nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒09‒05
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. A Lasting Crisis affects R&D decisions of smaller firms: the Greek experience By Ioannis Giotopoulos; Alexander S. Kritikos; Aggelos Tsakanikas
  2. The Influence of Environmental Commitment and Innovation on Export Intensity: Firm-Level Evidence from Tunisia By SDIRI, Hanen
  3. Wage inequality and induced innovation in a classical-Marxian growth model By Stamegna, Marco
  4. A complexity view on the future of work. Meta-modelling exploration of the multi-sector K+S agent based model. By Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
  5. Regional Differences in Intersectoral Linkages and Diverse Patterns of Structural Transformation By Paul, Saumik; Raju, Dhushyanth
  6. Immigration and Business Dynamics: Evidence from U.S. Firms By Parag Mahajan
  7. Long-run patterns in the discovery of the adjacent possible By Josef Taalbi
  8. Agglomeration, Innovation, and Spatial Reallocation: The Aggregate Effects of R&D Tax Credits By Alexandre Sollaci
  9. Patent term extensions and commercialization lags in the pharmaceutical industry: A growth-theoretic analysis By Hu, Mei-Ying; Lu, You-Xun; Lai, Ching-Chong
  10. The structural and productivity effects of infrastructure provision in developed and developing countries By Orea, Luis; Álvarez-Ayuso, Inmaculada; Servén, Luis
  11. From Polluting to Green Jobs: A Seamless Transition in the U.S.? By Mr. Ippei Shibata; Rui Mano; Katharina Bergant
  12. The Distributional Impacts of Worker Reallocation: Evidence from Europe By Mr. John C Bluedorn; Mr. Niels-Jakob H Hansen; Mr. Ippei Shibata; Marina M. Tavares; Francesca Caselli
  13. Can domestic institutions affect exports and innovation?: Mediation effects of institutional quality on manufacturing sector exports and innovation in developing countries By Achinthya Koswatta
  14. Technological Progress, Occupational Structure and Gender Gaps in the German Labour Market By Bachmann, Ronald; Gonschor, Myrielle
  15. Related Variety and Regional Development By Harald Bathelt; Michael Storper

  1. By: Ioannis Giotopoulos (University of Peloponnese); Alexander S. Kritikos (DIW Berlin, University of Potsdam, IAB Nuremberg, IZA Bonn); Aggelos Tsakanikas (National Technical University of Athens)
    Abstract: We use the prolonged Greek crisis as a case study to understand how a lasting economic shock affects the innovation strategies of firms in economies with moderate innovation activities. Adopting the 3-stage CDM model, we explore the link between R&D, innovation, and productivity for different size groups of Greek manufacturing firms during the prolonged crisis. At the first stage, we find that the continuation of the crisis is harmful for the R&D engagement of smaller firms while it increased the willingness for R&D activities among the larger ones. At the second stage, among smaller firms the knowledge production remains unaffected by R&D investments, while among larger firms the R&D decision is positively correlated with the probability of producing innovation, albeit the relationship is weakened as the crisis continues. At the third stage, innovation output benefits only larger firms in terms of labor productivity, while the innovation-productivity nexus is insignificant for smaller firms during the lasting crisis.
    Keywords: Small firms, Large firms, R&D, Innovation, Productivity, Long-term Crisis
    JEL: L25 L60 O31 O33
    Date: 2022–08
  2. By: SDIRI, Hanen
    Abstract: This study utilizes structural equation modeling (SEM) to analyze the extent to which environmental commitment and innovation increase the export intensity of Tunisian firms. Relying on firm-level data from the World Bank Enterprise Survey conducted in 2020, we empirically test how environmental commitment increases export intensity through innovation. This study distinguishes between two types of innovation; product innovation and process innovation. We show that environmental commitment is useful in stimulating both product and process innovation. We find that environmental commitment and product innovation drive exports. Yet, process innovation does not affect exports. Moreover, our results highlight that quality certification interacts with the relationship between environmental commitment and process innovation. The results can help decision-makers understand how environmental commitment represents an important strategy for companies to be more innovative and oriented towards export.
    Keywords: Product innovation. Process innovation. Environmental Commitment. Export intensity. Quality certification. Tunisian firms.
    JEL: F23 F63 F64 O3
    Date: 2022–07–01
  3. By: Stamegna, Marco
    Abstract: The present paper works out a classical-Marxian growth model with an endogenous direction of technical change and a heterogeneous labour force, made up of high-skilled and low-skilled workers. It draws on the Kaleckian mark-up pricing to link wage inequality to the relative unit labour cost at a firm level; on growth cycle models à la Goodwin to formalize the dynamic interaction between labour market and distributive shares of income; on the induced innovation literature to link the bias of technical change to the firm’s choice of the optimal combination of factor-augmenting technologies. We assume that economic growth is constrained by the growth rate of the high-skilled effective labour supply, whereas the low-skilled labour supply is perfectly elastic. Thus, we develop a three-dimensional system of differential equations for the output-capital ratio, the relative unit labour cost and the employment rate of the high-skilled workers, and investigate the stability and the main properties of the steady-state equilibrium. We find that, in contrast to the neoclassical literature on skill-biased technical change, the institutional framework governing the conflict over income distribution is the ultimate determinant of both wage inequality and the direction of technical change. A decline in low-skilled workers’ bargaining strength or a rise in product market concentration lead to both an increase in wage inequality and a bias of technical change favouring high-skilled over low-skilled labour productivity growth. As opposed to the Goodwin model with induced technical change and homogeneous labour force, labour market institutions thus affect steady-state income distribution, capital accumulation and labour productivity growth, and no necessary trade-off arises between labour market regulation and employment. Finally, if the steady-state value of wage inequality exceeds a critical value, an exogenous increase in the mark-up or in the high-skilled workers’ bargaining power allow both capitalists and high-skilled workers to increase their income shares at the expense of the low-skilled workers.
    Keywords: Wage inequality; growth; distribution; endogenous technical change
    JEL: D33 E11 E24 O33
    Date: 2022–07–16
  4. By: Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
    Abstract: When complexity meets economics, complexity economics turns out to be something more than simple interactions across individuals/entities, it turns into what has been labelled the bicycle postulate made of two components, coordination and change. Granted the ''Complex evolving system approach'', we provide an example of the effectiveness of the complexity view in economics applied to the context of the current debate on the future of work drawing upon the agent-based ''Schumpeter meeting Keynes'' multi-sector model (Dosi et al., 2022) and the meta-modelling approach developed in Dosi et al. (2018). The complexity approach proves to be an alternative, useful lens to address the technical change vs employment relationship modulated by demand patterns, income distribution, structural change and labour market organizations. It allows to enlarge the scope of investigation beyond production functions of tasks, relative prices of capital vs labour, inputs substitutability, comparative advantages of workers in their skill levels, the latter elements upon which the dominant neoclassical approach on the employment-technology nexus is rooted.
    Keywords: Complexity; Meta-modelling; Future of work.
    Date: 2022–08–16
  5. By: Paul, Saumik (Newcastle University); Raju, Dhushyanth (World Bank)
    Abstract: Intersectoral linkages can act as shock propagation channels and shape the pattern of structural transformation. To our knowledge, no research has examined how subnational differences in intersectoral linkages impact such spillover effects. We hypothesize that regional differences in local economic shocks diversify intersectoral linkages, and, consequently, produce divergent patterns of structural transformation across regions. Using novel regional input-output tables and existing enterprise censuses for Ghana, we test and find support for four predictions related to this hypothesis: (1) a recent, positive mining output shock that occurred in the south of Ghana leads to growing differences in intersectoral linkages between the north and the south of the country, (2) the effect of the mining output shock on output and productivity growth in other sectors differs across regions in line with changes in the patterns of intersectoral linkages, (3) the elasticity of employment in other sectors with respect to the change in employment in mining closely follows the regional patterns of intersectoral linkages, and (4) variation in the mining output shock across time and space explains the variation in the rate of firm entry and average firm-level employment in sectors (such as heavy manufacturing) that largely depend on mining for intermediate inputs.
    Keywords: structural transformation, intersectoral linkages, propagation of productivity shock, subnational areas, mining, Ghana
    JEL: D24 F15 F43 N10 O11 O14 O47 D57 E32 L14 Q54
    Date: 2022–07
  6. By: Parag Mahajan
    Abstract: Prior literature on the economic impact of immigration has largely ignored changes to the composition of labor demand. In contrast, this paper uses a comprehensive collection of survey and administrative data to show that heterogeneous establishment entry and exit drive immigrant-induced job creation and a rightward shift of the productivity distribution in U.S. local industries. High-productivity establishments are more likely to enter and less likely to exit in high immigration environments, whereas low-productivity establishments are more likely to exit. These dynamics result in productivity growth. A general equilibrium model proposes a mechanism that ties immigrant workers to high-productivity firms and shows how accounting for changes to the employer distribution can yield substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand.
    Keywords: immigration, business dynamics, productivity, firm heterogeneity
    JEL: J23 J61 L11 F22
    Date: 2022
  7. By: Josef Taalbi
    Abstract: This study analyses long-run patterns of new product introductions in Sweden, 1908-2016. A theoretical framework is formulated that links notions of exploration and exploitation to the notion of innovation as a search process of recombination across knowledge types to discover the set of the adjacent possible innovations. The framework makes predictions about the rate of diversification of product portfolios, the rate of innovation, and the distribution of innovations across organizations. The results suggest on the one hand that the rate of innovation is approximately linear rather than super-linear. This explains advantages of incumbent firms, but excludes the emergence of "winner takes all" distributions. The results also suggest that the rate of development of new types of products follows "Heaps' law", where the share of new product types within organizations declines over time. Instead, old firms become increasingly focused on a core set of products and knowledge, as they age. Together these results suggest that declining product diversity might be one explanation why large firms have seen their overall innovation rates decline.
    Date: 2022–08
  8. By: Alexandre Sollaci
    Abstract: I investigate the aggregate effects of R&D tax credits in the US. Because it subsidizes R&D activity and because credit rates vary between states, this policy has both spatial and dynamic effects on the economy. To address this issue, I construct an endogenous growth model with spatial heterogeneity and agglomeration spillovers in innovation. Aggregate outcomes in this model are thus affected by the spatial distribution of the population in the economy, which is itself endogenous and reacts to policy. I use this framework to identify a set of local R&D subsidies that maximize aggregate welfare.
    Keywords: agglomeration; innovation; R&D tax credits
    Date: 2022–07–01
  9. By: Hu, Mei-Ying; Lu, You-Xun; Lai, Ching-Chong
    Abstract: Due to the lags in commercialization, the effective life of a patent is generally less than its statutory term. We introduce commercialization lags into the Schumpeterian growth model and explore the effects of patent term extensions on pharmaceutical R&D and social welfare. Our results show that extending patent terms stimulates the consumption of homogeneous goods but generates an ambiguous effect on the consumption of pharmaceuticals. When patent extensions have an inverted-U effect on social welfare, the optimal patent extension increases with the length of commercialization lags but decreases with the input intensity of commercialization lags. Finally, we calibrate the model and find that increasing patent breadth reduces the optimal patent extension.
    Keywords: commercialization lags; patent term extensions; pharmaceutical R&D; economic growth; social welfare
    JEL: I11 L65 O31 O34
    Date: 2022–07–28
  10. By: Orea, Luis (University of Oviedo); Álvarez-Ayuso, Inmaculada (Universidad Autónoma de Madrid); Servén, Luis (Centro de Estudios Monetarios y Financieros)
    Abstract: In this paper, we provide an empirical assessment of the effects of infrastructure provision on structural change and aggregate productivity using industry-level data for a set of developed and developing countries over 1995-2010. A distinctive feature of our empirical strategy is that it allows the measurement of the resource reallocation directly attributable to infrastructure provision. To achieve this, we propose a two-level top-down decomposition of aggregate productivity that combines and extends several strands of the literature. In our empirical application, we find significant production losses attributable to misallocation of inputs across firms, especially among African countries. Our empirical application also shows that infrastructure provision has stimulated aggregate TFP growth through both within and between-industry productivity gains.
    Keywords: Productivity growth; Resource allocation; Stochastic frontier analysis; Structural change
    JEL: C20 D24 O18 O47
    Date: 2022–02–03
  11. By: Mr. Ippei Shibata; Rui Mano; Katharina Bergant
    Abstract: What are the implications of the needed climate transition for the potential reallocation of the U.S. labor force? This paper dissects green and polluting jobs in the United States across local labor markets, industries and at the household-level. We find that geography alone is not a major impediment, but green jobs tend to be systematically different than those that are either neutral or in carbon-emitting industries. Transitioning out of pollution-intensive jobs into green jobs may thus pose some challenges. However, there is a wage premium for green-intensive jobs which should encourage such transitions. To gain further insights into the impending green transition, this paper also studies the impact of the Clean Air Act. We find that the imposition of the Act caused workers to shift from pollution-intensive to greener industries, but overall employment was not affected.
    Keywords: Green and polluting employment; Green Labor Market Transition; Environmental Regulation; IMF working paper Western Hemisphere department; green job; polluting employment; polluting job; Employment; Environmental policy; Labor markets; Wages; Global
    Date: 2022–07–01
  12. By: Mr. John C Bluedorn; Mr. Niels-Jakob H Hansen; Mr. Ippei Shibata; Marina M. Tavares; Francesca Caselli
    Abstract: Using individual-level data for 30 European countries between 1983 and 2019, we document the extent and earning consequences of workers’ reallocation across occupations and industries and how these outcomes vary with individual-level characteristics, namely (i) education, (ii) gender, and (iii) age. We find that while young workers are more likely to experience earnings gains with on-the-job sectoral and occupational switches, low-skilled workers’ employment transitions are associated with an earnings loss. These differences in earnings gains and losses also mask a high degree of heterogeneity related to trends in routinization. We find that workers, particularly low-skilled and older workers during recessions, experience a severe earning penalty when switching occupations from non-routine to routine occupations.
    Keywords: Labor market mobility; Job transitions; Occupational mobility; Routinization; Business cycles; worker reallocation; routine occupation; earnings gain; earnings consequence; occupation transition; Economic recession; Wages; Unemployment; Unskilled labor; Europe
    Date: 2022–06–24
  13. By: Achinthya Koswatta
    Abstract: Studies show that when exports go up, innovation goes up as well. But what is the mediating effect of domestic institutions in the association between exports and innovation? If any, which institutions are more likely to improve exports and innovation in developing countries, and how? To address this lacuna, this study employs estimations of industry fixed effects for 22 two-digit manufacturing industries in the period from 1996 to 2018. The first estimation includes 57 developing countries, and the second estimation excludes extreme outliers or unusual countries from the sample.
    Keywords: Innovation, Mediation analysis, Institutions, Fixed effects, Manufacturing industries, Exports
    Date: 2022
  14. By: Bachmann, Ronald (RWI); Gonschor, Myrielle (RWI)
    Abstract: We analyze if technological progress and the corresponding change in the occupational structure have improved the relative position of women in the labour market. We show that the share of women rises most strongly in non-routine cognitive and manual occupations, but declines in routine occupations. While the share of women also rises relatively strongly in high-paying occupations, womens' individual-level wages lag behind which implies within-occupation gender wage gaps. A decomposition exercise shows that composition effects with respect to both individual and job characteristics can explain the rise of female shares in the top tier of the labour market to an extent. However, the unexplained part of the decomposition is sizeable, indicating that developments such as technological progress are relevant.
    Keywords: female labour market participation, occupations, tasks, technological progress
    JEL: J21 J31 O33
    Date: 2022–07
  15. By: Harald Bathelt; Michael Storper
    Abstract: Evolutionary approaches have contributed substantially to the growing knowledge body about regional development processes and their underlying mechanisms. They have advanced our understanding particularly by going beyond case study methods, using empirical, mostly regression- based statistical analyses. One key concept that underlies evolutionary economic geography (EEG) is that of “related variety†. In EEG studies, regional industry structure is represented through its level of related variety, which in turn is found to be positively associated with favorable types of regional economic development. In this paper, we raise questions regarding the internal logic of the concept, its spatial expressions, measurement specifics, empirical regularities and biases, and the short- and long- term effects of related variety on regional development. Based on this examination, we make suggestions for future research.
    Keywords: Economic geographies of places; evolutionary economic geography (EEG); regional development; regional specialization; related variety
    JEL: L23 R11
    Date: 2022–08

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