nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒03‒14
eight papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Productive Robots and Industrial Employment: The Role of National Innovation Systems By Kapetaniou, Chrystalla; Pissarides, Christopher A.
  2. Robots and Unions: The Moderating Effect of Organised Labour on Technological Unemployment By Haapanala, Henri; Marx, Ive; Parolin, Zachary
  3. What governs attitudes toward artificial intelligence adoption and governance? By O'Shaughnessy, Matthew; Schiff, Daniel; Varshney, Lav R.; Rozell, Christopher; Davenport, Mark
  4. The broadband diffusion process and its determinants in Algeria: A simultaneous estimation By Bacha, Radia; Gasmi, Farid
  5. How sectoral technical progress and factor substitution shaped Japan’s structural transformation? By Manu, Ana-Simona
  6. Aggregate Implications of Changing Sectoral Trends By Andrew T. Foerster; Andreas Hornstein; Pierre-Daniel G. Sarte; Mark W. Watson
  7. The Elusive Explanation for the Declining Labor Share By Gene M. Grossman; Ezra Oberfield
  8. The Transformation of Self Employment By Innessa Colaiacovo; Margaret Dalton; Sari Pekkala Kerr; William R. Kerr

  1. By: Kapetaniou, Chrystalla (University of Southampton); Pissarides, Christopher A. (London School of Economics)
    Abstract: In a model with robots, and automatable and complementary human tasks, we examine robot-labour substitutions and show how it they are influenced by a country's "innovation system". Substitution depends on demand and production elasticities, and other factors influenced by the innovation system. Making use of World Economic Forum data we estimate the relationship for thirteen countries and find that countries with poor innovation capabilities substitute robots for workers much more than countries with richer innovation capabilities, which generally complement them. In transport equipment and non-manufacturing robots and workers are stronger substitutes than in other manufacturing.
    Keywords: robots-employment substitution, automatable tasks, complementary task creation, innovation environment, industrial allocations
    JEL: J23 L60 O33 O52
    Date: 2022–02
  2. By: Haapanala, Henri (University of Antwerp); Marx, Ive (University of Antwerp); Parolin, Zachary (Bocconi University)
    Abstract: We analyse the moderating effect of trade unions on industrial employment and unemployment in countries facing exposure to industrial robots. Applying random effects within-between regression to a pseudo-panel of observations from 28 advanced democracies over 1998-2019, we find that stronger trade unions in a country are associated with a greater decline in the industry sector employment of young and low-educated workers. We also show that the unemployment rates for low-educated workers remain constant in strongly unionised countries with increasing exposure to robots, whereas in weakly unionised countries, low-educated unemployment declines with robot exposure but from a higher starting point. Our results point to unions exacerbating the insider-outsider effects of technological change within the industrial sector, which however is not fully passed on to unemployment.
    Keywords: trade unions, technological change, outsiders/insiders, dual labour market, unemployment, labour economics
    JEL: J5
    Date: 2022–02
  3. By: O'Shaughnessy, Matthew; Schiff, Daniel (Georgia Institute of Technology); Varshney, Lav R.; Rozell, Christopher; Davenport, Mark
    Abstract: Designing effective and inclusive governance and public communication strategies for artificial intelligence (AI) requires understanding how stakeholders reason about its use and governance. We examine underlying factors and mechanisms that drive attitudes toward the use and governance of AI across six policy-relevant applications using structural equation modeling and surveys of both U.S. adults (N=3524) and technology workers enrolled in an online computer science master’s degree program (N=425). We find that the cultural values of individualism, egalitarianism, general risk aversion, and techno-skepticism are important drivers of AI attitudes. Perceived benefit drives attitudes toward AI use, but not its governance. Experts hold more nuanced views than the public, and are more supportive of AI use but not its regulation. Drawing on these findings, we discuss challenges and opportunities for participatory AI governance, and we recommend that trustworthy AI governance be emphasized as strongly as trustworthy AI.
    Date: 2021–12–14
  4. By: Bacha, Radia; Gasmi, Farid
    Abstract: Digital transformation engendered by ICT advances, most notably broadband, pertains to many sectors that are known to drive economic development. This paper seeks to highlight market structure, institutional, and socio-economic factors that influence broadband adoption in Algeria. We apply to a novel 2003-2019 database a procedure that simultaneously, instead of sequentially as typically done, selects the best among the Bass, Gompertz, and Logistic innovation diffusion models estimated with Nonlinear Least Squares and searches for significant determinants of broadband adoption. We find that the data fits reasonably well the Gompertz and Logistic distributions with the latter outperforming the former not only from a statistical standpoint but also and more importantly for it captures Algeria's significant delay in the diffusion of broadband due to the social turmoil of the 1990 years’ decade. We identify some policy levers for fostering ICT applications. We find that the degree of concentration has a U-shaped impact on broadband adoption and that institutional quality, mobile broadband introduction, and tertiary education enrollment have a positive impact. These findings suggest that broadband adoption in Algeria can be expected to gain from encouraging entry with differentiated broadband services through higher-generation access technologies, improving regulatory governance, and enhancing digital literacy through higher education.
    Keywords: Broadband,;Digital transformation,;Innovation diffusion models; Regulation; Competition.
    JEL: L51 L86 L96 O2 O14 O33 O55
    Date: 2022–02
  5. By: Manu, Ana-Simona
    Abstract: The paper quantitatively assesses the importance of supply-side drivers in the transition of the Japanese economy from low-skilled to high-skilled sectors and its implication for growth, labor demand and labor income shares. A sectoral supply-side system, estimated over the 1980-2012 period, reveals different rates of technical progress across production factors and sectors, but also heterogeneity in the sectoral elasticity of substitution between capital and labor. The fact that capital and labor are easily substitutable in low-skilled services but not in high-skilled services, coupled with the dominant role of capital-augmenting technical change in services is a key factor behind the relocation of labor towards high-skilled services, as well as behind the declining trend in the labor income share in low-skilled services. JEL Classification: O47, O33, J23
    Keywords: biased technical change, CES production function, labor demand, labor income share
    Date: 2022–02
  6. By: Andrew T. Foerster (Federal Reserve Bank of San Francisco); Andreas Hornstein (Federal Reserve Bank of Richmond); Pierre-Daniel G. Sarte (Federal Reserve Bank of Richmond); Mark W. Watson (Princeton University and NBER)
    Abstract: We find disparate trend variations in TFP and labor growth across major U.S. production sectors and study their implications for the post-war secular decline in GDP growth. Capital accumulation and the network structure of U.S. production amplify the effects of sector-specific changes in the trend growth rates of TFP and labor on trend GDP growth. We summarize this amplification effect in terms of sectoral multipliers that, for some sectors, can exceed 3 times their value added shares in the economy. We estimate that sector-specific factors have historically accounted for approximately 3/4 of long-run changes in GDP growth, leaving common or aggregate factors to explain only 1/4 of those changes. Trend GDP growth fell by nearly 3 percentage points over the post war period with the Construction sector alone contributing roughly 1 percentage point of that decline between 1950 and 1980. Idiosyncratic changes to trend growth in the Durable Goods sector then contributed an almost 2 percentage point decline in trend GDP growth between 2000 and the end of our sample in 2018. Remarkably, no sector has contributed any steady significant increase to the trend growth rate of GDP in the past 70 years.
    Keywords: trend growth, sectoral linkages, investment network
    JEL: C32 E23 O41
    Date: 2021–04
  7. By: Gene M. Grossman (Princeton University and NBER); Ezra Oberfield (Princeton University and NBER)
    Abstract: A vast literature seeks to measure and explain the apparent decline in the labor share in national income that has occurred in recent times in the United States and elsewhere. The culprits include technological change, increased globalization and the rise of China, the enhanced exercise of market power by large firms in concentrated product markets, the decline in unionization rates and the erosion in the bargaining power of workers in labor markets, and the changing composition of the workforce due to a slowdown in population growth and a rise in educational attainment. We review this literature, with special emphasis on the pitfalls associated with using cross-sectional data to assess this phenomenon and the reasons why the body of papers collectively explains the phenomenon many times over.
    Keywords: labor share, national income
    JEL: E01
    Date: 2021–08
  8. By: Innessa Colaiacovo; Margaret Dalton; Sari Pekkala Kerr; William R. Kerr
    Abstract: Over the past half-century, while self-employment has consistently accounted for around one in ten of the United States workforce, its composition has changed. Since 1970, industries with high startup capital requirements have declined from 53% of self-employment to 23%. This same time period also witnessed declines in “hometown” local entrepreneurship and the probability of the self-employed being among top earners. Using 2016 data, we show that high startup capital requirements are linked with lower profitability at small scales. The transition away from high startup capital industries appears most closely linked to changes in small business production functions and less due to advantageous reallocation to other opportunities, growth in returns-to-scale among large businesses, or a worsening of financing conditions and debt levels.
    Keywords: Self-employment, small business, entrepreneurship, startup investment, occupational choice, financing.
    JEL: L26 D24 G51 J11 J24 J62 M13 R11 R13
    Date: 2022–02

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