nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒12‒12
sixteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Automation and the Workforce: A Firm-Level View from the 2019 Annual Business Survey By Daron Acemoglu; Gary W. Anderson; David N. Beede; Cathy Buffington; Eric E. Childress; Emin Dinlersoz; Lucia S. Foster; Nathan Goldschlag; John C. Haltiwanger; Zachary Kroff; Pascual Restrepo; Nikolas Zolas
  2. Skilled Immigration, Task Allocation and the Innovation of Firms By Mayda, Anna Maria; Orefice, Gianluca; Santoni, Gianluca
  3. Does Updating Education Curricula Accelerate Technology Adoption in the Workplace? Evidence from Dual Vocational Education and Training Curricula in Switzerland By Schultheiss, Tobias; Backes-Gellner, Uschi
  4. Government Subsidies as a Risk-Sharing Policy Tool in Innovation Investment By Lu, Hao; De Fuentes, Claudia; Milla, Joniada; Ahmadi, Soheil
  5. The Impact of Patent Applications on Technological Innovation in European Countries By Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio
  6. Creative Disruption – Technology innovation, labour demand and the pandemic By Erling Barth; Alex Bryson; Harald Dale-Olsen
  7. Directed technical change and the resource curse By Mads Greaker; Tom-Reiel Heggedal; Knut Einar Rosendahl
  8. The Empirics of Technology, Employment and Occupations: Lessons Learned and Challenges Ahead By Montobbio, Fabio; Staccioli, Jacopo; Virgillito, Maria Enrica; Vivarelli, Marco
  9. Robots, Jobs, and Optimal Fertility Timing By Claudio Costanzo
  10. Migration, Technology Diffusion and Convergence in a Two-Country AK Growth Model By Ikhenaode, Bright Isaac; Parello, Carmelo Pierpaolo
  11. Structural change(s) in Ghana: A comparison between the trade, formal and informal sectors By Bernardo Caldarola
  12. What Do R&D Spillovers from Universities and Firms Contribute to Productivity? Plant level productivity and technological and geographic proximity in Japan By René BELDERBOS; IKEUCHI Kenta; FUKAO Kyoji; KIM Young Gak; KWON Hyeog Ug
  13. R&D and Productivity in Finnish Firms By Valmari, Nelli
  14. Banks, Credit Reallocation, and Creative Destruction By Christian Keuschnigg; Michael Kogler; Johannes Matt
  15. The Identification of Time-Invariant Variables in Panel Data Model: Exploring the Role of Science in Firms’ Productivity By Amoroso, Sara; Bruno, Randolph Luca; Magazzini, Laura
  16. Investment Tax Credits and the Response of Firms By Lerche, Adrian

  1. By: Daron Acemoglu; Gary W. Anderson; David N. Beede; Cathy Buffington; Eric E. Childress; Emin Dinlersoz; Lucia S. Foster; Nathan Goldschlag; John C. Haltiwanger; Zachary Kroff; Pascual Restrepo; Nikolas Zolas
    Abstract: This paper describes the adoption of automation technologies by US firms across all economic sectors by leveraging a new module introduced in the 2019 Annual Business Survey, conducted by the US Census Bureau in partnership with the National Center for Science and Engineering Statistics (NCSES). The module collects data from over 300,000 firms on the use of five advanced technologies: AI, robotics, dedicated equipment, specialized software, and cloud computing. The adoption of these technologies remains low (especially for AI and robotics), varies substantially across industries, and concentrates on large and young firms. However, because larger firms are much more likely to adopt them, 12-64% of US workers and 22-72% of manufacturing workers are exposed to these technologies. Firms report a variety of motivations for adoption, including automating tasks previously performed by labor. Consistent with the use of these technologies for automation, adopters have higher labor productivity and lower labor shares. In particular, the use of these technologies is associated with a 11.4% higher labor productivity, which accounts for 20-30% of the difference in labor productivity between large firms and the median firm in an industry. Adopters report that these technologies raised skill requirements and led to greater demand for skilled labor but brought limited or ambiguous effects to their employment levels.
    JEL: E22 J20 J24
    Date: 2022–11
  2. By: Mayda, Anna Maria (Georgetown University); Orefice, Gianluca (Université Paris-Dauphine); Santoni, Gianluca (CEPII, Paris)
    Abstract: This paper analyses the impact of skilled migrants on the innovation (patenting) activity of French firms between 1995 and 2010, and investigates the underlying mechanism. We present districtlevel and firm-level estimates and address endogeneity using a modified version of the shift-share instrument. Skilled migrants increase the number of patents at both the district and firm level. Large, high-productivity and capital-intensive firms benefit the most, in terms of innovation activity, from skilled immigrant workers. Importantly, we provide evidence that one channel through which the effect works is task specialization (as in Peri and Sparber, 2009). The arrival of skilled immigrants drives French skilled workers towards language-intensive, managerial tasks while foreign skilled workers specialize in technical, research-oriented tasks. This mechanism manifests itself in the estimated increase in the share of foreign inventors in patenting teams as a consequence of skilled migration. Through this channel, greater innovation is the result of productivity gains from specialization.
    Keywords: skilled immigration, innovation, patents
    JEL: F22 J61
    Date: 2022–11
  3. By: Schultheiss, Tobias (University of Zurich); Backes-Gellner, Uschi (University of Zurich)
    Abstract: In an environment of accelerating technological change and increasing digitalization, firms need to adopt new technologies faster than ever before to stay competitive. This paper examines whether updates of education curricula help to bring new technologies faster into firms' workplaces. We study technology changes and curriculum updates from an early wave of digitalization (i.e., computernumerically controlled machinery, computer-aided design, and desktop publishing software). We take a text-as-data approach and tap into two novel data sources to measure change in educational content and the use of technology at the workplace: first, vocational education curricula and, second, firms' job advertisements. To examine the causal effects of adding new technology skills to curricula on the diffusion of these technologies in firms' workplaces (measured by job advertisements), we use an event study design. Our results show that curriculum updates substantially shorten the time it takes for new technologies to arrive in firms' workplaces, especially for mainstream firms.
    Keywords: technological change, digitalization, curricula updates, technology diffusion, text-as-data
    JEL: O33 I25 J23
    Date: 2022–10
  4. By: Lu, Hao (Saint Mary’s University); De Fuentes, Claudia (Saint Mary’s University); Milla, Joniada (Saint Mary’s University); Ahmadi, Soheil (Saint Mary’s University)
    Abstract: Current literature on the impact assessment of government innovation subsidies is mainly empirical driven and lacks an overarching theoretical model to explain the conditions under which government subsidies create positive additionalities on private R&D investment. In this paper, we present a theoretical model that treats government subsidies as a risk-sharing vehicle for private R&D activities. More importantly, we argue that positive additionalities will be more likely to occur when the subsidies are allocated based on the risk-reward condition of the project. In addition, we show that the risk-sharing effect of government subsidies is influenced by a firm's absorptive capacity and the asset specificity of the project. By showing the conditions under which subsidies create positive additionality, we provide guidance to policymakers on how to improve the effectiveness of government support for innovation.
    Keywords: government subsidy, additionality, R&D and innovation, the risk-sharing model, absorptive capacity, asset specificity
    JEL: D50 H81 O31 O38
    Date: 2022–11
  5. By: Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio
    Abstract: We investigate the innovational determinants of “Patent Applications” in Europe. We use data from the European Innovation Scoreboard-EIS of the European Commission for 36 countries in the period 2010-2019. We use Panel Data with Fixed Effects, Panel Data with Random Effects, Pooled OLS, WLS and Dynamic Panel. We found that the variables that have a deeper positive association with “Patent Applications” are “Human Resources” and “Intellectual Assets”, while the variables that show a more intense negative relation with Patent Applications are “Employment Share in Manufacturing” and “Total Entrepreneurial Activity”. A cluster analysis with the k-Means algorithm optimized with the Silhouette Coefficient has been realized. The results show the presence of two clusters. A network analysis with the distance of Manhattan has been performed and we find three different complex network structures. Finally, a comparison is made among eight machine learning algorithms for the prediction of the future value of the “Patent Applications”. We found that PNN-Probabilistic Neural Network is the best performing algorithm. Using PNN the results show that the mean future value of “Patent Applications” in the estimated countries is expected to decrease of -0.1%.
    Keywords: Innovation, and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Diffusion Processes; Open Innovation.
    JEL: O30 O31 O32 O33 O34
    Date: 2022–11–12
  6. By: Erling Barth (Institute for Social Research, Oslo, and ESOP, Department of Economics, University of Oslo); Alex Bryson (University College London, IZA, NIESR); Harald Dale-Olsen (Institute for Social Research, Oslo, and IZA)
    Abstract: We utilize a new survey on Norwegian firms’ digitalization and technology investments, linked to population-wide register data, to show that the pandemic massively disrupted the technology investment plans of firms, not only postponing investments, but also introducing new technologies. More productive firms innovated, while less productive firms postponed investments. Most innovations were permanent, not due to acceleration of existing plans, thus the pandemic yields long-term influence in directions unanticipated before the pandemic. The new technologies are associated with increased labour demand for skilled workers, and reduced demand for unskilled workers, particularly for the more productive firms
    Keywords: Technology investments, Digitalization, Labour demand, Pandemic, COVID-19
    JEL: D22 D24 F14 L11 L60
    Date: 2022–11–01
  7. By: Mads Greaker; Tom-Reiel Heggedal; Knut Einar Rosendahl (Statistics Norway)
    Abstract: The "resource curse" is a potential threat to all countries relying on export income from abundant natural resources such as fossil fuels. The early literature hypothesized that easily accessible natural resources would lead to lack of technological progress. In this article we instead propose that abundance of fossil fuels can lead to the wrong type of technological progress. In order to inquire into our research question, we build a model of a small, open economy having specialized in export of fossil fuels. R&D in fossil fuel extraction technology competes with R&D in clean energy technologies. Moreover, technological progress is path dependent as current R&D within a technology type depends on past R&D within the same type. Finally, global climate policy may reduce the future value of fossil fuel export. We find that global climate policy may either lead to a resource curse or help the country escaping a potential resource curse. The ripeness of the clean energy technologies is essential for the outcomes: If the clean technology level is not too far beyond the fossil fuel technology, a shift to exporting clean energy is optimal independent of global climate policy and climate policy can accelerate this shift. While if the clean technology is far behind, a shift should only happen as a response to global climate policy, and the government should intervene to accelerate this shift.
    Keywords: Environment; Directed technological change; Innovation policy; Resource curse
    JEL: O30 O31 O33
    Date: 2022–09
  8. By: Montobbio, Fabio (Università Cattolica del Sacro Cuore); Staccioli, Jacopo (Università Cattolica del Sacro Cuore); Virgillito, Maria Enrica (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: What have we learned, from the most recent years of debate and analysis, of the future of work being threatened by technology? This paper presents a critical review of the empirical literature and outlines both lessons learned and challenges ahead. Far from being fully exhaustive, the review intends to highlight common findings and main differences across economic studies. According to our reading of the literature, a few challenges—and also the common factors affecting heterogeneous outcomes across studies—still stand, including (i) the variable used as a proxy for technology, (ii) the level of aggregation of the analyses, (iii) the deep heterogeneity of different types of technologies and their adopted mix, (iv) the structural differences across adopters, and (v) the actual combination of the organisational practices in place at the establishment level in affecting net job creation/destruction and work reorganisation.
    Keywords: technology, employment, skills, occupations, tasks, future of work
    JEL: O33
    Date: 2022–11
  9. By: Claudio Costanzo
    Abstract: Labor automation is generally associated with a decrease in demand for mid-skill jobs,often routine-intensive, in favor of the others. This paper investigates its effects onfertility timing decisions using European panel data, by constructing a measure of localexposure to industrial robotics, and by adopting a Fixed Effect with Two-StageLeast Squares methodology. Higher exposure is associated with an anticipation offertility in low- and high-skilled regional labor markets, and with its postponementin medium-skilled ones. An optimal stopping model, in which individuals adjust thetiming based on their future labor opportunities, formalizes the causal intuition. Itsnumerical application, based on survey data, suggests that the effect of an increase inobserved automation on the willingness to postpone fertility is concave with respect toeducation, consistently with the Routine-Biased Technological Change hypothesis.
    Keywords: Automation; Demography; Fertility; Robots
    JEL: J13 J21 J24 O33
    Date: 2022–11
  10. By: Ikhenaode, Bright Isaac; Parello, Carmelo Pierpaolo
    Abstract: This paper proposes a two-country AK model of growth with cross-country knowledge diffusion and endogenous migration to study the relationship between migration, income inequality and economic growth. In contrast with mainstream AK literature, we show that introducing knowledge diffusion from frontier to non-frontier countries makes AK models predict conditional convergence, with migration playing an important role in speeding up the catching-up process of non-frontier countries. When testing the robustness of the policy implications of the AK literature, we find that subsidizing capital accumulation in frontier countries stimulates migration and worldwide growth, but also that it increases cross-country inequalities in terms of both income and technology. On the contrary, subsidizing capital accumulation in non-frontier countries reduces migration and mitigates inequalities worldwide, but has no effects on the long-run pace of economic growth of the two countries.
    Keywords: Two-Country Model; Endogenous Growth; Labor Migration; Technology Transfer; Growth Policy
    JEL: E1 F1 O4
    Date: 2022–11–11
  11. By: Bernardo Caldarola
    Abstract: This paper uses the case of Ghana to unpack the role of the informal sector in the process of structural change. A structuralist view of structural change - framed as changes in the employment shares of different industries - is combined with the insight that countries strive to diversify towards more complex industries in pursuit of economic upgrading. The paper adopts and adapts the product space and complexity analytical frameworks to compare changes in the relative importance of industries across the trade, formal and informal sectors, over a ten-year period starting in 2003. To assess whether the Ghanaian labour force has moved towards more or less complex industries, the changes in relative shares of finely disaggregated industries are assessed against an employment-based industrial complexity index. The results indicate that Ghana’s export and formal sectors have moved towards more complex industries, although export specialisation has moved towards export of natural resources. While exports of manufactured goods have increased, employment in formal and informal manufacturing has contracted, although, in the former case, employment has relocated towards more complex manufacturing industries. In contrast, the informal sector has moved towards less complex activities. The results stress on the need to align the productive capabilities of the informal sector with the Ghana's productive structure in order to allow the participation of Ghanaian households to the process of structural transformation.
    Keywords: Structural change; industrial complexity; Ghana; employment; informality.
    Date: 2022–11–28
  12. By: René BELDERBOS; IKEUCHI Kenta; FUKAO Kyoji; KIM Young Gak; KWON Hyeog Ug
    Abstract: We examine the simultaneous effects of spillovers due to R&D by universities and by firms on total factor productivity in a panel of over 20,000 Japanese manufacturing plants. Estimating geographic decay functions based on the location of the universe of manufacturing plants run by R&D conducting firms and public research institutions in Japan, we find a positive influence of both private and public technologically proximate-R&D stocks, which decay in distance and become negligible at around 500 kilometers. Decomposition analyses show that declining R&D spillovers are responsible for a substantial part of the decline in the rate of TFP growth in Japanese manufacturing. The exit of geographically proximate plants operated by R&D intensive firms, which may be associated with a relocation of manufacturing activity overseas, plays a notable role in this process and is an important phenomenon in major industrial agglomerations such as Tokyo and Osaka.
    Date: 2022–11
  13. By: Valmari, Nelli
    Abstract: Abstract Productivity of the Finnish private sector decreased during the financial crisis of 2008–2009 and, since then, productivity growth has not reached the level preceding the crisis. A key factor underlying productivity growth is R&D. The population of Finnish firms, excluding Nokia, have increased their R&D inputs since the financial crisis. Therefore, it is worthwhile considering whether changes in productivity effects of R&D, instead of changes in volumes of R&D inputs, may explain the slowdown in productivity growth. This paper estimates productivity effects of Finnish firms’ R&D inputs in several industries for the years 2001–2009 and 2010–2018. The estimates are used to find out whether the productivity effects of R&D have decreased after the financial crisis. The empirical strategy (Doraszelski and Jaumandreu, 2013) allows for productivity effects that are nonlinear and heterogeneous across firms. For most of the industries studied, there is no statistical evidence that the productivity effects of R&D are lower for the years 2010–2018 than for the years 2001–2009. Instead, there is evidence that, in some industries, the productivity effects of R&D increased after the financial crisis. In other words, low productivity growth after the financial crisis does not seem to be caused by a decrease in the productivity effects of R&D.
    Keywords: R&D, Productivity, Production function estimation
    JEL: D24 L60 O30
    Date: 2022–11–28
  14. By: Christian Keuschnigg (University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Swiss Finance Institute); Michael Kogler (University of St. Gallen); Johannes Matt (London School of Economics & Political Science (LSE))
    Abstract: How do banks facilitate creative destruction and shape firm turnover? We develop a dynamic general equilibrium model of bank credit reallocation with endogenous firm entry and exit that allows for both theoretical and quantitative analysis. By restructuring loans to firms with poor prospects and high default risk, banks not only accelerate the exit of unproductive firms but also redirect existing credit to more productive entrants. This reduces banks’ dependence on household deposits that are often supplied inelastically, thereby relaxing the economy’s resource constraint. A more efficient loan restructuring process thus fosters firm creation and improves aggregate productivity. It also complements policies that stimulate firm entry (e.g., R&D subsidies) and renders them more effective by avoiding a crowding-out via a higher interest rate.
    Keywords: creative destruction, reallocation, bank credit, productivity
    JEL: E23 E44 G21 O4
    Date: 2022–11
  15. By: Amoroso, Sara (European Commission, Joint Research Centre); Bruno, Randolph Luca (University College London); Magazzini, Laura (Sant'Anna School of Advanced Studies)
    Abstract: Recent literature has raised the attention on the estimation of time-invariant variables both in a static and a dynmamic framework. In this context, Hausman-Taylor type estimators have been applied, relying crucially on the distinction between exogenous and endogenous variables (in terms of correlation with the time-invariant error component). We show that this provision can be relaxed, and identification can be achieved by relying on the milder assumption that the correlation between the individual effect and the time-varying regressors is homogenous over time. The methodology is applied to identify the role of inputs from "Science" (firm-level publications' stock) on firms' labour productivity, showing that the effect is larger for those firms with higher level of R&D investments. The results further support the dual – direct and indirect – role of R&D.
    Keywords: panel data, time-invariant variables, science, productivity, R&D
    JEL: C23 O32 L20
    Date: 2022–11
  16. By: Lerche, Adrian (LMU Munich)
    Abstract: This paper estimates the direct effects of investment tax credits on firms' production behavior and the additional indirect effects arising from agglomeration economies. Exploiting a change in tax credit rates by firm size in Germany, I find that manufacturing firms increase capital and employment, with labor demand in information and communication technology-intensive industries shifting towards college-educated workers. Using geolocation data, I show that agglomeration benefits lead to a sizable further firm production expansion with these benefits materializing within distances of 5 kilometers. Worker flows from the service sector and from non-employment, rather than between manufacturing firms, explain the employment effects.
    Keywords: investment tax incentives, capital, labor demand, agglomeration
    JEL: D22 H25 H32 J23 R11
    Date: 2022–10

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