nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒04‒25
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. New Evidence on the Effect of Technology on Employment and Skill Demand By Hirvonen, Johannes; Stenhammar, Aapo; Tuhkuri, Joonas
  2. Subsidies, Entry, and Economic Growth in a Schumpeterian Model with Incumbents and Entrants By Lu, You-Xun; Chen, Shi-kuan; Lai, Ching-chong
  3. Innovation and Appropriability: Revisiting the Role of Intellectual Property By Filippo Mezzanotti; Timothy Simcoe
  4. The labour share along global value chains Perspectives and evidence from sectoral interdependence By Federico Riccio; Lorenzo Cresti; Maria Enrica Virgillito
  5. Place-Based Policies and Agglomeration Economies: Firm-Level Evidence from Special Economic Zones in India By Görg, Holger; Mulyukova, Alina
  6. The Impact of Acquisitions on Inventors' Turnover in the Biotechnology Industry By Luca Verginer; Federica Parisi; Jeroen van Lidth de Jeude; Massimo Riccaboni
  7. Technology network structure conditions the economic resilience of regions By Gergõ Tóth; Zoltán Elekes; Adam Whittle; Changjun Lee; Dieter F. Kogler
  8. New Evidence on Sectoral Labor Productivity: Implications for Industrialization and Development By Berthold Herrendorf; Richard Rogerson; Ákos Valentinyi
  9. The diffusion of robotic surgery: examining technology use in the English NHS By Maynou, Laia; Pearson, Georgia; McGuire, Alistair; Serra-Sastre, Victoria
  10. The Role of Face-to-face Contact in Innovation: The Evidence from the Spanish Flu Pandemic in Japan By INOUE Hiroyasu; NAKAJIMA Kentaro; OKAZAKI Tetsuji; SAITO Yukiko

  1. By: Hirvonen, Johannes; Stenhammar, Aapo; Tuhkuri, Joonas
    Abstract: Abstract We present novel evidence on the effects of advanced technologies on employment, skill demand, and firm performance. The main finding is that advanced technologies led to increases in employment and no change in skill composition. Our main research design focuses on a technology subsidy program in Finland that induced sharp increases in technology investment in manufacturing firms. Our data directly measure multiple technologies and skills and track firms and workers over time. We demonstrate novel text analysis and machine learning methods to perform matching and to measure specific technological changes. To explain our findings, we outline a theoretical framework that contrasts two types of technological change: process versus product. We document that firms used new technologies to produce new types of output rather than replace workers with technologies within the same type of production. The results contrast with the ideas that technologies necessarily replace workers or are skill biased.
    Keywords: Technology, Labor, Skills, Industrial policy
    JEL: J23 J24 O33
    Date: 2022–04–11
  2. By: Lu, You-Xun; Chen, Shi-kuan; Lai, Ching-chong
    Abstract: This paper explores the effects of various subsidies on economic growth and growth composition in a Schumpeterian model with incumbents and entrants. The main results can be summarized as follows. Subsidizing the production of intermediate goods or subsidizing incumbents’ in-house R&D serves to promote economic growth. However, the growth effect of the subsidy on entrants’ R&D can be positive or negative, depending on the level of the fixed entry cost. Moreover, we show that various types of subsidies have different effects on the entry of new firms and market structure. Finally, we calibrate the model and find that the subsidy on intermediate goods production is more effective than R&D subsidies in terms of promoting growth and raising welfare.
    Keywords: innovation, subsidies, economic growth, market structure, incumbents and entrants
    JEL: O31 O38 O40
    Date: 2022–02–10
  3. By: Filippo Mezzanotti; Timothy Simcoe
    Abstract: It is more than 25 years since the authors of the Yale and Carnegie surveys studied how firms seek to protect the rents from innovation. In this paper, we revisit that question using a nationally representative sample of firms over the period 2008-2015, with the goal of updating and extending a set of stylized facts that has been influential for our understanding of the economics of innovation. There are five main findings. First, while patenting firms are relatively uncommon in the economy, they account for an overwhelming share of R&D spending. Second, utility patents are considered less important than other forms of IP protection, like trade secrets, trademarks, and copyrights. Third, industry differences explain a great deal of the level of firms’ engagement with IP, with high-tech firms on average being more active on all forms of IP. Fourth, we do not find any significant difference in the use of IP strategies across firms at different points of their life cycle. Lastly, unlike age, firms of different size appear to manage IP significantly differently. On average, larger firms tend to engage much more extensively in the protection of IP, and this pattern cannot be easily explained by differences in the type of R&D or innovation produced by a firm. We also discuss the implications of these findings for innovation research and policy.
    Date: 2022–03
  4. By: Federico Riccio; Lorenzo Cresti; Maria Enrica Virgillito
    Abstract: This article proposes a novel framework to investigate how globalisation affects workers' share of value added. We explore functional income distribution by looking at industrial interdependence and thus identifying GVCs as the unit of analysis; we then track inputs composition and their labour share evolution along the value chains. First, we find widespread heterogeneous patterns across value chains components, accounting for the direct, domestic and foreign requirements of the chains, inside an overall declining trend. Second, we study the evolution of the vertical labour share along development stages. Finally, by means of a shift-share analysis, we investigate what drives such decline in the vertical labour share: albeit country-sector idiosyncratic factors accounted by the within-input component contribute the most, between-input reallocation - GVCs restructuring - matters particularly to detect the role played by foreign contributions. In essence, we provide evidence of a recombination of inputs toward emerging economies and service-based activities. Such recombination negatively impacts upon the overall labour share dynamics. Overall, our methodology contributes to better understanding the process of fragmentation of production and international division of labour by developing a series of novel and fine-grained indicators; in addition, it allows to study the ensuing implication for functional income distribution.
    Keywords: Structural Change; Global Value Chains; Labour Share.
    Date: 2022–04–19
  5. By: Görg, Holger (Kiel Institute for the World Economy); Mulyukova, Alina (Kiel Institute for the World Economy)
    Abstract: This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct and spillover effects of the program. We combine geocoded firm-level data and geocoded SEZs using a concentric ring approach, thus creating a novel dataset of firms with their assigned SEZ status. To overcome the selection bias we employ inverse probability weighting with time-varying covariates in a difference-in-differences frame-work. Our analysis yields that conditional on controlling for initial selection, SEZs induced no further productivity gains for within SEZ firms, on average. This is predominantly driven by relatively less productive firms, whereas more productive firms experienced significant productivity gains. However, SEZs created negative externalities for firms in the vicinity which attenuate with distance. Neighbouring domestic firms, large firms, manufacturing firms and non-importer firms are the main losers of the program. Evidence points at the diversion of inputs from non-SEZ to SEZ-firms as a potential mechanism.
    Keywords: firm performance, agglomerations, Special Economic Zones, India
    JEL: O18 O25 P25 R10 R58 R23 F21 F60
    Date: 2022–03
  6. By: Luca Verginer; Federica Parisi; Jeroen van Lidth de Jeude; Massimo Riccaboni
    Abstract: In high-tech industries, where intellectual property plays a crucial role, the acquisition of intangible assets and employees' tacit knowledge is an integral part of the motivation for Mergers and Acquisitions (M&As). Following the molecular biology revolution, the wave of takeovers in the biotechnology industry in the Nineties is a well-known example of M&As to absorb new knowledge. The retention of critical R&D employees embodying valuable knowledge and potential future innovation is uncertain after an acquisition. While not all employees might be relevant for the success of the takeover, inventors are among the most valuable. This is especially true for the acquisition of an innovative start-up. This paper estimates how likely an inventor working for an acquired biotechnology company will leave. We find that inventors affected by acquisitions are 20\% more likely to leave the company by a difference-in-differences approach matching both firms and inventors.
    Date: 2022–03
  7. By: Gergõ Tóth (Agglomeration and Social Networks Lendület Research Group, Centre for Economic and Regional Studies, Tóth Kálmán u. 4, 1097 Budapest, Hungary and Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland); Zoltán Elekes (Agglomeration and Social Networks Lendület Research Group, Centre for Economic and Regional Studies, Tóth Kálmán u. 4, 1097 Budapest, Hungary and Centre for Regional Science at Umea University, Umea University, 901 87 Umea, Sweden); Adam Whittle (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland); Changjun Lee (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland andDepartment of Media and Social Informatics, Hanyang University, Ansan-si, South Korea); Dieter F. Kogler (Spatial Dynamics Lab, University College Dublin, D04 V1W8, Dublin, Ireland Insight Centre for Data Analytics, University College Dublin, Belfield, Dublin 4, Ireland)
    Abstract: This paper assesses the network robustness of the technological capability base of 269 European metropolitan areas against the potential elimination of some of their capabilities. By doing so it provides systematic evidence on how network robustness conditioned the economic resilience of these regions in the context of the 2008 economic crisis. The analysis concerns calls in the relevant literature for more in-depth analysis on the link between regional economic network structures and the resilience of regions to economic shocks. By adopting a network science approach that is novel to economic geographic inquiry, the objective is to stress-test the technological resilience of regions by utilizing information on the co-classification of CPC classes listed on European Patent Office patent documents. We find that European metropolitan areas show heterogeneous levels of technology network robustness. Further findings from regression analysis indicate that metropolitan regions with a more robust technological knowledge network structure exhibit higher levels of resilience with respect to changes in employment rates. This finding is robust to various random and targeted elimination strategies concerning the most frequently combined technological capabilities. Regions with high levels of employment in industry but with vulnerable technological capability base are particularly challenged by this aspect of regional economic resilience.
    Keywords: regional economic resilience, network robustness, metropolitan regions, technology space
    JEL: C53 O30 R11
    Date: 2022–01
  8. By: Berthold Herrendorf; Richard Rogerson; Ákos Valentinyi
    Abstract: Moving labor from agriculture to manufacturing – “industrialization” – is often viewed as essential for the development of poor countries. We present new evidence on the channels through which industrialization can help poor countries close the productivity gap with rich countries. To achieve this, we leverage recent data releases by the Groningen Growth and Development Centre and build a new dataset of comparable labor productivity levels in agriculture and manufacturing for 64 mostly poor countries during 1990–2018. We find two key results: (i) cross-country labor productivity gaps in manufacturing are larger than in the aggregate and (ii) there is no tendency for manufacturing labor productivity to converge. While these results challenge the notion that expanding manufacturing employment is essential for the development of today’s poor countries, we also find that higher labor productivity growth in manufacturing is associated with higher labor productivity growth in the aggregate and in several key sectors.
    JEL: E24 O11 O14 O47
    Date: 2022–03
  9. By: Maynou, Laia; Pearson, Georgia; McGuire, Alistair; Serra-Sastre, Victoria
    Abstract: This paper examines the adoption and diffusion of medical technology as associated with the dramatic recent increase in the surgical use of robots. We consider specifically the sequential adoption and diffusion patterns of three interrelated surgical technologies within a single healthcare system (the English NHS): robotic, laparoscopic and open radical prostatectomy. Robotic and laparoscopic techniques are minimally invasive procedures with similar patient benefits, but the newer robotic technique requires a high initial investment cost to purchase the robot and carries high maintenance costs over time. Using data from a large UK administrative database, Hospital Episodes Statistics, for the period 2000–2018, we analyse 173 hospitals performing radical prostatectomy, the most prevalent and earliest surgical area of adoption of robotic surgery. Our empirical analysis first identifies substitution effects, with robotic surgery replacing the incumbent technology, including the recently diffused laparoscopic technology. We then quantify the spillover of robotic surgery as it diffuses to other surgical specialties. Finally, we perform time-to-event analysis at the hospital level to quantitatively examine the adoption. Results show that a higher number of urologists and a wealthier referral area favor robot adoption.
    Keywords: adoption; diffusion; robotic surgery; substitution; technology; Efficiency Research Program funded by The Health Foundation; Award Reference Number 7432.
    JEL: O33 I12 C41 C33 J20
    Date: 2022–04–01
  10. By: INOUE Hiroyasu; NAKAJIMA Kentaro; OKAZAKI Tetsuji; SAITO Yukiko
    Abstract: This study empirically investigates the role of face-to-face contact in innovation, by exploiting the Spanish flu pandemic in Japan from 1918 to 1921, which prohibitively increased the cost of face-to-face contact between inventors. By using unique patent bibliographic data for this period, we estimate the pandemic's impact on innovation for face-to-face contact-intensive technologies using the Difference-in-Differences (DID) approach. The estimation results show that during the pandemic, patent applications for face-to-face contact-intensive technologies significantly decreased, and did not fully recover even after the pandemic ended. We also find that the negative impact is driven by a decrease in new entries into patent applications, that is, patent applications by the inventors who applied for patents for the first time. We further find that productive inventors had experienced incidences of co-invention during their early careers. These results suggest that the decrease in face-to-face contacts with colleagues and seniors in the preliminary stages of inventors' careers reduced the opportunity to nurture new inventors.
    Date: 2022–03

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