nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒01‒10
sixteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market By Rik L. Rozendaal; Herman R. J. Vollebergh
  2. Asymmetries in Global Value Chain Integration, Technology and Employment Structures in Europe: Country and Sectoral Evidence By Filippo Bontadini; Rinaldo Evangelista; Valentina Meliciani; Maria Savona
  3. The geography of environmental innovation: A critical review and agenda for future research By Losacker, Sebastian; Hansmeier, Hendrik; Horbach, Jens; Liefner, Ingo
  4. The Determinants of Design Applications in Europe By Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Leogrande, Domenico
  5. Technology-Skill Complementarity and Labor Displacement: Evidence from Linking Two Centuries of Patents with Occupations By Leonid Kogan; Dimitris Papanikolaou; Lawrence D. W. Schmidt; Bryan Seegmiller
  6. Is There Job Polarization in Developing Economies? A Review and Outlook By Antonio Martins-Neto; Nanditha Mathew; Pierre Mohnen; Tania Treibich
  7. Innovation Performance and the Signal Effect: Evidence from a European Program By Nadine Levratto; Aurelien Quignon
  8. Knowledge Spillovers From Superstar Tech-Firms: The Case of Nokia By Fuad Hasanov; Reda Cherif; Jyrki Ali-Yrkkö; Natalia Kuosmanen; Mika Pajarinen
  9. Entrepreneurial Ecosystems and Regional Persistence of High Growth Firms: A 'Broken Clock' Critique By Coad, Alex; Srhoj, Stjepan
  10. AI-enabled Automation, Trade, and the Future of Engineering Services By Klügl, Franziska; Kyvik Nordås, Hildegunn
  11. Tracing Productivity Growth Channels in the UK By Mr. Daniel Garcia-Macia; Julia Korosteleva
  12. Public Investment, Convergence and Productivity Growth in European regions By Roberto Martino
  13. Transitions as a coevolutionary process: the urban emergence of electric vehicle inventions By Andrea Ferloni
  14. Product recalls, market size and innovation in the pharmaceutical industry By Federico Nutarelli; Massimo Riccaboni; Andrea Morescalchi
  15. Evaluating the US pharmaceutical patent policy By Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
  16. Labour-saving automation and occupational exposure: a text-similarity measure By Fabio Montobbio; Jacopo Staccioli; Maria Enrica Virgillito; Marco Vivarelli

  1. By: Rik L. Rozendaal; Herman R. J. Vollebergh
    Abstract: This article tests the effects of fuel economy and greenhouse gas emission standards on the direction of innovation, in particular on breakthrough technologies in the automotive industry. We develop an intuitive measure of standard stringency that captures the policy’s most important features for the decision as to whether or not to innovate. To test the role of these standards relative to prices and taxes, we construct a firm-level panel of patents in clean and dirty automotive technologies for the years 2000-2016. Our results indicate that standards are a very robust driver inducing clean innovation, whereas taxes also seem to play a role but prices (net of taxes) do not. This effect is driven by patenting for breakthrough technologies, in particular electric vehicle and hydrogen fuel cell technologies. We find no evidence that these policies negatively impact dirty innovation.
    Keywords: environmental policy instruments, regulatory stringency, innovation, directed technical change
    JEL: O30 Q55 Q58
    Date: 2021
  2. By: Filippo Bontadini; Rinaldo Evangelista; Valentina Meliciani; Maria Savona
    Abstract: This paper provides empirical evidence on the complex role played by technology in affecting the relationship between the participation of EU countries and industries in Global Value Chains (GVCs) and their employment structure over the period 2000-2014. The empirical analysis is based on country/industry level data for 21 EU countries on employment, trade in value added, patents and investments in intangible assets, and focusses on backward linkages within GVCs. The role of technology is analysed by taking into account both the technological intensity of offshoring industries and that of their GVC partners. We study the employment structure by looking at the shares of managers and manual workers, which reflect the “functional specialisation” of the country-sector within GVCs. We find that pre-existing asymmetries in the functional specialisation are highly persistent over time, with little sign of convergence over our observed period. Furthermore, GVC participation is not related to changes in the employment structure. However, this relationship appears to be mediated by country-industries’ initial technological performance. Technological leader industries exhibit, in fact, larger shares of employment in headquarter functions, and this functional specialisation tends to be strengthened as they increase their integration into GVCs. In contrast, country-industries that start off as technological laggards see integration into GVCs accompanied by an increase in the share of employment in fabrication functions. The technological profile of the partners is also found to play a role in the relationship between GVC integration and the functional specialisation of the offshoring country/industry, although different patterns emerge depending on the nature of the partner (manufacturing vs service).
    Keywords: global value chains, employment, technology, intangible assets, patents
    JEL: F14 F15 O33
    Date: 2021
  3. By: Losacker, Sebastian (University Hannover); Hansmeier, Hendrik (Fraunhofer Institute for Systems and Innovation Research ISI); Horbach, Jens (University of Applied Sciences Augsburg); Liefner, Ingo (University Hannover)
    Abstract: Environmental innovations make an important contribution to solving ecological and climate crises. Although these crises are global phenomena, the regional dimension plays a crucial role, as regions both provide the conditions for the development of environmental innovations and promote widespread use and diffusion. Against this background, this article has two objectives. Firstly, we critically review the state of research on regional determinants of environmental innovation. Secondly, based on these results, we develop an agenda for further research in regional studies that will help to better understand the geography of environmental innovation and to come up with useful region-specific policy recommendations.
    Keywords: environmental innovation; geography of innovation; sustainability transitions; regional development; geography of transitions
    JEL: O31 O33 Q55 R11
    Date: 2021–12–17
  4. By: Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Leogrande, Domenico
    Abstract: In this article we estimate the level of “Design Application” in 37 European Countries in the period 2010-2019. We use data from the European Innovation Scoreboard-EIS of the European Commission. We perform four econometric models i.e., Pooled OLS, Panel Data with Random Effects, Panel Data with Fixed Effects, Dynamic Panel. We found that the level of Design Applications is negatively associated to “Enterprise Births”, “Finance and Support”, “Firm Investments” and positively associated with “Venture Capital”, “Turnover share large enterprises”, “R&D expenditure public sector”, “Intellectual Assets”. In adjunct we perform a cluster analysis with the application of the k�Means algorithm optimized with the Silhouette Coefficient and we found three different clusters. Finally, we confront eight different machine learning algorithms to predict the level of “Design Application” and we found that the Tree Ensemble is the best predictor with a value for the 30% of the dataset analyzed that is expected to decrease in mean of -12,86%.
    Keywords: Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Technological Change: Choices and Consequences; Intellectual Property and Intellectual Capital.
    JEL: O30 O31 O32 O33 O34
    Date: 2021–11–04
  5. By: Leonid Kogan; Dimitris Papanikolaou; Lawrence D. W. Schmidt; Bryan Seegmiller
    Abstract: We construct new technology indicators using textual analysis of patent documents and occupation task descriptions that span almost two centuries (1850–2010). At the industry level, improvements in technology are associated with higher labor productivity but a decline in the labor share. Exploiting variation in the extent certain technologies are related to specific occupations, we show that technological innovation has been largely associated with worse labor market outcomes—wages and employment—for incumbent workers in related occupations using a combination of public-use and confidential administrative data. Panel data on individual worker earnings reveal that less educated, older, and more highly-paid workers experience significantly greater declines in average earnings and earnings risk following related technological advances. We reconcile these facts with the standard view of technology-skill complementarity using a model that allows for skill displacement.
    JEL: J01 J24 J3 N3 N6 O3 O4
    Date: 2021–12
  6. By: Antonio Martins-Neto; Nanditha Mathew; Pierre Mohnen; Tania Treibich
    Abstract: This paper analyses the evidence of job polarization in developing countries. We carry out an extensive review of the existing empirical literature and examine the primary data sources and measures of routine intensity. The synthesis of results suggests that job polarization in emerging economies is only incipient compared to other advanced economies. We then examine the possible moderating aspects preventing job polarization, discussing the main theoretical channels and the existing empirical literature. Overall, the literature relates the lack of polarization as a natural consequence of limited technology adoption and the offshoring of routine, middle-earning jobs to some host developing economies. In turn, the limited technology adoption results from suboptimal capabilities in those economies, including the insufficient supply of educated workers. Finally, we present the main gaps in the literature in developing economies and point to the need for more micro-level studies focusing on the impacts of technology adoption on workers’ careers and studies exploring the adoption and use of technologies at the firm level.
    Keywords: job polarization, routine intensity, skills, developing countries
    JEL: J24 J63 O33 E24
    Date: 2021
  7. By: Nadine Levratto (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Aurelien Quignon (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper seeks to estimate the effect of a European policy that subsidizes innovation investments. By carefully selecting observables, we compare recipients of the program with non-recipient firms to overcome the endogeneity of R&D grants. We conduct a difference-indifferences design on the universe of a unique firm-level dataset of European SMEs between 2008 and 2017. We find a significant effect of proof of concept grants, which implies an increase in the number of patent applications and the probability of patenting. There are positive impacts on credit financing, which suggest a signal effect to investors about the project quality of young firms.
    Keywords: Innovation,Patent,Financing constraints,H2020,R&D subsidies
    Date: 2021–12–06
  8. By: Fuad Hasanov; Reda Cherif; Jyrki Ali-Yrkkö; Natalia Kuosmanen; Mika Pajarinen
    Abstract: Do workers hired from superstar tech-firms contribute to better firm performance? To address this question, we analyze the effects of tacit knowledge spillovers from Nokia in the context of a quasi-natural experiment in Finland, the closure of Nokia’s mobile device division in 2014 and the massive labor movement it implied. We apply a two-stage difference-in-differences approach with heterogeneous treatment to estimate the causal effects of hiring former Nokia employees. Our results provide new evidence supporting the positive causal role of former Nokia workers on firm performance. The evidence of the positive spillovers on firms is particularly strong in terms of employment and value added.
    Keywords: human capital, employment, value added, Nokia, difference-in-differences, heterogeneous treatment, knowledge spillovers, superstar firms.; superstar tech-firm; spillover effect; Nokia employee; superstar firm; effects from Nokia; Spillovers; Employment; Labor productivity; Positive spillovers; Human capital; Global
    Date: 2021–10–29
  9. By: Coad, Alex; Srhoj, Stjepan
    Abstract: The Entrepreneurial Ecosystems (EE) approach makes specific predictions regarding how EE inputs are converted into high-growth firms (HGFs) as an output. A simulation model draws out our hypothesis of regional persistence in HGF shares. Based on intuitions that EEs are persistent, we investigate whether regional HGF shares are persistent, using census data for 2 European countries taken separately (Croatia for 2004-2019, and Slovenia for 2008-2014). Overall, there is no clear persistence in regional HGF shares - regions with large HGF shares in one period are not necessarily likely to have large HGF shares in the following period. This is a puzzle for EE theory. In fact, there seems to be more persistence in industry-level HGF shares than for regional HGF shares. We formulate a ‘broken clock’ critique - just as a broken clock is correct twice a day, EE recommendations may sometimes be correct, but are fundamentally flawed as long as time-changing outcomes (HGF shares) are predicted using time-invariant variables (such as local universities, institutions and infrastructure).
    Keywords: High-Growth Firms, Persistence, Regional Persistence; Entrepreneurial Ecosystems; Clusters; Sectoral Systems of Innovation
    JEL: L52 L78 M21 O38
    Date: 2021–12–07
  10. By: Klügl, Franziska (Örebro University School of Business); Kyvik Nordås, Hildegunn (Örebro University School of Business)
    Abstract: This paper studies the role of trade for the joint uptake of AI-enabled automation in manufacturing and engineering. It develops an agent-based model (ABM) where the agents are heterogeneous manufacturers and engineering firms. The model features two technology-related business models: engineering as a face-to-face consultancy service and engineering as automated software. Switching to the software technology is costly for both manufacturers and engineers, but the cost declines with the number of firms having made the leap due to network effects. The simulations start with a scenario where all firms are in the consultancy business model and trace out the path of software adoption over time. The software adoption rate follows an S-shaped curve for manufacturers and a boom and bust cycle for engineers. Trade affects the cut-off productivity rate at which manufacturers switch technology, the shape of the adoption rate curve, and the incentives for engineers to develop software. In a two-country model with a high and low-wage country, the low wage country adopts software early and import consultancy services from the high-wage country, a pattern similar to China’s trade and AI development.
    Keywords: Technology adoption; Automation; Trade; Agent Based Modelling
    JEL: C63 F16 O33
    Date: 2021–12–23
  11. By: Mr. Daniel Garcia-Macia; Julia Korosteleva
    Abstract: What drove the UK productivity slowdown post-GFC, and how is the post-Covid recovery expected to differ? This paper traces the sources of TFP growth in the UK over the last two decades through the lens of a structural model of innovation, using registry data on the universe of firms. The dominant innovation source in the pre-GFC decade were improvements by incumbent firms on their own products, whereas creation of new varieties by entrants took a leading role post-GFC. In the Covid recovery, survey data suggests that creative destruction (i.e., innovation replacing other firms’ products) is expected to gain importance. This emphasizes the need for growth policies that facilitate labor and capital reallocation across firms, in addition to R&D support.
    Keywords: economic growth, innovation, creative destruction
    Date: 2021–11–12
  12. By: Roberto Martino
    Abstract: This paper estimates an augmented growth model to analyse the contribution of public investment to productivity growth for European regions. The empirical model accounts for the accumulation of public capital, the stock of infrastructure and the creation of knowledge by the government sector, alongside other growth determinants, as institutions, education, and business R&D. Convergence dynamics are also explored. Data include 273 NUTS2 European regions from 27 countries from 1999 to 2018. The empirical evidence presented suggests that public investment is positively associated with productivity growth and complementarities with business investment are in place. Furthermore, returns on both types of investments are larger in the regions of the Southern periphery, flagging policy space for further public and private productive spending. No significant effect is found for the stock of infrastructure. Public R&D has an indirect impact on productivity growth through the mediating effect of business R&D, while institutional quality is a horizontal determinant of growth.
    Date: 2021
  13. By: Andrea Ferloni (Institute of Geography and Sustainability (IGD), University of Lausanne- UNIL)
    Abstract: The transition to Electric Vehicles (EVs) is a coevolutionary process involving at least three sectors—EV, battery, and smart grid—in replacing combustion cars. This paper contributes to research on the geography of transitions by linking increased relatedness between technologies over time with their co-location, exploring the spatial emergence of transition industries and the role of local economic systems in enabling it. Patent citations are used to construct three main paths from 1920 to 2020 that permit to geolocate key inventions and to elaborate on the role of cities in supporting knowledge exchanges and recombinations. The case study suggests that a coevolutionary perspective can contribute to understanding the geography of transitions in three ways: by showing how new technology configurations imply varying power relations between industrial fields, by elaborating on the capacity of urban regions to adapt to these, and by illustrating the role of actors and networks in this process.
    Keywords: Coevolution, Electric Vehicle, Geography of transitions, Large Urban Regions, Patent networks, Main path analysis
    Date: 2021
  14. By: Federico Nutarelli; Massimo Riccaboni; Andrea Morescalchi
    Abstract: The idea that research investments respond to market rewards is well established in the literature on markets for innovation (Schmookler, 1966; Acemoglu and Linn, 2004; Bryan and Williams, 2021). Empirical evidence tells us that a change in market size, such as the one measured by demographical shifts, is associated with an increase in the number of new drugs available (Acemoglu and Linn, 2004; Dubois et al., 2015). However, the debate about potential reverse causality is still open (Cerda et al., 2007). In this paper we analyze market size's effect on innovation as measured by active clinical trials. The idea is to exploit product recalls an innovative instrument tested to be sharp, strong, and unexpected. The work analyses the relationship between US market size and innovation at ATC-3 level through an original dataset and the two-step IV methodology proposed by Wooldridge et al. (2019). The results reveal a robust and significantly positive response of number of active trials to market size.
    Date: 2021–11
  15. By: Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
    Abstract: The debate on whether COVID-19 vaccine patents are slowing down the pace of vaccination and the recovery from the crisis has brought the optimal design of pharmaceutical patent policy to the fore. In this paper we evaluate patent policy in the US pharmaceutical industry. We estimate the effect of patent length and scope on generic entry prior to the expiration of new drug patents using two quasi-experimental approaches: one based on changes in patent laws and another on the allocation of patent applications to examiners. We find that extending effective patent length increases generic entry whereas broadening protection reduces it. To assess the welfare effects of patent policy, we match these empirical results with a model of new drug development, generic entry, and patent length and scope. Optimal policy calls for shorter but broader pharmaceutical patents.
    JEL: I18 K20 L13 O34 O31
    Date: 2021–12–29
  16. By: Fabio Montobbio (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – BRICK, Collegio Carlo Alberto, Torino – ICRIOS, Bocconi University, Milano); Jacopo Staccioli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – Institute of Economics, Scuola Superiore Sant’Anna, Pisa); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, Pisa – Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    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 labour-saving 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

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