nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒04‒03
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Wages and productivity in Argentinian manufacturing: A structuralist and distributional firm-level analysis By Gómez, María Celeste; Virgillito, Maria Enrica
  2. Multinationals, robots and the labor share By Fabrizio Leone
  3. The geography of structural transformation: Effects on inequality and mobility By Kohei Takeda
  4. The role of product digitization for productivity By Schubert, Torben; Ashouri, Sajad; Deschryvere, Matthias; Jäger, Angela; Visentin, Fabiana; Cunningham, Scott; Hajikhani, Arash; Pukelis, Lukas; Suominen, Arho
  5. Robot adoption, worker-firm sorting and wage inequality: Evidence from administrative panel data By Ester Faia; Gianmarco I. P. Ottaviano; Saverio Spinella
  6. The changing value of employment and its implications By Alonzo, Davide; Gallipoli, Giovanni
  7. Economic stimulus effects of product innovation under demand stagnation By Daisuke Matsuzaki; Yoshiyasu Ono
  8. Why Big Data Can Make Creative Destruction More Creative – But Less Destructive By Norbäck, Pehr-Johan; Persson, Lars
  9. The Law of Proportionate Effect: A test based on the graphical model methodology By Guerzoni, Marco; Riso, Luigi; Vivarelli, Marco
  10. When Did Growth Begin? New Estimates of Productivity Growth in England from 1250 to 1870 By Bouscasse, P.; Nakamura, E.; Steinsson, J.

  1. By: Gómez, María Celeste; Virgillito, Maria Enrica
    Abstract: Wages and productivity represent two of the most relevant variables to consider in economic development. Given the low productivity levels that emerging countries reveal, the accumulation of productive capabilities and a narrower dispersion across sectors would enable emerging countries to overcome the middle-income trap. Yet, this positive trend in productivity should translate into higher wages. Thus, we pose the following questions applied to a middle-income trapped country: is there a link between labour productivity and wages in the Argentine manufacturing sector? Does it differ across techno-productive classes or wage levels? Which factors affect this nexus, considering premature deindustrialisation? Using a firm-level dataset from 2010 to 2016, we perform quantile regression estimates to evaluate the link between productivity and wages across the conditional wage distribution among manufacturing firms. Based on a structural analysis, we identify the differences in these elasticities at 2-ISIC code levels and across Pavitt taxonomies. Our results confirm a positive, but extremely low, pass-through between productivity and wages in the Argentinian manufacturing firms, different across sectors according to their techno-productive capabilities, robust under different empirical strategies.
    Keywords: Gains from productivity, Development, Asymmetries
    JEL: J31 D24 L6 O14 C21
    Date: 2023
  2. By: Fabrizio Leone
    Abstract: Using a panel of Spanish manufacturing firms covering the 1990-2017 period, I show that firms acquired by multinational enterprises start investing in industrial robots, which leads to a reduction of the labor share at the firm and industry levels. The results are explained by a model of robot adoption and are robust to accounting for selection into multinational ownership. The estimates imply that, without multinationals and robots, the manufacturing labor share would be at its level of two decades ago. These findings shed new light on how globalization and technological change jointly shape the decline in the labor share.
    Keywords: multinational enterprises, industrial robots, labor share, globalization, technological change
    Date: 2023–02–06
  3. By: Kohei Takeda
    Abstract: The interplay between structural transformation in the aggregate and local economies is key to understanding spatial inequality and worker mobility. This paper develops a dynamic overlapping generations model of economic geography where historical exposure to different industries creates persistence in occupational structure, and non-homothetic preferences and differential productivity growth lead to different rates of structural transformation. Despite the heterogeneity across locations, sectors, and time, the model remains tractable and is calibrated with the U.S. economy from 1980 to 2010. The calibration allows us to back out measures of upward mobility and inequality, thereby providing theoretical underpinnings to the Gatsby Curve. The counterfactual analysis shows that structural transformation has substantial effects on mobility: if there were no productivity growth in the manufacturing sector, income mobility would be about 6 percent higher, and if amenities were equalized across locations, it would rise by around 10 percent. In these effects, we find that different degrees of historical exposure to industries in local economies play an important role.
    Keywords: structural transformation, upward mobility, labor mobility, economic geography
    Date: 2022–12–12
  4. By: Schubert, Torben; Ashouri, Sajad; Deschryvere, Matthias; Jäger, Angela; Visentin, Fabiana (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Cunningham, Scott; Hajikhani, Arash; Pukelis, Lukas; Suominen, Arho
    Abstract: Digitalization is considered an important driver of the unravelling societal and economic transformations. However, holding both promises and challenges, its effects on the performance of individual firms are still underexplored. In this paper, we recognize that digitalization may take many shapes and try isolating the effects specifically of product digitization on firm level labour productivity. Our analyses are based on a large Europe-wide unique dataset combining structured information from ORBIS and PATSTAT with novel web-scraped information on digitalization in firms involved in high-tech manufacturing. We show that digitalization benefits productivity. However, the effect appears to result exclusively from product digitization, while a general digital intensity measure turned out to be insignificant. Moreover, we show that the effects are stronger for firms with higher initial productivity and firms located in countries considered digitally leading. Our results from the European high-tech sector suggest that the digital transformation in Europe is slow paced and scaled-up in only a fraction of the firms.
    JEL: O49 C81 O33 D20 O47
    Date: 2023–02–14
  5. By: Ester Faia; Gianmarco I. P. Ottaviano; Saverio Spinella
    Abstract: Leveraging the geographic dimension of a large administrative panel on employer-employee contracts, we study the impact of robot adoption on wage inequality through changes in worker-firm assortativity. Using recently developed methods to correctly and robustly estimate worker and firm unobserved characteristics, we find that robot adoption increases wage inequality by fostering both horizontal and vertical task specialization across firms. In local economies where robot penetration has been more pronounced, workers performing similar tasks have disproportionately clustered in the same firms ('segregation'). Moreover, such clustering has been characterized by the concentration of higher earners performing more complex tasks in firms paying higher wages ('sorting'). These firms are more productive and poach more aggressively. We rationalize these findings through a simple extension of a well-established class of models with two-sided heterogeneity, on-the-job search, rent sharing and employee Bertrand poaching, where we allow robot adoption to strengthen the complementarities between firm and worker characteristics.
    Keywords: robot adoption, worker-firm sorting, wage inequality, technological change, finite mixture models
    Date: 2023–02–10
  6. By: Alonzo, Davide; Gallipoli, Giovanni
    Abstract: We characterize the employment value of different worker-occupation matches and estimate the substitutability of match-specific inputs in production. In an equilibrium model of the U.S. labor market, we examine the responses of employment and wages to shifts in technology and match values. Earnings are mainly driven by technology while match value heterogeneity influences the distribution of workers across occupations. The model delivers measures of rents and compensating differentials. After 1980, employment rents increased for educated workers but stagnated for others. Compensating differentials have risen on average, particularly in occupations where worker mobility has grown.
    Keywords: employment, wages, equilibrium, technological change, heterogeneity, occupations
    JEL: D51 D58 J2 J3 J62
    Date: 2023
  7. By: Daisuke Matsuzaki; Yoshiyasu Ono
    Abstract: When faced with economic stagnation, innovation, product innovation in particular, is often cited as an effective stimulus because it is thought to encourage household consumption and lead to higher demand. Using a secular stagnation model with wealth preference, we examine the effects of product innovation on employment and consumption. Two types of product innovation are examined: quantity-augmenting-like innovation and addictive innovation. The former works as if a larger quantity were consumed although the actual quantity remains the same. The latter reduces the elasticity of the marginal utility of consumption. We find that the former reduces both consumption and employment whereas the latter expands them.
    Date: 2023–03
  8. By: Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: The application of machine learning (ML) to big data has become increasingly important. We propose a model where firms have access to the same ML, but incumbents have access to historical data. We show that big data raises entrepreneurial barriers making the creative destruction process less destructive (less business-stealing) if the entrepreneur has weak access to the incumbent’s data. It is also shown that this induces entrepreneurs to take on more risk and be more creative. Policies making data generally available may therefore be suboptimal. Supporting entrepreneurs’ access to ML might be preferable since it stimulates creative entrepreneurship.
    Keywords: Machine Learning; Big Data; Creative Destruction; Entrepreneurship; Operational Data
    JEL: L10 L20 M13 O30
    Date: 2023–02–22
  9. By: Guerzoni, Marco; Riso, Luigi; Vivarelli, Marco
    Abstract: Using both regression analysis and an unsupervised graphical model approach (never applied before to this issue), we confirm the rejection of the Gibrat's law when our firm-level data are considered over the entire investigated period, while the opposite is true when we allow for market selection. Indeed, the growth behavior of the re-shaped (smaller) population of the survived most efficient firms is in line with the Law of Proportionate Effect; this evidence reconciles early and current literature testing Gibrat's law and may have interesting implications in terms of both applied and theoretical research.
    Keywords: Gibrat's Law, firm survival, market selection, firm growth
    JEL: L11
    Date: 2023
  10. By: Bouscasse, P.; Nakamura, E.; Steinsson, J.
    Abstract: We provide new estimates of the evolution of productivity in England from 1250 to 1870. Real wages over this period were heavily influenced by plague-induced swings in the population. We develop and implement a new methodology for estimating productivity that accounts for these Malthusian dynamics. In the early part of our sample, we find that productivity growth was zero. Productivity growth began in 1600—almost a century before the Glorious Revolution. We estimate productivity growth of 3% per decade between 1600 and 1760, which increased to 6% per decade between 1770 and 1860. Our estimates attribute much of the increase in output growth during the Industrial Revolution to a falling land share of production, rather than to faster productivity growth. Our evidence helps distinguish between theories of why growth began. In particular, our findings support the idea that broad-based economic change preceded the bourgeois institutional reforms of 17th century England and may have contributed to causing them. We estimate relatively weak Malthusian population forces on real wages. This implies that our model can generate sustained deviations from the “iron law of wages†prior the Industrial Revolution.
    JEL: N13 O40 J10
    Date: 2023–03–07

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