nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒10‒11
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The struggle of small firms to retain high-skill workers: Job duration and importance of knowledge intensity By Hugo Castro-Silva; Francisco Lima
  2. Structural Change and Productivity Growth in Europe - Past, Present and Future By Georg Duernecker; Miguel Sanchez-Martinez
  3. Creative Destruction, Distance to Frontier, and Economic Development By Michael Peters; Fabrizio Zilibotti
  4. Do Targeted R&D Grants Towards Potential Highgrowth Firms Increase Employment and Demand for High Human Capital Workers? By Daunfeldt, Sven-Olov; Halvarsson, Daniel; Gustavsson Tingvall, Patrik; McKelvie, Alexander
  5. Geography of Science: Competitiveness and Inequality By Aurelio Patelli; Lorenzo Napolitano; Giulio Cimini; Andrea Gabrielli
  6. Is high-speed rail green? Evidence from a quasi-natural experiment in China By Nie, Ling; Zhang, ZhongXiang
  7. Structural Transformation of Occupation Employment By Georg Duernecker; Berthold Herrendorf
  8. Tracing Value Added in the Presence of Foreign Direct Investment By Zhi Wang; Shang-Jin Wei; Xinding Yu; Kunfu Zhu
  9. Routine-biased technical change can fail: Evidence from France By Fana Marta; Giangregorio Luca
  10. Universal Database for Economic Complexity By Aurelio Patelli; Andrea Zaccaria; Luciano Pietronero
  11. Public Charging Infrastructure and Electric Vehicles in Norway By Schulz, Felix; Rode, Johannes

  1. By: Hugo Castro-Silva (Universidade de Lisboa); Francisco Lima (Universidade de Lisboa)
    Abstract: In the knowledge economy, skilled workers play an important role in innovation and economic growth. However, small firms may not be able to keep these workers. We study how the knowledge-skill complementarity relates to job duration in small and large firms, using a Portuguese linked employer-employee data set. We select workers displaced by firm closure and estimate a discrete-time hazard model with unobserved heterogeneity on the subsequent job relationship. To account for the initial sorting of displaced workers to firms, we introduce weights in the model according to the individual propensity of employment in a small firm. Our results show a lower premium on skills in terms of job duration for small firms. Furthermore, we find evidence of a strong knowledge-skill complementarity in large firms, where the accumulation of firm-specific human capital also plays a more important role in determining the hazard of job separation. For small firms, the complementarity does not translate into longer job duration, even for those with pay policies above the market. Overall, small knowledge-intensive firms struggle to retain high skill workers and find it harder to leverage the knowledge-skill complementarity.
    Keywords: knowledge intensity, technology, firm size, small firms, job duration, skills
    JEL: A1
    Date: 2021
  2. By: Georg Duernecker; Miguel Sanchez-Martinez
    Abstract: This paper studies the effect of structural change on the historical path of aggregate labor productivity growth for a large sample of European countries, and it builds a quantitative multi-sector growth model to analyze the potential impact that structural change may have on future productivity growth. We document that the observed reallocation of economic activity since the 1970s towards the service sector has exerted a strongly negative effect on aggregate productivity growth in most European countries. Moreover, we perform a quantitative analysis to show that the expected path of structural change might continue to have a sizable dent on future productivity growth in Europe. By contrast, the impact in the U.S. is expected to rapidly diminish. We show that this differential result can be explained by the large expansion, in Europe, of certain service sub-sectors characterized by stagnant productivity.
    Keywords: structural change, productivity growth, Baumol’s cost disease, service sector, European Union
    JEL: O41 O47 O52
    Date: 2021
  3. By: Michael Peters; Fabrizio Zilibotti
    Abstract: We construct a model of creative destruction with endogenous firm dynamics. We integrate the theory into a general equilibrium multi-country model of technological convergence where countries interact via international spillovers. We derive implications for both firm dynamics and aggregate productivity dynamics. In richer economies, firms are on average larger and the best firms grow larger over time. In poorer economies, there is little creative destruction, low selection, and firms remain small. We estimate the parameters of the model using firm-level data for India and the United States. We study the effect of counterfactual policy reforms. Industrial policy that selectively targets the more productive firms can be beneficial in poor countries while being harmful in countries close to the economic frontier. The findings echo Acemoglu et al. (2006).
    JEL: O12 O4 O43
    Date: 2021–10
  4. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Halvarsson, Daniel (the Ratio Institute); Gustavsson Tingvall, Patrik (Södertörn University Stockholm, Sweden); McKelvie, Alexander
    Abstract: Most previous studies on the employment effects of government R&D grants targeting SMEs are characterized by data-, measurement-, and selection problems, making it difficult to construct a relevant control group of firms that did not receive a R&D grant. We investigate the effects on employment and firm-level demand for high human capital workers of two Swedish programs targeted towards growth-oriented SMEs using Coarsened Exact Matching. Our most striking result is the absence of any statistically significant effects. We find no robust evidence that the targeted R&D grant programs had any positive and statistically significant effects on the number of employees recruited into these SMEs, or that the grants are associated with an increase in the demand for high human capital workers. The lack of statistically significant findings is troublesome considering that government support programs require a positive impact to cover the administrative costs associated with these programs.
    Keywords: Innovation policy; R&D grants; Matching grants; Statistical matching methods; High human capital; Firm growth; Outcome additionality
    JEL: H81 L25 L26 O38
    Date: 2021–10–01
  5. By: Aurelio Patelli; Lorenzo Napolitano; Giulio Cimini; Andrea Gabrielli
    Abstract: Using ideas and tools of complexity science we design a holistic measure of \textit{Scientific Fitness}, encompassing the scientific knowledge, capabilities and competitiveness of a research system. We characterize the temporal dynamics of Scientific Fitness and R\&D expenditures at the geographical scale of nations, highlighting patterns of similar research systems, and showing how developing nations (China in particular) are quickly catching up the developed ones. Down-scaling the aggregation level of the analysis, we find that even developed nations show a considerable level of inequality in the Scientific Fitness of their internal regions. Further, we assess comparatively how the competitiveness of each geographic region is distributed over the spectrum of research sectors. Overall, the Scientific Fitness represents the first high quality estimation of the scientific strength of nations and regions, opening new policy-making applications for better allocating resources, filling inequality gaps and ultimately promoting innovation.
    Date: 2021–10
  6. By: Nie, Ling; Zhang, ZhongXiang
    Abstract: Existing studies have investigated the environmental dividends of substituting high-speed rail for other energy-intensive vehicles from an engineering standpoint, but they have yet to explore the economic effects of high-speed rail and the associated carbon emission reduction benefits. To fill the research gap, we use panel data from 285 Chinese cities between 2004 and 2014, and employ a difference-in-difference model to empirically examine the impact of high-speed rail opening on CO2 emissions. Our results show that the opening of high-speed rail reduces local carbon emissions significantly. This finding is robust and is unaffected by outliers, control group selection, time trends, geography and expectation factors, or endogeneity. The mechanism test reveals that the structure, innovation, and FDI effects are three intermediate influence channels. Further research finds that the emission reduction benefit rises as the intensity of high-speed rail opening climbs the ladder, and high-speed rail service has a spillover effect within an 80-kilometer radius. Moreover, the carbon benefit of the Beijing-Shanghai high-speed rail line far surpasses its carbon footprint, indicating that the line is green. Based on these findings, we recommend that China should support the expansion of high-speed rail in order to reduce carbon emissions in a scientific and responsible manner.
    Keywords: Environmental Economics and Policy
    Date: 2021–10–06
  7. By: Georg Duernecker; Berthold Herrendorf
    Abstract: We use census data to show that structural transformation reflects a fundamental reallocation of labor from goods to services, instead of a relabelling that occurs when goods-producing firms outsource their in-house service production. The novelty of our approach is that it categorizes labor by occupations, which are invariant to outsourcing. We find that the reallocation of labor from goods-producing to service-producing occupations is a robust feature in censuses from around the world and different time periods. To understand the underlying forces, we propose a tractable model in which uneven occupation-specific technological change generates structural transformation of occupation employment.
    Keywords: biased technological change, occupations, outsourcing, structural transformation
    JEL: O11 O14
    Date: 2021
  8. By: Zhi Wang; Shang-Jin Wei; Xinding Yu; Kunfu Zhu
    Abstract: We develop a unified framework to trace value added along global supply chains in the presence of foreign direct investment by decomposing either GDP based on forward linkages or final production based on backward linkages. The new framework accounts for the presence of foreign invested enterprises (FIEs), their interactions with local firms in the host countries as well as their activities in international trade. The size of the GVC activities identified with this framework roughly doubles that in the previous literature that treats FIEs the same as local firms. The “missing GVC activities” are more serious for high-tech sectors than for those with a lower R&D intensity, and more serious for high-income economies than for middle-income economies.
    JEL: F1
    Date: 2021–10
  9. By: Fana Marta (European Commission – JRC); Giangregorio Luca (University Pompeu Fabra)
    Abstract: The paper studies the determinants of wage differentials over time within jobs in France, detailing the contribution of different set of explanatory factors by means of a Recentred Influence Function, to estimate the effect of a set of covariates at different point of the wage distribution. We simultaneously test the contribution of tasks performed by workers and organisational methods at the firm level, labour market institutions and individual characteristics. We do so by exploiting a unique database at the worker level, the French Enquête Complémentaire Emploi: Conditions de travail, between 2005 and 2016, which covers also monthly wages. Main findings support the hypothesis according to which wages differentials along the wage distribution are almost entirely explained by contractual and work arrangements rather than tasks and organisational practices. Overall evidence run against the main argument of the Routine Bias Technical Change hypothesis.
    Keywords: wage differentials, Recentred Influence Function, Routine Bias Technical Change
    Date: 2021–09
  10. By: Aurelio Patelli; Andrea Zaccaria; Luciano Pietronero
    Abstract: We present an integrated database suitable for the investigations of the Economic development of countries by using the Economic Fitness and Complexity framework. Firstly, we implement machine learning techniques to reconstruct the database of Trade of Services and we integrate it with the database of the Trade of the physical Goods, generating a complete view of the International Trade and denoted the Universal database. Using this data, we derive a statistically significant network of interaction of the Economic activities, where preferred paths of development and clusters of High-Tech industries naturally emerge. Finally, we compute the Economic Fitness, an algorithmic assessment of the competitiveness of countries, removing the unexpected misbehaviour of Economies under-represented by the sole consideration of the Trade of the physical Goods.
    Date: 2021–10
  11. By: Schulz, Felix; Rode, Johannes
    Abstract: We study whether public charging infrastructure drives battery electric vehicle adoption. Our analysis is based on granular, annual information on the location of public charging infrastructure and the battery electric vehicle ownership rate across 356 Norwegian LAU-2 municipalities between 2009 and 2019. We focus on areas in which the first public charging infrastructure was installed in this time period. In these mostly rural areas, the establishment of a first public charging station initiated adoption. We find, on average, an increase of the local electric vehicle ownership rate by 1.5 percentage points or 200% over 5 years. Our results are robust to anticipatory effects. They also remain unaffected from different treatment thresholds: the median number of public chargers in a municipality between 2009 and 2019 or the median density of public charging points per 1,000 inhabitants in the same time frame. While we cannot fully rule out reverse effects, we identify public charging infrastructure to serve as a stimulus to the diffusion of battery electric vehicles.
    Date: 2021

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