nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒12‒06
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Profit Taxation, R&D Spending, and Innovation By Lichter, Andreas; Löffler, Max; Isphording, Ingo E.; Nguyen, Thu-Van; Pöge, Felix; Siegloch, Sebastian
  2. Exposure of occupations to technologies of the fourth industrial revolution By Benjamin Meindl; Morgan R. Frank; Joana Mendon\c{c}a
  3. Is the patent system a level playing field? The effect of patent attorney firms By Gaetan de Rassenfosse; Paul Jensen; T'Mir Julius; Alfons Palangkaraya; Elizabeth Webster
  4. Employment Effects of Environmental Policies – Evidence From Firm-Level Data By Mr. Adil Mohommad
  5. How digital technology affects working conditions in globally fragmented production chains: evidence from Europe. By Aleksandra Parteka; Joanna Wolszczak-Derlacz; Dagmara Nikulin
  6. Colocation of Entrepreneurs and New Firm Survival: Role of New Firm Founder’s Experiential Relatedness to Local Entrepreneurs By Tavassoli, Sam; Jienwatcharamongkhol, Viroj; Arenius, Pia
  7. The human side of productivity: Uncovering the role of skills and diversity for firm productivity By Chiara Criscuolo; Peter Gal; Timo Leidecker; Giuseppe Nicoletti
  8. Technological Progress, Artificial Intelligence, and Inclusive Growth By Mr. Martin Schindler; Mr. Anton Korinek; Joseph Stiglitz
  9. Local access to skill-related high-income jobs facilitates career advancement for low-wage workers By Zoltan Elekes; Anna Baranowska-Rataj; Rikard Eriksson
  10. Labour-saving automation and occupational exposure: a text-similarity measure By Montobbio, Fabio; Staccioli, Jacopo; Virgillito, Maria Enrica; Vivarelli, Marco
  11. Quantitative easing and corporate innovation By Grimm, Niklas; Laeven, Luc; Popov, Alexander
  12. How Does Basic Research Improve Innovation Performance in the World’s Major Pharmaceutical Firms? By Bart Leten; Stijn Kelchtermans; Rene Belderbos

  1. By: Lichter, Andreas (Heinrich Heine University Düsseldorf); Löffler, Max (Maastricht University); Isphording, Ingo E. (IZA); Nguyen, Thu-Van (Stifterverband Essen); Pöge, Felix (Boston University); Siegloch, Sebastian (University of Mannheim)
    Abstract: We study how profit taxation affects plants' R&D spending and innovation activities. Relying on geocoded survey panel data which approximately covers the universe of R&D-active plants in Germany, we exploit around 7,300 changes in the municipal business tax rate over the period 1987–2013 for identification. Applying event study models, we find a negative and statistically significant effect of an increase in profit taxation on plants' R&D spending with an implied long-run elasticity of −1.25. Reductions in R&D are particularly strong among more credit-constrained plants. In contrast, homogeneity of effects across the plant size distribution questions policy makers common practice to link targeted R&D tax incentives to plant size. We further find lagged negative effects on the (citation-weighted) number of filed patents.
    Keywords: corporate taxation, firms, R&D, innovation, patents
    JEL: H25 H32 O31 O32
    Date: 2021–11
  2. By: Benjamin Meindl; Morgan R. Frank; Joana Mendon\c{c}a
    Abstract: The fourth industrial revolution (4IR) is likely to have a substantial impact on the economy. Companies need to build up capabilities to implement new technologies, and automation may make some occupations obsolete. However, where, when, and how the change will happen remain to be determined. Robust empirical indicators of technological progress linked to occupations can help to illuminate this change. With this aim, we provide such an indicator based on patent data. Using natural language processing, we calculate patent exposure scores for more than 900 occupations, which represent the technological progress related to them. To provide a lens on the impact of the 4IR, we differentiate between traditional and 4IR patent exposure. Our method differs from previous approaches in that it both accounts for the diversity of task-level patent exposures within an occupation and reflects work activities more accurately. We find that exposure to 4IR patents differs from traditional patent exposure. Manual tasks, and accordingly occupations such as construction and production, are exposed mainly to traditional (non-4IR) patents but have low exposure to 4IR patents. The analysis suggests that 4IR technologies may have a negative impact on job growth; this impact appears 10 to 20 years after patent filing. Further, we compared the 4IR exposure to other automation and AI exposure scores. Whereas many measures refer to theoretical automation potential, our patent-based indicator reflects actual technology diffusion. Our work not only allows analyses of the impact of 4IR technologies as a whole, but also provides exposure scores for more than 300 technology fields, such as AI and smart office technologies. Finally, the work provides a general mapping of patents to tasks and occupations, which enables future researchers to construct individual exposure measures.
    Date: 2021–10
  3. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Paul Jensen (University of Melbourne); T'Mir Julius (University of Melbourne); Alfons Palangkaraya (Swinburne University of Technology); Elizabeth Webster (Swinburne University of Technology)
    Abstract: The patent system underpins the business model of some of the fastest-growing companies. Used appropriately, it should support frontier technologies and nurture new firms. Used perniciously, it can stifle innovation and protect established technological behemoths. We analyse patent examination decisions at the American, European, Japanese, Korean, and Chinese patent offices and find evidence that patent attorney firms have a surprisingly large role in the patent system. Patent attorney firm quality is most important, vis-Ã -vis invention quality, in less codified and more rapidly changing technology areas such as software and ICT. Moreover, patent attorney firm quality matters more when invention quality is low. Finally, there is a significant inter-patent office variation, with a greater patent attorney firm quality effect at the USPTO.
    Keywords: appropriation; innovation; patent attorney firm; patent system
    JEL: K20 L43 O34
    Date: 2021–11
  4. By: Mr. Adil Mohommad
    Abstract: The employment impact of environmental policies is an important question for policy makers. We examine the effect of increasing the stringency of environmental policy across a broad set of policies on firms’ labor demand, in a novel identification approach using Worldscope data from 31 countries on firm-level CO2 emissions. Drawing on evidence from as many as 5300 firms over 15 years and the OECD environmental policy stringency (EPS) index, it finds that high emission-intensity firms reduce labor demand upon impact as EPS is tightened, whereas low emission-intensity firms increase labor demand, indicating a reallocation of employment. Moreover, tightening EPS during economic contractions appears to have a positive effect on employment, other things equal. Quantifications exercises show modest positive net changes in employment for market-based policies, and modest negative net changes for non-market policies (mainly emission quantity regulations) and for the combined aggregate EPS. Within market-based policies, the percent decline in employment in high-emission firms (correspondingly the increase in low-emission firms) for a unit change in a policy index is smallest (largest) for trading schemes (“green” certificates, and “white” certificates)—although stringency is not comparable across indices. Finally, the employment effects of EPS are not persistent.
    Keywords: IMF working paper research Department; employment effect; emission-intensity firm; policy index; intensity firm; Employment; Environmental policy; Greenhouse gas emissions; Labor demand; Non-renewable resources; Global
    Date: 2021–05–14
  5. By: Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland); Dagmara Nikulin (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This paper uses a sample of over 9.5 million workers from 22 European countries to study the intertwined effects of digital technology and cross-border production links on workers' wellbeing. We compare the social effects of technological change exhibited by three types of innovation: computerisation (software), automation (robots) and artificial intelligence (AI). To fully quantify work-related wellbeing, we propose a new methodology that corrects the information on remuneration by reference to such non-monetary factors as the work environment (physical and social), career development prospects, or work intensity. We show that workers' wellbeing depends on the type of technological exposure. Employees in occupations with high software or robots content face worse working conditions than those exposed to AI. The impact of digitalisation on working conditions depends on participation in global production. To demonstrate this, we estimate a set of augmented models for determination of working conditions, interacting technological factors with Global Value Chain participation. GVC intensification is accompanied by deteriorating working conditions - but only in occupations exposed to robots or software, not in AI-intensive jobs. In other words, we find that AI technologies differ from previous waves of technological progress - also in their impact on workers' wellbeing within global production structures.
    Keywords: digital technologies, working conditions, GVC, Global Value Chains, artificial intelligence, AI
    JEL: F1 F6 J8 O3
    Date: 2021–11
  6. By: Tavassoli, Sam (CIRCLE, Lund University); Jienwatcharamongkhol, Viroj (Blekinge Institute of Technology); Arenius, Pia (RMIT University)
    Abstract: Geographical clustering (colocation) influences new firm survival; however, not all new firms within a cluster are impacted equally. In this paper, we elaborate on how the colocation of local entrepreneurs may have different influences on new firm founder’s learning depending on his/her fit, in terms of his/her experiential relatedness, to that of local entrepreneurs. We then associate such founder’s learning with the higher survival of his/her new firm. We test our hypotheses using a matched founder-firm dataset that covers the population of the knowledge-intensive business service sector in Sweden during 2001-2012. We find support for our propositions concerning the relatedness of new firm founders’ experiential background to that of local entrepreneurs. Specifically, we find that high level of relatedness to local entrepreneurs enhances the survival rate of a new firm started by a novice founder, whereas intermediate level of relatedness suits better for a new firm started by an experienced founder.
    Keywords: Colocation; Entrepreneurial learning; New firm survival; Experiential relatedness; Entrepreneurial performance
    JEL: M13
    Date: 2021–11–24
  7. By: Chiara Criscuolo; Peter Gal; Timo Leidecker; Giuseppe Nicoletti
    Abstract: Relying on linked employer-employee datasets from 10 countries, this paper documents that the skills and the diversity of the workforce and of managers – the human side of businesses – account on average for about one third of the labour productivity gap between firms at the productivity “frontier” (the top 10% within each detailed industry) and medium performers at the 40-60 percentile of the productivity distribution. The composition of skills, especially the share of high skills, varies the most along the productivity distribution, but low and medium skilled employees make up a substantial share of the workforce even at the frontier.High skills show positive but decreasing productivity returns. Moreover, the skill mix of top firms varies markedly across countries, pointing to the role of different strategies pursued by firms in different policy environments. We also find that managerial skills play a particularly important role, also through complementarities with worker skills. Gender and cultural diversity among managers – and to a lesser extent, among workers – is positively related to firm productivity as well. We discuss public policies that can facilitate the catch-up of firms below the frontier through skills and diversity. These cover a wide range of areas, exerting their influence through three main channels: the supply, upgrading and the matching across firms (the SUM) of skills and other human factors.
    Keywords: diversity, linked employer-employee data, managers, productivity, skills
    JEL: D24 J24 M14
    Date: 2021–12–06
  8. By: Mr. Martin Schindler; Mr. Anton Korinek; Joseph Stiglitz
    Abstract: Advances in artificial intelligence and automation have the potential to be labor-saving and to increase inequality and poverty around the globe. They also give rise to winner-takes-all dynamics that advantage highly skilled individuals and countries that are at the forefront of technological progress. We analyze the economic forces behind these developments and delineate domestic economic policies to mitigate the adverse effects while leveraging the potential gains from technological advances. We also propose reforms to the global system of governance that make the benefits of advances in artificial intelligence more inclusive.
    Keywords: C. putting AI; competition Policy; employment trend; C. intellectual property right; export-led growth; Technological innovation; Artificial intelligence; Income; Global; East Asia
    Date: 2021–06–11
  9. By: Zoltan Elekes; Anna Baranowska-Rataj; Rikard Eriksson
    Abstract: A considerable proportion of jobs across labour markets of the Western world are low-wage jobs, while the number of “bad†jobs with deteriorating working conditions and task content is growing. This puts pressure on both successful and lagging regions as low- wage workers struggle to avoid getting priced out of urban areas, while diminishing economic opportunities in more lagging regions fuel social and political discontent. The aim of this paper is to provide empirical evidence on the role of local labour market structure and evolution in enabling or constraining workers in escaping low-wage jobs. Drawing on the network-based approach of evolutionary economic geography in measuring local labour market structure we employ a uniquely detailed individual-level panel dataset provided by Statistics Sweden to construct skill-relatedness networks for 72 functional labour market regions in Sweden. Our fixed-effect panel regressions indicate that the density of skill-related high-income jobs within a region is conductive of low-wage workers moving to better-paid jobs. While metropolitan regions offer a premium for this relationship, it also holds for smaller regions, as well as across various worker characteristics.
    Keywords: skill-relatedness network; local labour market; low-wage workers; structural change; relatedness density
    Date: 2021–11
  10. By: Montobbio, Fabio; Staccioli, Jacopo; Virgillito, Maria Enrica; Vivarelli, Marco
    Abstract: This paper represents one of the first attempts at building a direct measure of occupational exposure to robotic labour-saving technologies. After identifying robotic and LS robotic patents retrieved by Montobbio et al. (2022), the underlying 4-digit CPC definitions are employed in order to detect functions and operations performed by technological artefacts which are more directed to substitute the labour input. This measure allows to obtain fine-grained information on tasks and occupations according to their similarity ranking. Occupational exposure by wage and employment dynamics in the United States is then studied, complemented by investigating industry and geographical penetration rates.
    Keywords: Labour-Saving Technology,Natural Language Processes,Labour Markets,Technological Unemployment
    JEL: O33 J24
    Date: 2021
  11. By: Grimm, Niklas; Laeven, Luc; Popov, Alexander
    Abstract: To what extent can Quantitative Easing impact productivity growth? We document a strong and heterogeneous response of corporate R&D investment to changes in debt financing conditions induced by corporate debt purchases under the ECB’s Corporate Sector Purchase Program. Companies eligible for the program increase significantly their investment in R&D, relative to similar ineligible companies operating in the same country and sector. The evidence further suggests that by subsidizing the cost of debt, corporate bond purchases by the central bank stimulate innovation through a wealth transfer to innovative companies with low debt levels, rather than by supporting credit constrained firms. JEL Classification: E5, G10, O3
    Keywords: corporate innovation, productivity growth, quantitative easing, unconventional monetary policy
    Date: 2021–11
  12. By: Bart Leten; Stijn Kelchtermans; Rene Belderbos
    Abstract: Employing a panel (1995-2015) of large R&D spending pharmaceutical firms, we investigate how internal basic research increases a firm’s innovative performance. We disentangle two mechanisms through which internal basic research affects technology development: (1) as strengthening of the firm’s absorptive capacity to build on externally conducted science, and (2) as a direct source of the firm’s innovation. We find that the positive relationship between internal basic research and innovation performance is significantly mediated by these two mechanisms, with the absorptive capacity mechanism relatively more important. The mediation relationships are more pronounced in recent years, with basic research as a direct source of innovation increasing in importance. This pattern is associated with a decline of corporate investments in basic research over time, and suggests that firms have adopted a more judicious and targeted approach to basic research aimed at getting more leverage out of a smaller commitment to basic research.
    Date: 2021–11–19

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