nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒11‒01
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Skill-biased acquisitions? Human capital and target employee mobility in small technology firms By Xiao, Jing; Lindholm Dahlstrand, Åsa
  2. Firm Entry and Exit and Aggregate Growth By Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl
  3. AgriLOVE: agriculture, land-use and technical change in an evolutionary, agent-based model. By Jonathan Taglialatela; Andrea Mina
  4. Population Growth and Automation Density: Theory and CrossCountry Evidence By Ana Lucia Abeliansky; Klaus Prettner
  5. Demographic change, secular stagnation and inequality: automation as a blessing? By Arthur Jacobs; Freddy Heylen
  6. Scrapping, Renewable Technology Adoption, and Growth By Bernardino Adão; Borghan Narajabad; Ted Temzelides
  7. The Determinants of Competitive Advantage: Capability vs. Industry Structure By Harada, Tsutomu; Hiramine, Yoshiki
  8. How did China rise its manufacturing domestic value added in exports through GVC moving up? By Ping Hua
  9. The Human Side of Structural Transformation By Tommaso Porzio; Federico Rossi; Gabriella V. Santangelo
  10. Changing GVC in Post-Pandemic Asia: Korea, China and Southeast Asia By Keun Lee; Taeyoung Park

  1. By: Xiao, Jing (CIRCLE, Lund University); Lindholm Dahlstrand, Åsa (CIRCLE, Lund University)
    Abstract: The purpose of this study is to investigate the relationship between acquisitions and mobility of knowledge workers and managers in small technology companies and how individual skills and capabilities moderate the relationship. Relying on the matched employer-employee data of the Swedish high-tech sectors from 2007 to 2015, we find that acquisitions increase the likelihood of employee departures, mainly in the form of switching to another employer, but that these acquisition effects are weaker for employees with technological competences. Moreover, we also find that managers, compared to other employees, are more likely to exit from the (national) labor market after acquisitions. Our results show that acquiring firms tend to gain access to and retain knowledge workers with engineering background.
    Keywords: Acquisitions; Target employee mobility; High-tech sectors; Knowledge workers; Technological capabilities; Managerial capabilities
    JEL: C23 G34 J63 L26
    Date: 2021–10–22
  2. By: Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl
    Abstract: Applying the Foster, Haltiwanger and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea.
    Keywords: Entry; Exit; Productivity; Entry costs; Barriers to technology adoption
    JEL: E22 O10 O38 O47
    Date: 2021–10–19
  3. By: Jonathan Taglialatela; Andrea Mina
    Abstract: The paper focuses on the capital structure of firms in their early years of operation. Through the lens of Pecking Order Theory, we study how the pursuit of innovation influences the reliance of firms on different types of internal and external finance. Panel analyses of data on 7,394 German start-ups show that innovation activities are relevant predictors of the start-ups' revealed preferences for finance, and that the nature of these effects on the type and order of financing sources depends on the degree of information asymmetries specific to research and development activities, human capital endowments, and the market introduction of new products and processes.
    Keywords: Innovation; information asymmetries; start-up; pecking order; entrepreneurial finance.
    Date: 2021–10–23
  4. By: Ana Lucia Abeliansky; Klaus Prettner
    Abstract: We analyse the effects of declining population growth on automation. Theoretical considerations imply that countries with lower population growth introduce automation technologies faster than those with higher population growth. 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 one percent increase in population growth is associated with an approximately two percent 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 measuring robot stocks.
    Keywords: Automation, Industrial Robots, Demographic Change, Declining Fertility
    Date: 2021–10
  5. By: Arthur Jacobs; Freddy Heylen (-)
    Abstract: We construct and calibrate an overlapping generations model incorporating demographic change and the possibility to automate the production process to test the hypothesis put forward by Acemoglu and Restrepo (2017). In line with their hypothesis, we find that ageing is a powerful force stimulating the adoption of automation technologies in OECD economies. Ageing-induced automation is found to soften the negative effects of labour scarcity and rising old-age dependency rates on per capita growth, but the compensation is incomplete. One important reason is that automated tasks are far from perfect substitutes for tasks executed by human labour. A second reason is that ageing-induced automation reduces the intensity of positive behavioural reactions to ageing in the form of retiring later and investing more in human capital. Moreover, the partial compensation comes at the price of rising wage and welfare inequality between individuals of different innate ability level and a fall in the net labour share of income. Compared to existing literature, we pay special attention to the theoretical and empirical foundations of the modelling of automation. Theoretically, our work is the first one testing this hypothesis that relates the approach to automation rigorously to the state-of the-art conception by Acemoglu and Restrepo (2018a; 2018b). Empirically, we tested and largely confirmed the validity of our approach and calibration by comparing model predictions of (changes in) automation density to actual data on robotization in a cross-country fashion.
    Keywords: Automation, Demographic change, Secular stagnation, Overlapping generations model, Robotics, Factor shares
    JEL: E22 E27 J11 J23 J24 J31
    Date: 2021–10
  6. By: Bernardino Adão; Borghan Narajabad; Ted Temzelides
    Abstract: We develop a dynamic general equilibrium integrated assessment model that incorporates scrapping costs due to new technology adoption in renewable energy as well as externalities associated with carbon emissions and renewable technology spillovers. We use world economy data to calibrate our model and investigate the effects of the scrapping channel on renewable energy adoption and on the optimal energy transition. Our calibrated model implies several interesting connections between scrapping costs, the two externalities, policy, and welfare. We investigate the relative effectiveness of two policy instruments-Pigouvian carbon taxes and policies that internalize spillover effects-in isolation as well as in tandem. Our findings suggest that scrapping costs are of quantitative importance for technology adoption and the energy transition. The two policy instruments are better thought of as complements rather than substitutes.
    JEL: H21 O14 O33 Q54 Q55
    Date: 2021
  7. By: Harada, Tsutomu; Hiramine, Yoshiki
    Abstract: The purpose of this study is to investigate the effects of capability and industry structure on competitive advantage in the Japanese economy. We used one of the most comprehensive data sets for Japanese firms compiled by Teikoku Databank. While related literature primarily examined the effects of industry on competitive advantage using industry dummies, this study incorporated more sophisticated measures for industry structure. The results revealed that both capability and industry structure accounted for competitive advantage. Moreover, the opposite effects of industry structure on competitive advantage between competitive and uncompetitive firms were identified. Thus, the results indicate that capability plays a more important role in accounting for competitive advantage than industry structure.
    Keywords: competitive advantage, capability, industry structure
    Date: 2021–10
  8. By: Ping Hua (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Despite its high implication into global value chains (GVCs), the Chinese real domestic value added in exports increased at an annual average growth rate of 14% over the 2000-2016 period and its ratio from 65% to 83%. To understand this evolution, a GVC augmented function of domestic value added in exports is proposed and estimated using panel data of 16 Chinese manufacturing sectors over the 2005-2014 period from OCDE TiVA and WIOD databases. Besides the traditional positive effects of labor productivity, capital intensity and employment on domestic value added in exports, we find that China's GVC positon improvement through withdrawing backward links and increasing forward links exerted positive effects. The negative elasticity of backward links multiplied by the decreasing share of foreign value added and by its indirect productivity effect contributed to increase Chinese domestic value added in exports. This contribution is 3.5 times higher than that of GVC forward links, measured as the product of the positive elasticity of forward links multiplied by the increasing share of exports of intermediate goods embodied to exports of third countries. This successful moving up from low cost labor-intensive processing and assembly to relatively higher value-added intermediated goods decreased the risk of being stuck in low-value-added tasks, while the future one should be much more complicated in the context of increasing trade protectionism.
    Keywords: China,domestic value added,global value chains JEL: F15,F41,F62
    Date: 2021–10–11
  9. By: Tommaso Porzio; Federico Rossi; Gabriella V. Santangelo
    Abstract: We document that nearly half of the global decline in agricultural employment during the 20th-century was driven by new cohorts entering the labor market. A newly compiled dataset of policy reforms supports an interpretation of these cohort effects as human capital. Through the lens of a model of frictional labor reallocation, we conclude that human capital growth, both as a mediating factor and as an independent driver, led to a sharp decline in the agricultural labor supply. This decline accounts, at fixed prices, for 40% of the decrease in agricultural employment. This aggregate effect is roughly halved in general equilibrium.
    JEL: J24 J43 J62 L16 O11 O14 O18 R23
    Date: 2021–10
  10. By: Keun Lee; Taeyoung Park
    Abstract: This paper has provided some overview of the changing GVC in Asia, especially since the outbreak of Covid-19, focusing on the phenomena of reshoring and nearshoring. It first discussed the role of the three factors responsible for changing and shaping GVC in Asia, and they are digitalization with Industry 4.0 since the 2010s, the US-China trade conflict since 2018, and the Covid-19 since 2020. Thus, an emerging trend is that FDI firms in China and Asia are either reshoring their factories back to their home bases or relocating to nearby locations, such as Vietnam and other Southeast Asian economies. These changes are also associated with MNCs¡¯ move to increase the resiliency of their value chains and by the national government to promote domestic jobs by offering incentives to reshoring. Investigating the cases of reshoring involving Korean firms getting out of China or SEA, the paper identifies three types, 1) reshoring of production of labour-intensive products requiring monetary or tax incentives, 2) reshoring getting possible by flattening of GVC by innovation, such as skipping a stage where semi-finished products are processed in foreign countries, and 3) large scale automation or transformation into Smart Factory, which requires considerable investment and innovation capabilities. These cases and typology suggest that effective reshoring requires not just monetary incentives but also technical assistance to realize the potentials for innovation and automation. In the meantime, some FDI firms are moving out of China and relocating into nearby SEA countries mainly for labour-saving reasons and avoiding tariffs imposed by the US on made-in-China products. Such exit from China might mean a new opportunity for SEA, as exemplified by Vietnam receiving many FDI firms out of China. It could be a new opportunity for SEA to overcome the challenges posed by 4IR and keep existing FDI (onshoring) and/or attract new factories getting out of China (nearshoring).
    Keywords: Reshoring; Near-shoring; China; Korea; Southeast Asia; Digital Factory;
    Date: 2021–10

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