international organizations by excluding goods with double usages. Our exploratory analysis reveals important structural properties of green specialization. First, green production is highly concentrated, with 13 out of 119 4-digit industries accounting for 95% of the total. Second, green and polluting productions do not occur in the same sectors, and countries tend to specialize in either green or brown sectors. This suggests that the distributional effect of European environmental policies can be large. Third, green specialization is highlypath dependent, but it is also reinforced by the presence of non-green capabilities within the same sector. This helps explain why economies with better engineering and technical capabilities have built a comparative advantage in green production.
    Keywords: Green goods; Green specialization; Revealed comparative advantage; Complementarity; Path dependency
    JEL: Q55 L60
    Date: 2020
  4. By: Consoli, Davide; Fusillo, Fabrizio; Orsatti, Gianluca; Quatraro, Francesco (University of Turin)
    Abstract: Scholars and policy makers frame the debate on labour market polarisation by emphasising the role of key drivers such as international trade and of technological change. The present paper explores these themes from a different perspective, and inquires whether de-routinisation has harmed local innovation capacity. Our empirical study builds on the literature on learning-bydoing and incremental innovation, and focuses on advanced manufacturing technologies (AMTs) in US Metropolitan Statistical Areas over the period 1990-2012. Results provide support to the hypothesis that de-routinisation is associated with a generalized decline of local innovation performance, especially in AMTs.
    Date: 2020–11
  5. By: Maurizio Iacopetta (Observatoire français des conjonctures économiques); Raoul Minetti (Michigan State University); Pierluigi Murro
    Abstract: New firms are often based on ideas that the founders developed while working for incumbent firms. We study the macroeconomic effects of spinoffs through a growth model of product variety expansion, driven by firm entry, and product innovation. Spinoffs stem from conflicts of interest between incumbent firms' shareholders and employees. The analysis suggests that incumbents invest more in product innovation when knowledge protection is stronger. An inverted-U shape relationship emerges, however, between the intensity of spinoff activities and the strength of the rule of law. A calibration experiment indicates that, with a good rule of law, loosening knowledge protection by 53 reduces product innovation by one fifth in the short run and one seventh in the long run, but boosts the spinoff rate by one tenth and one sixth in the short and long run, respectively. Nevertheless, per capita income growth drops and welfare deteriorates. The trade-offs are broadly consistent with evidence from Italian firms.
    Keywords: Corporate governance; Endogenous growth; Spinoffs
    JEL: E44 O40 G30
    Date: 2020–04–29
  6. By: Flora Bellone (Université Côte d'Azur; GREDEG CNRS); Cilem Selin Hazir (Leibniz Institute of Ecological Urban and Regional Development); Toshiyuki Matsuura (Keio Economic Observatory, Keio University)
    Abstract: This study examines how the product mixes of Japanese manufacturing plants have been impacted by the rise of China imports over the period 1997-2014, and the extent that plants' local embeddedness mitigate this causal relationship. We find evidence that China import competition induced both product downsizing and product exit within Japanese manufacturing plants. Moreover, we find that those negative e ects differ across plants according to various plant characteristics including the spatial organization of their parent firm. Finally, we show that both product survival and product sales are positively impacted by external agglomeration economies, but these e ects are strong for standalone plants only, and almost non-existent for plants aliated to spatially compact multi-unit firms.
    Keywords: Import competition, Product Portfolio, Local Product Relatedness
    JEL: F61 L25 D22
    Date: 2020–11
  7. By: Andres Rodriguez-Pose; Roberto Ganau; Kristina Maslauskaite; Monica Brezzi;
    Abstract: This paper examines the relationship between credit constraints − proxied by the investment-to-cash flow sensitivity – and firm-level economic performance − defined in terms of labor productivity – during the period 2009-2016, using a sample of 22,380 manufacturing firms from 11 European countries. It also assesses how regional institutional quality affects productivity at the level of the firm both directly and indirectly. The empirical results highlight that credit rationing is rife and represents a serious barrier for improvements in firm-level productivity and that this effect is far greater for micro and small than for larger firms. Moreover, high-quality regional institutions foster productivity and help mitigate the negative credit constraints-labor productivity relationship that limits the economic performance of European firms. Dealing with the European productivity conundrum thus requires greater attention to existing credit constraints for micro and small firms, although in many areas of Europe access to credit will become more effective if institutional quality is improved.
    Keywords: Credit Constraints; Labor Productivity; Manufacturing Firms; Regional Institutions; Cross-Country Analysis; Europe
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  8. By: Cristelli, Gabriele; Lissoni, Francesco
    Abstract: We study the innovation effects of the Agreement on the Free Movement of Persons (AFMP), signed by Switzerland and the EU in 1999. Using geocoded patent data, complemented by matched inventor-immigrant-census records, we identify a large number of cross-border inventors (CBIs), commuters from neighbouring countries working in Swiss R&D labs. We show that, during the AFMP implementation phase, the influx of CBIs increased differentially across regions at different driving distances from the border. That caused a 24% increase in patents, mostly due to large and medium patent holders (as opposed to very large ones) and to inventor teams mixing CBIs and natives. The latter were not displaced and increased their productivity, thanks to complementarity between their knowledge assets and those of CBIs.
    Keywords: Immigration, Innovation, Patents, Inventors, Free Movement of Persons
    JEL: F22 J61 O31 O33
    Date: 2020–11
  9. By: Philippe Aghion (Harvard University); Céline Antonin (Observatoire français des conjonctures économiques); Simon Bunel; Xavier Jaravel
    Abstract: We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, wages, prices and profits. Causal effects are estimated with event studies and a shift-share IV design leveraging pre-determined supply linkages and productivity shocks across foreign suppliers of industrial equipment. At all levels of analysis —plant, firm, and industry —the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices, and higher sales. The estimated elasticity of employment to automation is 0.28, compared with elasticities of 0.78 for profits, -0.05 for prices, and 0.37 for sales. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation is positive and significant only in industries that face international competition. These estimates can be accounted for in a simple monopolistic competition model: firms that automate more increase their profits but pass through some of the productivity gains to consumers, inducing higher scale and higher employment. The results indicate that automation can increase labor demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalized world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition.
    Keywords: Automation; Employment; Plant-level; Firm-level; Labor market; Product market; Manufacturing
    JEL: J23 J24 L11 O3
    Date: 2020
  10. By: Bengtsson, Lars (Division of Innovation Engineering, LTH, Lund University); Edquist, Charles (CIRCLE, Lund University)
    Abstract: This paper aims to synthesize previous user innovation policy proposals into an adapted systems of innovation framework, on which a holistic user innovation policy for the household sector can be based. We identify and review policy proposals made by user innovation researchers and categorize them according to ten key activities in the systems of innovation framework. In the review of 22 publications with policy proposals on user innovation, we find that the publications lack an integrating innovation policy framework. Most of them limit their policy proposals to a few policy activities, i.e., the innovation policy proposals are partial and mono-causal. In contrast to the linear view of the innovation process, user innovation researchers predominantly adopt an institutional view of the innovation process. Based on a systems of innovation framework, we propose a holistic innovation policy framework adapted to user innovation in the household sector. It is centered on ten key activities and policy instruments related to them. Our proposals effectively provide policy development support to policy researchers, policymakers, and politicians stressing the multi-causal and non-linear features of the user innovation process.
    Keywords: User innovation; household sector; systems of innovation; innovation policy; holistic innovation policy
    JEL: L50 O31 O32 O33 O38 O39
    Date: 2020–11–10
  11. By: Michael J. Böhm (University of Bonn); Khalil Esmkhani (University of British Columbia); Giovanni Gallipoli (Vancouver School of Economics, UBC)
    Abstract: This paper presents new evidence on worker-firm complementarities. We combine matched employer-employee data with direct measures of workers' cognitive and noncognitive skills, and propose an empirical approach that separately identifies the firm-level return for each attribute. We find that similar skills command different returns across employers and that workers' sorting into firms depends on returns to both attributes. We derive theoretical restrictions that characterize many-to-one matching in employer-employee data, linking within-firm skill dispersion to between-firm differences in average skills. Estimates support these restrictions. Firm heterogeneity in skill returns raises both the average level and dispersion of earnings.
    Keywords: firm heterogeneity, skill returns, sorting, wages, Inequality
    JEL: D30 J23 J24 J31
    Date: 2020–11
  12. By: Maurizio Iacopetta (Observatoire français des conjonctures économiques); Pietro Peretto (Duke University)
    Abstract: Corporate governance distortions delay or even halt a country's transformation into a modern innovation economy. We investigate the mechanism through a growth model that allows for agency issues within firms. Governance distortions raise the cost of investment and depress the incentives to set up new firms. Modest differences in governance account for large gaps in income: A 32 percent investment cost differential can explain the secular decline of Latin America income relative to that of the USA, and implies an industrialization delay of a third of a century. We obtain similar results for a large number of countries and macro-regions.
    Keywords: Corporate governance; Income differences; Secular transition; Modern growth
    JEL: D58 O14 O16 O43 O57
    Date: 2020–03–27
  13. By: Krieger, Bastian (ZEW - Leibniz Centre for European Economic Research); Pellens, Maikel (Ghent University); Blind, Knut (Fraunhofer Institute for System and Innovation Research ISI); Schubert, Torben (CIRCLE - Centre for Innovation Research)
    Abstract: Previous research has expressed concerns about firms engaging less in basic research. We contribute to this debate by studying trends in the scientific publishing activities of firms located in Germany. Our results do not confirm a declining trend in raw numbers with numbers indicating that firms’ aggregate volume of scientific publications stayed constant between 2008 and 2016. However, the number of publishing firms declined, in particular in high-tech and knowledge-intensive industries. Beyond that, we observe positive trends in publishing in basic research journals compared to journals focused on applied research, and publishing in collaboration with academic partners compared to publishing alone. Thus, our results paint an ambiguous picture. While they do not confirm a decrease in firms’ basic research engagement in the aggregate, the figures document a concentration of publishing activities on fewer firms. We argue that this concentration of basic research activities in firms may pose a threat to the longer term innovativeness of the German economy.
    Keywords: Corporate publishing; Basic research; R&D strategy
    JEL: O32 O33 O34 O36
    Date: 2020–11–19
  14. By: Gianluca Pallante; Emanuele Russo; Andrea Roventini
    Abstract: US military Research and Development (R&D) expenditures arguably represent the best example of mission-oriented policy. They are sizeable, with a clear-cut public purpose (national defense) and with the government being their exclusive beneficiary. Exploiting a longitudinal dataset linking public R&D obligations to private R&D expenditures for US states, we investigate the impact of defense R&D on privately-financed R&D. To address potential endogeneity in the allocation of funds, we use an instrumental variable identification strategy leveraging the differential exposure of US states to national shocks in federal military R&D. We document considerable "crowding-in" effects with elasticities in the 0.11-0.14 range. These positive effects extend also to the labor market, when focusing on employment in selected R&D intensive industries and especially for engineers.
    Keywords: R&D; Innovation policy; Defense; Mission-oriented innovation.
    Date: 2020–11–12
  15. By: García-Vega, María; Kneller, Richard; Stiebale, Joel
    Abstract: We analyze the effect of a labor market reform on firms' product innovation. The re- form, which amounts to a natural experiment, differentially reduced firing costs for some firms, thereby lowering adjustment costs in the presence of demand uncertainty. Using a difference-in- differences framework, we show that the reform increased product innovations. We also provide evidence that the reform induced upgrading of product quality and enabled firms to grow faster and enter new markets. The effects are concentrated in industries with high levels of demand volatility and R&D intensity, where exible adjustments to unexpected shocks are important.
    Keywords: Innovation,New products,Productivity,Labor market reform,EPL
    JEL: D22 J3 O31 G31
    Date: 2020
  16. By: Scandura, Alessandra; Bolzani, Daniela (University of Turin)
    Abstract: This paper investigates the importance of the network of collaborations with other firms, research institutions, and business associations as key drivers of innovation, providing a comparison between immigrant-owned firms and non-immigrant-owned firms. We hypothesise that the network of collaboration is more important for innovative activities of immigrant entrepreneurs than for natives, due to their migrant condition, and that immigrant entrepreneurs’ acculturation to the host country culture moderates the influence of such network. We test our hypotheses on a unique matched-pair sample of immigrant and native domestic entrepreneurs active in high-tech mainstream (non-ethnic) markets. Our results show that universities and research institutions along with business associations are more important for immigrant-owned companies; we further show that immigrant entrepreneurs’ acculturation to the host country culture acts as a substitute for interactions with business associations. These findings are highly relevant for the academic and policy discourses on the link between immigrant entrepreneurship and innovation in developed countries.
    Date: 2020–10
  17. By: Boyan Jovanovic; Zhu Wang
    Abstract: We study the innovation and diffusion of technology at the industry level. We derive the full dynamic paths of an industry's evolution, from birth to its maturity, and we characterize the impact of diffusion on the incentive to innovate. The model implies that protection of innovators should be only partial due to the congestion externality in meetings in which idea transfers take place. We fit the model to the early experiences of the automobile and personal computer industries both of which show an S-shaped growth of the number of firms.
    JEL: L0
    Date: 2020–10
  18. By: Schubert, Torben (Fraunhofer ISI, and Circle, Lund University); Jäger, Angela (Fraunhofer ISI); Türkeli, Serdar (UNU-MERIT, Maastricht University); Visentin, Fabiana (UNU-MERIT, Maastricht University)
    Abstract: This paper develops the plan for the econometric estimations concerning the relationship between firm productivity and the specifics of the innovation process. The paper consists of three main parts. In the first, we review the relevant literature related to the productivity paradox and its causes. Specific attention will be paid to broad economic trends, in particular the higher importance of intangibles, the increasing importance of knowledge spillovers and servitisation as drivers of the slowdown in productivity growth. In the second part, we introduce a plan for the econometric estimation strategy. Here we propose an extended Crépon-Duguet-Mairesse type of model (CDM), which enriches the original specification by the three influence factors of intangibles, spillovers, and servitisation. This will allow testing the influence of these three factors on productivity at the level of the firm within a unified framework. In the third part, we build on the literature review in order to provide a detailed plan for the data collection procedure including a description of the variables to be collected and the source from which the variables are coming. It should be noted that we will rely partly on structured data (e.g. ORBIS), while many others variables will need to be generated from unstructured sources, in particular the webpages of firms. The use of unstructured data is a particular strength of our proposed data collection procedure because the use of such data is expected to offer novel insights. However, it implies additional risks in terms of data quality or missing data. Our data collection plan explores the maximum potential of variables that will ideally be made available for later econometric treatment. Whether indeed all variables will have sufficient quality to be used in the econometric estimations will be subject to the outcomes of the actual collection efforts.
    Keywords: Productivity, Intangibles, Servitisation, Innovation, R&D, Open Innovation, IPR, Knowledge diffusion, Economic growth, Productivity Paradox, Big data, Large data sets, data collection
    JEL: C55 C80 D24 E22 L80 O31 O32 O34 O40 O47
    Date: 2020–11–11

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