nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒05‒17
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Specificity of human capital: An occupation space based on job-to-job transitions By Eduardo Levi Yeyati; Martín Montané
  2. Visibility of Technology and Cumulative Innovation: Evidence From Trade Secrets Laws By Bernhard Ganglmair; Imke Reimers
  3. The Impact of Foreign Direct Investment on Innovation: Evidence from Patent Fillings and Citations in China By Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
  4. Artificial Intelligence and Industrial Innovation: Evidence from Firm-Level Data By Christian Rammer; Gastón P Fernández; Dirk Czarnitzki
  5. The Battle Over Patents: History and the Politics of Innovation By Stephen H. Haber; Naomi R. Lamoreaux
  6. Big Push in Distorted Economies By Francisco J. Buera; Hugo A. Hopenhayn; Yongseok Shin; Nicholas Trachter
  7. Patents on General Purpose Technologies: Evidence from the Diffusion of the Transistor By Nagler, Markus; Schnitzer, Monika; Watzinger, Martin
  8. The Age of Invention: Matching Inventor Ages to Patents Based on Web-scraped Sources By Mary Kaltenberg; Adam B. Jaffe; Margie Lachman
  9. Human Capital Investment and Development: The Role of On-the-job Training By Xiao Ma; Alejandro Nakab; Daniela Vidart
  10. Stronger Patent Regime, Innovation and Scientist Mobility By Ganguly, Madhuparna
  11. Invention and the Life Course: Age Differences in Patenting By Mary Kaltenberg; Adam B. Jaffe; Margie E. Lachman
  12. Technology Adoption and Leapfrogging: Racing for Mobile Payments By Pengfei Han; Zhu Wang

  1. By: Eduardo Levi Yeyati (Universidad Torcuato Di Tella/The Brookings Institution); Martín Montané (Universidad Torcuato Di Tella)
    Abstract: Using job transition data from Argentina’s Household Survey, we document the extent to which human capital is specific to occupations and activities. Based on workers’ propensity to move between occupations/industries, we build Occupation and Industry Spaces to illustrate job similarities, and we compute an occupation and industry similarity measures that, in turn, we use to explain wage transition dynamics. We show that our similarity measures influence positively post-transition wages. Inasmuch as wages capture a worker ´s marginal productivity and this productivity reflects the degree to which a worker matches the job’s skill demand, our results indicate that a worker ´s human capital is specific to both occupation and activity: closer occupations share similar skill demands and task composition (in other words, demand similar workers) and imply a smaller human capital loss in the event of a transition.
    Date: 2021–03
  2. By: Bernhard Ganglmair; Imke Reimers
    Abstract: Innovative activity depends on the incentives to create new ideas as well as the visibility of and access to existing ones. We show that a relative strengthening of trade secrets protection has a disproportionately negative e ect on patenting of processes { inventions that are not otherwise visible to society. We develop a structural model of initial and follow-on innovation to determine the welfare e ects of such shifts in disclosure for industries characterized by cumulative innovation. While stronger trade secrets encourage investment in initial R&D, they may have negative e ects on overall welfare by reducing opportunities for follow-on innovation.
    Keywords: cumulative innovation; disclosure; intellectual property; Uniform Trade Secrets Act; visibility
    JEL: D80 O31 O34
    Date: 2021–05
  3. By: Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
    Abstract: This paper studies how foreign direct investment (FDI) affects innovation in the host country, using matched firm-level patent data of Chinese firms. The data contain multidimensional information about patent counts and citations which, together with an identification strategy based on Lu et al. (2017), allows us to measure innovation comprehensively and to uncover the causal relationship. Our empirical analysis shows that FDI has positive intra-industry effects on the quantity and quality of innovation by Chinese firms. We show that these positive effects are driven by increases in competition, rather than by knowledge spillover from FDI which is measured by patent citations between domestic firms and foreign invested enterprises (FIEs). We further investigate the inter-industry effects of FDI and find that FDI has positive vertical effects on innovation in upstream sectors.
    Keywords: FDI; Innovation; Patent; Competition; Spillover
    JEL: F2 L5 O3
    Date: 2021–05–11
  4. By: Christian Rammer; Gastón P Fernández; Dirk Czarnitzki
    Abstract: Artificial Intelligence (AI) represents a set of techniques that enable new ways of innovation and allows firms to offer new features of products and services, to improve production, marketing and administration processes, and to introduce new business models. This paper analyses the extent to which the use of AI contributes to the innovation performance of firms. Based on firmlevel data from the German part of the Community Innovation Survey (CIS) 2018, we examine the contribution of different AI methods and applications to product and process innovation outcomes. The representative nature of the survey allows extrapolating the findings to the macroeconomic level. The results show that 5.8% of firms in Germany were actively using AI in their business operations or products and services in 2019. The use of AI generated additional sales with world-first product innovations in these firms of about €16 billion, which corresponds to 18% of total sales of world-first innovations in the German business sector. Firms that developed AI by combining in-house and external resources obtained significantly higher innovation results. The same is true for firms that apply AI in a broad way and have already several years of experience in using AI.
    Keywords: Artificial Intelligence, Innovation, CIS data, Germany
    Date: 2021–04–30
  5. By: Stephen H. Haber; Naomi R. Lamoreaux
    Abstract: This essay is the introduction to a book of the same title, forthcoming in summer of 2021 from Oxford University Press. The purpose is to document the ways in which patent systems are products of battles over the economic surplus from innovation. The features of these systems take shape as interests at different points in the production chain seek advantage in any way they can, and consequently, they are riven with imperfections. The interesting historical question is why US-style patent systems with all their imperfections have come to dominate other methods of encouraging inventive activity. The essays in the book suggest that the creation of a tradable but temporary property right facilitates the transfer of technological knowledge and thus fosters a highly productive decentralized ecology of inventors and firms.
    JEL: N4 N41 N42 N43 N44 O3 O34
    Date: 2021–05
  6. By: Francisco J. Buera; Hugo A. Hopenhayn; Yongseok Shin; Nicholas Trachter
    Abstract: Why don't poor countries adopt more productive technologies? Is there a role for policies that coordinate technology adoption? To answer these questions, we develop a quantitative model that features complementarity in firms' technology adoption decisions: The gains from adoption are larger when more firms adopt. When this complementarity is strong, multiple equilibria and hence coordination failures are possible. More importantly, even without equilibrium multiplicity, the model elements responsible for the complementarity can substantially amplify the effect of distortions and policies. In what we call the Big Push region, the impact of idiosyncratic distortions is over three times larger than in models without such complementarity. This amplification enables our model to nearly fully account for the income gap between India and the United States without coordination failures playing a role.
    Date: 2021–03–26
  7. By: Nagler, Markus; Schnitzer, Monika; Watzinger, Martin
    Abstract: How do patents influence the spread of General Purpose Technologies? To answer this question, we analyze the diffusion of the transistor, one of the most important technologies of our time. We show that the transistor diffusion and cross-technology spillovers increased dramatically after AT&T began licensing its transistor patents on standardized terms in 1952. This suggests that standardized licensing of the transistor patents helped jumpstart the positive feedback loop between innovations upstream and in applications. A subsequent reduction in royalties did not lead to a further increase, suggesting that standardized licensing in itself is more important than the specific royalty rates.
    Keywords: General Purpose Technololgies; Innovation; Intellectual Property; Standardized Licensing; Transistor
    JEL: O3 O33 O34
    Date: 2021–01
  8. By: Mary Kaltenberg; Adam B. Jaffe; Margie Lachman
    Abstract: This paper overviews the data collection procedures and resulting data for inventor ages and associated death dates. We use information about inventors from patents (name and location) and search for age and date of death information from publicly available online web directories and build a scoring system to indicate the quality of information that we collect. After applying a variety of heuristics and robustness checks, we are confident of 1,508,676 inventor ages associated with patents granted between 1976 and 2018. We also find the death dates of 206,589 inventors, though we are not as confident of the accuracy of the death information. The datasets and associated replication files are freely available at:
    JEL: O31 O34
    Date: 2021–05
  9. By: Xiao Ma (University of California-San Diego (UCSD)); Alejandro Nakab (University of California-San Diego (UCSD)); Daniela Vidart (University of Connecticut)
    Abstract: This paper offers an explanation for why workers in richer countries have faster rates of wage growth over their lifetimes than workers in poorer countries by providing theory and evidence on the differences in firm-provided training across countries. We document that the share of workers who receive firm-provided training increases with development, and that this is a key determinant of worker human capital investments. We then build a general equilibrium search model with firm-training investments and frictional labor markets. Our model suggests firm-training accounts for a large share of the cross-country wage growth differences. We find that self-employment is the key factor explaining the lack of training in the poorest economies, whereas labor market frictions are key to explaining training differences as countries develop. Finally, our model predicts considerable inefficiencies in human capital investments and sizeable aggregate gains from training subsidies to firms, which may be particularly desirable in poor countries where economic environments disincentivize training.
    Keywords: On-the-job Training, Human Capital Accumulation, Lifecycle wage growth, Economic Growth, Worker Turnover
    JEL: E24 J24 O11 O15 J63 J64 M53
    Date: 2021–05
  10. By: Ganguly, Madhuparna
    Abstract: This paper analyzes the effects of a stronger patent regime on innovation incentives, patenting propensity and scientist mobility when an innovating firm can partially recover its damage due to scientist movement from the infringing rival. The strength of the patent system, which is a function of litigation success probability and damage recovery proportion, stipulates expected indemnification. We show that stronger patents fail to reduce the likelihood of infringement and further, decrease the innovation's expected profitability. Higher potential reparation also reduces the scientist's expected return on R&D knowledge, entailing greater R&D investment. Our results suggest important considerations for patent reforms.
    Keywords: Damage rules; Infringement; Patent strength; Scientist mobility
    JEL: J60 K40 L13 O34
    Date: 2021
  11. By: Mary Kaltenberg; Adam B. Jaffe; Margie E. Lachman
    Abstract: Previous research suggests creative ability peaks in the age decades of the 30s and early 40s, and declines thereafter, with some variation across fields. Building from the cognitive aging literature, we expect differences in the rate of creation and qualitative nature of creative works by age. Cognitive processes show aging-related changes with increases in experience-based knowledge (pragmatics or crystallized abilities) and decreases in the ability to process novel information quickly and efficiently (mechanics or fluid abilities). We describe a new database created by combining the publicly available patent data with information on inventor ages scraped from directory websites on the web for approximately 1.2 million U.S.-resident inventors patenting between 1976 and 2017. Our results suggest that cross-sectional and within-inventor patenting rates are similar, peaking at around the early 40s for both women and men. We find varying results for attributes of patents in relation to age, some of which are consistent with cognitive aging theory. For solo inventors, backward citations and originality, which are connected to experience, were found to increase with age. Forward citations, number of claims, and generality measures, as well as a citation-based measure of disruptiveness decline on average with inventor age. A similar pattern was found for performance in teams based on the average age of inventors in the team. Exploration of age diversity showed that teams with a wider age range had patents that are slightly more important (i.e., with more forward citations). The findings have the potential to advance scholarship on the life course of innovation with implications for workplace policies.
    JEL: O31 O34
    Date: 2021–05
  12. By: Pengfei Han; Zhu Wang
    Abstract: Paying with a mobile phone is a cutting-edge innovation transforming the global payments industry. However, some advanced economies like the U.S. are lagging behind in mobile payment adoption. We construct a dynamic model with sequential payment innovations to explain this puzzle, which uncovers how advanced economies' past success in adopting card-payment technology holds them back in the mobile-payment race. Our calibrated model matches the cross-country adoption patterns of card and mobile payments and also explains why advanced and developing countries favor different mobile payment solutions. Based on the model, we conduct several quantitative exercises for welfare and policy analyses.
    Keywords: Technology adoption; Sunk cost; Payment system
    JEL: E4 G2 O3
    Date: 2021–03–01

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