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on Technology and Industrial Dynamics |
| By: | Matias Braun; Luis Felipe Cespedes; Sebastian Bustos |
| Abstract: | Productivity differentials have been documented as the main determinant of the variation of income per capita across countries. In this paper, we investigate whether the implementation of innovation-intensive or adoption-intensive business strategies by firms can explain differences in productivity levels and productivity growth across industries and countries. We compute a novel innovation-intensity strategy index for firms, based on textual analysis of financial reports issued in the US by firms from developed and developing countries and from a wide range of industries. We show that the index captures dimensions of the innovation process implemented by firms that go beyond R&D efforts. Our empirical results indicate that firms that pursue an innovation-based strategy exhibit higher productivity levels compared to firms that follow an adoption-based strategy. Nonetheless, the optimal business strategy depends on the distance to the world technology frontier. Firms far from the frontier grow faster when implementing an adoption-based strategy, but an innovation-based strategy better suits firms closer to the technological frontier. We provide evidence indicating that a country’s financial market sophistication, competition policy and innovation capabilities –such as educational level, availability of scientists and engineers, and intellectual property protection– are key determinants of the strategy implemented by firms. The empirical evidence suggests that middle-income traps may occur if competition policy, innovation capabilities and financial market sophistication are not enhanced as a country moves closer to the technology frontier. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp522&r= |
| By: | Hötte, Kerstin; Jee, Su Jung; Srivastav, Sugandha |
| Abstract: | Technologies help adapt to climate change but little systematic research about these technologies and their interaction with mitigation exists. We identify climate change adaptation technologies (CCATs) in US patent data to study the technological frontier in adaptation. We find that patenting in CCATs was roughly stagnant over the past decades. CCATs form two main clusters: (1) science-intensive CCATs related to agriculture, health and monitoring technologies; and (2) engineering-based for coastal, water and infrastructure adaptation. 25% of CCATs help in climate change mitigation, and we infer that synergies can be maximized through well designed policy. CCATs rely more on public R&D than other inventions, and CCAT patents are citing more science over time, indicating a growing relevance of research as a knowledge source for innovation. Policymakers can use these results to get greater clarity on where R&D support for CCATs can be directed. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:amz:wpaper:2021-19&r= |
| By: | Carvalho, Vasco M. (University of Cambridge); Draca, Mirko (University of Warwick and CAGE); Kuhlen, Nikolas (University of Cambridge and The Alan Turing Institute) |
| Abstract: | How do firms and inventors move through ‘knowledge space’ as they develop their innovations? We propose a method for tracking patterns of ‘exploration and exploitation’ in patenting behaviour in the US for the period since 1920. Our exploration measure is constructed from the text of patents and involves the use of ‘Bayesian Surprise’ to measure how different current patent-based innovations are from existing portfolios. Our results indicate that there are distinct ‘life-cycle’ patterns to firm and inventor exploration. Furthermore, exploration activity is more geographically concentrated than general patenting, but this concentration is centred outside the main hubs of patenting. |
| Keywords: | JEL Classification: |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:575&r= |
| By: | Genz, Sabrina; Schnabel, Claus |
| Abstract: | While numerous studies have analyzed the aggregate employment effects of digital technologies, this paper focuses on the employment development of individual workers exposed to digitalization. We use a unique linked employer-employee data set for Germany and a direct measure of the first-time introduction of cutting-edge digitalization technologies in establishments between 2011 and 2016. Applying a matching approach, we compare workers in establishments investing in digital technologies with similar employees in establishments that do not make such an investment. We find that the employment stability of incumbent workers is lower in investing than non-investing establishments, but most displaced workers easily find jobs in other firms, and differences in days in unemployment are small. We also document substantial heterogeneities in the employment effects across skill groups, occupational tasks performed, and gender. Employment reactions to digitalization are most pronounced for both low- and high-skilled workers, for workers with non-routine tasks, and for female workers. Our results underline the importance of tackling the impending digital divide among different groups of workers. |
| Keywords: | digitalization,employment,separations,skills,tasks |
| JEL: | J21 J63 O33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:042021&r= |
| By: | Lafond, François; Goldin, Ian; Koutroumpis, Pantelis; Winkler, Julian |
| Abstract: | We review recent research on the slowdown of labor productivity and examine the contribution of different explanations to this decline. Comparing the post-2005 period with the preceding decade for 5 advanced economies, we seek to explain a slowdown of 0.8 to 1.8pp. We trace most of this to lower contributions of TFP and capital deepening, with manufacturing accounting for the biggest sectoral share of the slowdown. No single explanation accounts for the slowdown, but we have identified a combination of factors which taken together account for much of what has been observed. In the countries we have studied, these are mismeasurement, a decline in the contribution of capital per worker, lower spillovers from the growth of intangible capital, the slowdown in trade, and a lower growth of allocative efficiency. Sectoral reallocation and a lower contribution of human capital may also have played a role in some countries. In addition to our quantitative assessment of explanations for the slowdown, we qualitatively assess other explanations, including whether productivity growth may be declining due to innovation slowing down. |
| JEL: | O40 E66 D24 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:amz:wpaper:2021-12&r= |
| By: | Parag Mahajan |
| Abstract: | This paper finds that establishment entry and exit—particularly the prevention of establishment exit—drive immigrant absorption and immigrant-induced productivity increases in U.S. local industries. Using a comprehensive collection of confidential survey and administrative data from the Census Bureau, it shows that inflows of immigrantworkers lead to more establishment entry and less establishment exit in local industries. These relationships are responsible for nearly all of long-run immigrant-induced job creation, with 78 percent accounted for by exit prevention alone, leaving a minimal role for continuing establishment expansion. Furthermore, exit prevention is not uniform: immigrant inflows increase the probability of exit by establishments from low productivity firms and decrease the probability of exit by establishments from high productivity firms. As a result, the increase in establishment count is concentrated at the top of the productivity distribution. A general equilibrium model proposes a mechanism that ties immigrantworkers to high productivity firms and shows how accounting for changes to the firm productivity distribution can yield substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand. |
| Keywords: | Immigration, Business Dynamics, Job Creation, Productivity, Firm Heterogeneity |
| JEL: | J23 J61 L11 F22 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:21-18&r= |
| By: | Alexander S. Kritikos (DIW Berlin, University of Potsdam, IZA Bonn, IAB Nuremberg); Alexander Schiersch (DIW Berlin); Caroline Stiel (DIW Berlin) |
| Abstract: | In Germany, the productivity of professional services, a sector dominated by micro and small firms, declined by 40 percent between 1995 and 2014. This productivity decline also holds true for professional services in other European countries. Using a German firm-level dataset of 700,000 observations between 2003 and 2017, we analyze this largely uncovered phenomenon among professional services, the 4th largest sector in the EU15 business economy, which provide important intermediate services for the rest of the economy. We show that changes in the value chain explain about half of the decline and the increase in part-time employment is a further minor part of the decline. In contrast to expectations, the entry of micro and small firms, despite their lower productivity levels, is not responsible for the decline. We also cannot confirm the conjecture that weakening competition allows unproductive firms to remain in the market. |
| Keywords: | business services, labor productivity, productivity slowdown |
| JEL: | L84 O47 D24 L11 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:37&r= |
| By: | Alvedalen, Janna (CIRCLE, Lund University); Carlsson, Bo (Case Western Reserve University) |
| Abstract: | Entrepreneurial ecosystem (EE) is a popular concept in entrepreneurship studies that describes all actors and the interaction between actors in a specific geographical area. While studies have focused on a single case, this paper explores and compares the nature of five EEs in Life Sciences in Sweden and the US, based on own data collection in all five areas. The paper outlines commonalities and differences between how EEs operate and function in different territorial contexts. It also explores how national and local factors influence the rate and nature of entrepreneurship at the regional level. The paper shows how important it is to take a territorial perspective on EE, because EEs look different in distinct geographical and institutional contexts. |
| Keywords: | Entrepreneurial Ecosystem; Life Sciences; Sweden; US |
| JEL: | L26 M21 O33 |
| Date: | 2021–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2021_010&r= |
| By: | Bornali Bhandari; Tulika Bhattacharya (National Council of Applied Economic Research) |
| Abstract: | The Economic Surveys (2014–15 and 2015–16) have, over the years, stressed on the need to create jobs to meet the needs of a burgeoning population. However, the question as to which sector has the most potential to create jobs and at what level have often been left unanswered. The objective of this paper is to identify the sectors of the Indian economy that are able to generate different types of skilled employment, both directly as well indirectly, by estimating their employment linkage effects with varying levels of skills using the Input– Output technique. The contribution of this paper is that it re-defines skills by combining three types of education, including general, vocational and technical education, and thus defines four types of skilled employment categories—low skilled, low-medium skilled, medium-high skilled, and high skilled employment. The paper incorporates these four types of skilled employment within the Input–Output framework, using the World Input–Output Database (WIOD), and estimates the forward and backward linkage effects related to employment with respect to four different skill types for India. The estimation of these employment linkage effects is critical to identify the key employment-generating sectors in the Indian economy with varying levels of skill. The study also urges policymakers to boost some select sectors in order to enhance different types of employment, thus proposing a way to take forward the ‘Skill India Mission’. |
| Keywords: | Employment, India, Jobs, Input-output model, Skills |
| JEL: | C67 I29 J21 J23 J24 O1 O53 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nca:ncaerw:120&r= |
| By: | Jan Bena; Isil Erel; Daisy Wang; Michael S. Weisbach |
| Abstract: | Inducing firms to make specialized investments through bilateral contracts can be challenging because of potential hold- up problems. Such contracting difficulties have long been argued to be an important reason for acquisitions. To evaluate the extent to which this motivation leads to mergers, we perform a textual analysis of the patents filed by the same lead inventors of the target firms before and after the mergers. We find that patents of inventors from target firms become 28.9% to 46.8% more specific to those of acquirers’ inventors following completed mergers, benchmarked against patents filed by targets and a group of counterfactual acquirers. This pattern is stronger for vertical mergers that are likely to require specialized investments. There is no change in the specificity of patents for mergers that are announced but not consummated. Overall, we provide empirical evidence that contracting issues in motivating specialized investment can be a motive for acquisitions. |
| JEL: | G34 L14 L22 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29174&r= |
| By: | Hermo, Santiago (Brown University); Päällysaho, Miika (Dept. of Economics, Stockholm University); Seim, David (Dept. of Economics, Stockholm University); Shapiro, Jesse (Brown University) |
| Abstract: | A large literature in cognitive science studies the puzzling “Flynn effect” of rising fluid intelligence (reasoning skill) in rich countries. We develop an economic model in which a cohort’s mix of skills is determined by different skills’ relative returns in the labor market and by the technology for producing skills. We estimate the model using administrative data from Sweden. Combining data from exams taken at military enlistment with earnings records from the tax register, we document an increase in the relative labor market return to logical reasoning skill as compared to vocabulary knowledge. The estimated model implies that changes in labor market returns explain 36 percent of the measured increase in reasoning skill, and can also explain the decline in knowledge. An original survey of parents, an analysis of trends in school curricula, and an analysis of occupational characteristics show evidence of increasing emphasis on reasoning as compared to knowledge. |
| Keywords: | Flynn effect; IQ; skill investment; human capital; administrative data |
| JEL: | J24 J31 O52 |
| Date: | 2021–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2021_0002&r= |