nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒09‒27
eighteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Green technologies, complementarities, and policy By Nicolò Barbieri; Alberto Marzucchi; Ugo Rizzo
  2. Employment quality, economic performance and wages in Europe. Exploring the virtuous circle By Pianta, Mario; Reljic, Jelena
  3. Human Resources in Europe. Estimation, Clusterization, Machine Learning and Prediction By Leogrande, Angelo; Costantiello, Alberto
  4. Robots and Labor Regulation: A Cross-Country/Cross-Industry Analysis By Silvio Traverso; Massimiliano Vatiero; Enrico Zaninotto
  5. The reassuring effect of firms' technological innovations on workers' job insecurity By Caselli, Mauro; Fracasso, Andrea; Marcolin, Arianna; Scicchitano, Sergio
  6. Zoom in, zoom out: A shift-share analysis of productivity in Switzerland based on micro data By Jean-Marie Grether; Benjamin Tissot-Daguette
  7. Intangible Capital and Labor Productivity Growth: Revisiting the Evidence By Roth, Felix; Sen, Ali
  8. Are Industrial Robots a new GPT? A Panel Study of Nine European Countries with Capital and Quality-adjusted Industrial Robots as Drivers of Labour Productivity Growth By Kariem Soliman
  9. Multinationals, innovation and institutional context: IPR protection and distance effects By Bruno, Randolph L.; Crescenzi, Riccardo; Estrin, Saul; Petralia, Sergio
  10. Intangibles and industry concentration: Supersize me By Matej Bajgar; Chiara Criscuolo; Jonathan Timmis
  11. Simulating Endogenous Global Automation By Seth G. Benzell; Laurence J. Kotlikoff; Guillermo LaGarda; Victor Yifan Ye
  12. The Long-Term Effects of Industrial Policy By Jaedo Choi; Andrei A. Levchenko
  13. Matching Workers' Skills and Firms' Technologies: From Bundling to Unbundling By Philippe Choné; Francis Kramarz
  14. The Rise of Scientific Research in Corporate America By Ashish Arora; Sharon Belenzon; Konstantin Kosenko; Jungkyu Suh; Yishay Yafeh
  15. Institutions, Holdup and Automation By Presidente, Giorgio
  16. Routine-Biased Technological Change Does Not Always Lead to Polarisation: Evidence from 10 OECD Countries, 1995-2013 By Matthias Haslberger
  17. Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China By Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
  18. Population growth and automation density: theory and cross-country evidence By Ana Lucia Abeliansky; Klaus Prettner

  1. By: Nicolò Barbieri (Department of Economics and Management, University of Ferrara, Ferrara, Italy); Alberto Marzucchi (Gran Sasso Science Institute, Social Sciences, L’Aquila, Italy); Ugo Rizzo (Department of Mathematics and Computer Science, University of Ferrara, Ferrara, Italy)
    Abstract: The present study explores the technological complementarities between green and non-green inventions. First, we look at whether inventive activities in climate-friendly domains depend on patenting in related technological domains that are not green. Based on patent data filed over the 1978–2014 period, we estimate a spatial autoregressive model using co-occurrence matrices to capture technological interdependencies. Our first finding highlights that the development of green technologies strongly relies on advances in other green and in particular non-green technological domains, whose relevance for the green economy is usually neglected. Building on this insight, we detect the non-green complementary technologies that co-occur with green ones and assess whether environmental policies affect this particular instantiation of technologies at the country level. The results of the instrumental variable approach confirm that while environmental policies spur green patenting, they do not displace the development of the non-green technological pillars upon which green inventions develop.
    Keywords: Green technology, patent data, environmental policy, network-dependent innovation
    JEL: H23 O31 Q58 Q55
    Date: 2021–09
  2. By: Pianta, Mario; Reljic, Jelena
    Abstract: This paper investigates the existence of a virtuous circle between industries’ employment quality, the ability to introduce new products, increase labour productivity and pay higher wages. We first present descriptive evidence of these trends in Europe. We then develop a simultaneous four-equation model investigating empirically four related variables: first, the rise of non-standard work as a proxy of low employment quality; second, the success of firms in translating their R&D efforts into new products and services; third, labour productivity growth driven by technological activities; fourth, wage increases and the factors supporting their rise. The model is tested empirically for 41 manufacturing and service sectors of six European economies (Germany, France, Italy, Spain, the Netherlands, and the UK) over the period 1996-2016. The findings provide novel evidence of mutually reinforcing relationships, where higher employment quality complements technological activities, leading to more product innovations that increase productivity growth. In turn, the latter allows wage increases that contribute to higher employment quality, resulting in a good jobs-high innovation virtuous circle.
    Keywords: Non-standard work, Product Innovation, Labour productivity, Wages, Virtuous circles, European industries
    JEL: J23 J24 J31 J50 L6 L8 O31 O33 O52
    Date: 2021–09–19
  3. By: Leogrande, Angelo; Costantiello, Alberto
    Abstract: We estimate the relationships between innovation and human resources in Europe using the European Innovation Scoreboard of the European Commission for 36 countries for the period 2010-2019. We perform Panel Data with Fixed Effects, Random Effects, Pooled OLS, Dynamic Panel and WLS. We found that Human resources is positively associated to “Basic-school entrepreneurial education and training”, “Employment MHT manufacturing KIS services”, “Employment share Manufacturing (SD)”, “Lifelong learning”, “New doctorate graduates”, “R&D expenditure business sector”, “R&D expenditure public sector”, “Tertiary education”. Our results also show that “Human Resources” is negatively associated to “Government procurement of advanced technology products”, “Medium and high-tech product exports”, “SMEs innovating in-house”, “Venture capital”. In adjunct we perform a clusterization with k-Means algorithm and we find the presence of three clusters. Clusterization shows the presence of Central and Northern European countries that has higher levels of Human Resources, while Southern and Eastern Europe has very low degree of Human Resources. Finally, we use seven machine learning algorithms to predict the value of Human Resources in Europe Countries using data in the period 2014-2021 and we show that the linear regression algorithm performs at the highest level.
    Keywords: Innovation and Invention: Processes and Incentives, Management of Technological Innovation and R&D, Technological Change: Choices and Consequences, Diffusion Processes Intellectual Property and Intellectual Capital, Open Innovation, Government Policy.
    JEL: O30 O31 O32 O33 O34 O38
    Date: 2021–09
  4. By: Silvio Traverso; Massimiliano Vatiero; Enrico Zaninotto
    Abstract: This work discusses and empirically investigates the relationship between labor regulation and robotization. In particular, the empirical analysis focuses on the relationship between the discipline of workers’ dismissal and the adoption of indus- trial robots in nineteen Western countries over the 2006–2016 period. We find that high levels of statutory employment protection have been negatively associated with robot adoption, suggesting that labor-friendly national legislations, by increasing adjustment costs (such as firing costs), and thus making investment riskier, provide less favorable environments for firms to invest in industrial robots. We also find, however, that the correlation is positively mediated by the sectoral levels of capital intensity, a hint that firms do resort to industrial robots as potential substitutes for workers to reduce employees’ bargaining power and to limit their hold-up opportu- nities, which tend to be larger in sectors characterized by high levels of operating leverage.
    Keywords: Robot adoption, Labor regulation, Hold-up
    JEL: K31 O31
    Date: 2021
  5. By: Caselli, Mauro; Fracasso, Andrea; Marcolin, Arianna; Scicchitano, Sergio
    Abstract: We analyse how the adoption of technological innovations correlates with workers' perceived levels of job insecurity, and what factors mediate such relationship, by exploiting a recent, large and dedicated survey distributed to a representative sam- ple of Italian workers. The dedicated survey allows us to look at both cognitive and affective job insecurity as well as different technological innovations actually adopted by the companies where the workers are employed. The results show that the adoption of technological innovations by companies is related to a reduction in the level of job insecurity perceived by their workers and suggest that technological innovation is perceived by active workers as a signal of firms' health and of their commitment to preserving the activity. We also find that the reassuring effect of technological innovations is differentiated across companies and workers, due to the mediating role played by a number of factors, such as specific training and signifi- cant changes in workers' usual activities.
    Keywords: job insecurity,technology,innovation,automation
    JEL: J28 O33
    Date: 2021
  6. By: Jean-Marie Grether; Benjamin Tissot-Daguette
    Abstract: Using novel data on value added in Switzerland we propose to use a growth rate decomposition technique, in the spirit of shift-share analysis, to analyze the patterns of regional competitiveness over the 2011-2015 period. The growth differential of a region (or canton) depends on four terms, three structural effects and one competitive effect. The competitive effect turns out to be the dominant force at a high level of aggregation. An interesting pattern of structural effects unveils when working at a lower level of aggregation, allowing for identification of the leaders and laggers across regions and sectors.
    Keywords: firm-level, productivity, shift-share, structural and competitive effects, Switzerland.
    JEL: R11 R32
    Date: 2021–09
  7. By: Roth, Felix; Sen, Ali
    Abstract: This contribution analyzes the impact of intangible capital on labor productivity growth across countries at the aggregate and sectoral levels by employing an econometric growth-accounting approach. First, our results show that intangible capital deepening accounts for around 40 percent of labor productivity growth at both the aggregate and sectoral level. Second, we find that this positive impact of intangible capital on productivity growth at both levels of aggregation is driven by investments in economic competencies, the only intangible group not covered in the national accounts. Third, our results reveal deep sectoral heterogeneities regarding investments and productivity effects of different intangible types. These findings have important implications for future EU industrial policies and are directly relevant to the EU's efforts to close its productivity gap with the US.
    Keywords: intangible capital,labor productivity growth,cross-country sectoral panel analysis,manufacturing,market services,EU
    JEL: C23 E22 L16 L60 L80 O47 O52
    Date: 2021
  8. By: Kariem Soliman (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: In recent years, the interest in the field of economic research in studying the effect of robots on economic outcomes, i.e., labour productivity, labour demand and wages, has increased from an individual country perspective as well as for country groups. By using a fixed effects panel modeling approach, this study of nine robot intensive European countries shows that the core characteristics of a general purpose technology (GPT) are already satisfied by industrial robots. In 2019, seven countries in the panel, i.e. Germany, Italy, France, Spain and the UK (top 5), Sweden (7th) and Austria (10th) - in terms of operational stocks - were among the top 10 of robot using European countries (excl. Turkey). Following the understanding of a GPT of Bresnahan/Trajtenberg (1995), six panel regression models were estimated and linked to the four main characteristics of a GPT. Accordingly, two new measures are proposed in this paper; the first one is named the Division of Labour (or DoL) and is constructed by building the ratio of labour productivity inside the manufacturing industry to labour productivity across all industries. The second one is the Robot Task Intensity Index (RTII), which accounts for the number of tasks that a robot was used for in different production processes across the nine European countries. A high level of fulfilled tasks implies a higher quality of robot as the number of potential tasks, which the robot can perform, is an important criterion for the quality of that robot. In accordance with the GPT literature, both measures showed the expected (in) significances. At the bottom line, all six models underlined the economic relevance of industrial robots for the nine European countries included in the analysis and give a strong indication that robots can indeed be seen as a new general purpose technology.
    Keywords: Industrial Robots, General Purpose Technology, Labour Productivity Growth, Robot Task Intensity Index (RTII), Fixed Effects Model, EU KLEMS
    JEL: D24 J24 O11 O14 O33
    Date: 2021–09
  9. By: Bruno, Randolph L.; Crescenzi, Riccardo; Estrin, Saul; Petralia, Sergio
    Abstract: We characterise the knowledge production process whereby the inventive capabilities of the firm generate innovation output in highly inventive multinational enterprises (MNEs). We explore the sensitivity of this relationship to the strength of intellectual property rights (IPR) protection across the MNEs R&D subsidiaries. We argue that MNE innovative performance will be enhanced when the firm’s R&D activities are based in locations where IPR protection is stronger. Moreover, when considering the internal geography of the MNEs R&D activities, innovation performance depends on the distance between the home and host country IPR regime. Thus, innovation performance is worse as the difference between home and host IPR regimes increases. Finally, we explore asymmetries in this relationship, in particular that the deterioration is more marked when MNEs locate their R&D activities in host economies with IPR protection significantly less strict than in their home country. We test these ideas using a unique new dataset about the most innovative MNEs in the world, an unbalanced panel of around 900 MNEs observed for the period 2004 to 2013 and find strong support for all our hypotheses.
    Keywords: multinationals; innovation; IPR protection; institutional distance; patents; inventive capabilities; 639633-MASSIVE-ERC-2014-STG; 822781-GROWINPRO; Internal OA fund
    JEL: R14 J01 L81
    Date: 2021–07–19
  10. By: Matej Bajgar (Center for Economic Research and Graduate Education - Economics Institute); Chiara Criscuolo (OECD); Jonathan Timmis (The World Bank)
    Abstract: This paper presents new evidence on the growing scale of big businesses in the United States, Japan, and Europe. It finds broad evidence of rising industry concentration across the majority of countries and sectors over the period 2002 to 2014. Rising concentration is strongly associated with intensive investment in intangibles, particularly innovative assets, software, and data. This relationship appears to be stronger in more globalised and digital-intensive industries. The results are consistent with intangibles disproportionately benefiting large firms and enabling them to scale up and increase market shares. We find nuanced implications of these new business models for competition – rising markups and reduced churning amongst the top firms, but falling industry prices.
    Keywords: Competition, Industry and entrepreneurship, Innovation
    JEL: E22 L1 L25
    Date: 2021–09–22
  11. By: Seth G. Benzell; Laurence J. Kotlikoff; Guillermo LaGarda; Victor Yifan Ye
    Abstract: This paper develops a 17-region, 3-skill group, overlapping generations, computable general equilibrium model to evaluate the global consequences of automation. Automation, modeled as capital- and high-skill biased technological change, is endogenous with regions adopting new technologies when profitable. Our approach captures and quantifies key macro implications of a range of foundational models of automation. In our baseline scenario, automation has a moderate effect on regional outputs and a small effect on world interest rates. However, it has a major impact on inequality, both wage inequality within regions and per capita GDP inequality across regions. We examine two policy responses to technological change -- mandating use of the advanced technology and providing universal basic income to share gains from automation. The former policy can raise a region's output, but at a welfare cost. The latter policy can transform automation into a win-win for all generations in a region.
    JEL: E1 E23 F43 O31 O33 O4 O41
    Date: 2021–09
  12. By: Jaedo Choi; Andrei A. Levchenko
    Abstract: This paper provides causal evidence of the impact of industrial policy on firms' long-term performance and quantifies industrial policy's long-term welfare effects. Using a natural experiment and unique historical data during the Heavy and Chemical Industry (HCI) Drive in South Korea, we find large and persistent effects of firm-level subsidies on firm size. Subsidized firms are larger than those never subsidized even 30 years after subsidies ended. Motivated by this empirical finding, we build a quantitative heterogeneous firm model that rationalizes these persistent effects through a combination of learning-by-doing (LBD) and financial frictions that hinder firms from internalizing LBD. The model is calibrated to firm-level micro data, and its key parameters are disciplined with the econometric estimates. Counterfactual analysis implies that the industrial policy generated larger benefits than costs. If the industrial policy had not been implemented, South Korea's welfare would have been 22-31% lower, depending on how long-lived are the productivity benefits of LBD. Between one-half and two-thirds of the total welfare difference comes from the long-term effects of the policy.
    JEL: O14 O25
    Date: 2021–09
  13. By: Philippe Choné (CREST-ENSAE, Institut Polytechnique de Paris, France); Francis Kramarz (Department of Economics, Uppsala University, Sweden)
    Abstract: How are workers matched to their employing firms when workers have multi-dimensional skills and firms differ in the importance of each such skill for their production function? When workers' skills cannot be unpacked and sold separately on skill-specific markets, the implicit price of each skill varies across firms. The wage function is shown to be log-additive in worker's quality and a firm-specific effect that reflects the firm's chosen aggregate mix of skills and the associated equilibrium matching. When individual skills can be purchased thanks to new technologies and increasing access to outsourcing, temp agencies and other pro-market institutions, firms reinforce their hires of skills in which they have a comparative advantage yielding a more polarized matching equilibrium. Generalist workers - endowed with a balanced set of skills - are shown to benefit whereas specialists are negatively affected by markets opening. We also examine the case when workers or firms pay a fee to an unbundling platform. Then we discuss the empirical content of our model and present some empirical evidence based on this content, using Swedish data sources on workers' skills and their employing firm and occupation. We conclude by pointing connections between our contribution and various literatures.
    Keywords: bundling; multidimensional skills; matching ; sorting; heterogeneous firms; polarization.
    JEL: D20 D40 D51 J20 J24 J30
    Date: 2021–07–20
  14. By: Ashish Arora; Sharon Belenzon; Konstantin Kosenko; Jungkyu Suh; Yishay Yafeh
    Abstract: Corporate science in America emerged in the interwar period, as some companies set up state-of-the-art corporate laboratories, hired trained scientists, and embarked upon basic research of the kind we would associate today with academic institutions. Using a newly assembled dataset on U.S. companies between 1926 and 1940 combining information on corporate ownership, organization, research and innovation, we attempt to explain the rise of corporate research. We argue that it was driven by companies trying to take advantage of opportunities for innovation made possible by scientific advances and an underdeveloped academic research system in the United States. Measuring field-specific scientific backwardness in several different ways, we find that large firms, business group affiliated firms, and firms close to the technological frontier were more likely to initiate scientific research. We also find that companies in monopolistic or concentrated industries were more likely to engage in basic research. Corporate research was positively correlated with novel and valuable patents, and with market-to-book ratios. For companies choosing to do so, investment in corporate research seems to have paid off. The results shed light on the link between corporate organization, market structure and corporate science.
    JEL: N8 N82 O32
    Date: 2021–09
  15. By: Presidente, Giorgio
    Abstract: What drives investment in automation technologies? This paper documents a positive relationship between labor-friendly institutions and investment in industrial robots in a sample of developing and advanced economies. Institutions explain a substantial share of cross-country variation in automation. The relationship between institutions and robots is stronger in sunk cost-intensive industries, where producers are vulnerable to holdup. The result suggests that one reason for producers to invest in automation is to thwart rent appropriation by labor. As a consequence, policies aimed at supporting workers’ welfare by increasing their bargaining power might actually reduce their employment opportunities.
    Keywords: Robots,Institutions,automation,holdup,unions,sunk costs,appropriability,bargaining,frictions,rents,technology adoption
    JEL: O32 O33 L16 J50 O57
    Date: 2021
  16. By: Matthias Haslberger
    Abstract: This article deals with a central paradox in the occupational polarisation literature: most scholars accept that technological change is biased against routine-intensive occupations, but in many countries, we do not see the pattern of occupational polarisation that the theory usually predicts. I argue and show empirically using a dataset of 10 OECD countries between 1995 and 2013 that technological change is both routine-biased and skill-biased, but that the result of routine-biased technological change may be occupational upgrading rather than polarisation. This is due to differences in occupational routine-wage hierarchies: only where routine occupations cluster around the middle of the wage distribution are we likely to see polarisation. Where routine occupations are concentrated near the bottom of the wage hierarchy, upgrading occupational change is the norm. Based on research on the US, the former has been widely assumed, but it does not hold true in all countries. Overall, this article shows that much previous work on routine-biased technological change and polarisation was built on premises that do not travel well. This underscores the importance of comparative research for building and testing robust general theories.
    Date: 2021–08
  17. By: Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
    Abstract: We use household-level panel data from China and a quantitative framework to document the extent and consequences of factor misallocation in agriculture. We find that there are substantial within-village frictions in both the land and capital markets linked to land institutions in rural China that disproportionately constrain the more productive farmers. These frictions reduce aggregate agricultural productivity by affecting two key margins: (1) the allocation of resources across farmers (misallocation) and (2) the allocation of workers across sectors, in particular the type of farmers who operate in agriculture (selection). Selection substantially amplifies the productivity effect of distortionary policies by affecting occupational choices that worsen average ability in agriculture.
    Keywords: agriculture, misallocation, selection, productivity, China
    JEL: O11 O14 O4 E02 Q1
    Date: 2021–09–16
  18. By: Ana Lucia Abeliansky (Department of Economics, Vienna University of Economics and Business); Klaus Prettner (Department of Economics, Vienna University of Economics and Business)
    Abstract: We analyze the effects of declining population growth on automation. Theoretical considerations imply that countries with lower population growth introduce automation technologies faster. We test the theoretical implication on panel data for 60 countries over the time span 1993-2013. Regression estimates support the theoretical implication, suggesting that a 1% increase in population growth is associated with an approximately 2% reduction in the growth rate of robot density. Our results are robust to the inclusion of standard control variables, different estimation methods, dynamic specifications, and changes with respect to the measurement of the stock of robots.
    Keywords: Automation, Industrial Robots, Demographic Change, Declining Fertility
    JEL: J11 O33 O40
    Date: 2021–09

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