nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒04‒10
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Climate change and labour-saving technologies: the twin transition via patent texts By Tommaso Rughi; Jacopo Staccioli; Maria Enrica Virgillito
  2. Robots, occupations, and worker age: A production-unit analysis of employment By Deng, Liuchun; Müller, Steffen; Plümpe, Verena; Stegmaier, Jens
  3. Robots and Workers: Evidence from the Netherlands By Acemoglu, Daron; Koster, Hans R.A.; Ozgen, Ceren
  4. A portrait of AI adopters across countries: Firm characteristics, assets’ complementarities and productivity By Flavio Calvino; Luca Fontanelli
  5. Is acquisition-FDI during an economic crisis detrimental for domestic innovation? By Maria Garcia-Vega; Apoorva Gupta; Richard Kneller
  6. The Impact of University Patent Ownership on Innovation and Commercialization By Jun Wang; Yi Qian
  7. Digitalisation and sustainability strategies at the firm level By Horbach, Jens
  8. Political Connections, Business Groups and Innovation By Commander, Simon; Estrin, Saul; De Silva, Thamashi
  9. Technical Founders, Digital Transformation and Corporate Technological Innovation: Empirical Evidence from Listed Companies in China’s STAR Market By Zhi-Guang Li; Yanrui Wu; Yao-Kuang Li
  10. On the direct and indirect effects of ICT on SMEs export performance. Evidence from Colombian manufacturing By Andrés Mauricio Gomez-Sanchez; Juan A. Máñez Castillejo; Juan Alberto Sanchis-Llopis
  11. GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models By Tyna Eloundou; Sam Manning; Pamela Mishkin; Daniel Rock
  12. Not lost in translation: The implications of machine translation technologies for language professionals and for broader society By Francesca Borgonovi; Justine Hervé; Helke Seitz
  13. Tackling the UK's Regional Economic Inequality: Binding Constraints and Avenues for Policy Intervention By Stansbury, Anna; Turner, Dan; Balls, Ed
  14. Was Robert Gibrat Right? A Test Based on the Graphical Model Methodology By Guerzoni, Marco; Riso, Luigi; Vivarelli, Marco
  15. Creation, destruction and reallocation of jobs in italian firms: an analysis based on administrative data By Luca Citino; Edoardo Di Porto; Andrea Linarello; Francesca Lotti; Enrico Sette

  1. By: Tommaso Rughi; Jacopo Staccioli; Maria Enrica Virgillito
    Abstract: This paper provides a direct understanding of the twin transition from the innovative activity domain. It starts with a technological mapping of the technological innovations characterised by both climate change mitigation/adaptation (green) and labour-saving attributes. To accomplish the task, we draw on the universe of patent grants in the USPTO since 1976 to 2021 reporting the Y02-Y04S tagging scheme and we identify those patents embedding an explicit labour-saving heuristic via a dependency parsing algorithm. We characterise their technological, sectoral and time evolution. Finally, after constructing an index of sectoral penetration of LS and non-LS green patents, we explore its impact on employment share growth at state level in the US. Our evidence shows that employment shares in sectors characterised by a higher exposure to LS (non-LS) technologies present an overall negative (positive) growth dynamics.
    Keywords: Climate change mitigation technologies; Labour-saving technologies; Search heuristics; Natural Language Processing; Labour markets.
    Date: 2023–03–15
  2. By: Deng, Liuchun; Müller, Steffen; Plümpe, Verena; Stegmaier, Jens
    Abstract: We analyse the impact of robot adoption on employment composition using novel micro data on robot use in German manufacturing plants linked with social security records and data on job tasks. Our task-based model predicts more favourable employment effects for the least routine-task intensive occupations and for young workers, with the latter being better at adapting to change. An event-study analysis of robot adoption confirms both predictions. We do not find adverse employment effects for any occupational or age group, but churning among low-skilled workers rises sharply. We conclude that the displacement effect of robots is occupation biased but age neutral, whereas the reinstatement effect is age biased and benefits young workers most.
    Keywords: automation, employment, industrial robots, occupation, worker age, workforce composition
    JEL: D22 J23 J24 O33
    Date: 2023
  3. By: Acemoglu, Daron (MIT); Koster, Hans R.A. (Vrije Universiteit Amsterdam); Ozgen, Ceren (University of Birmingham)
    Abstract: We estimate the effects of robot adoption on firm-level and worker-level outcomes in the Netherlands using a large employer-employee panel dataset spanning 2009-2020. Our firm-level results confirm previous findings, with positive effects on value added and hours worked for robot-adopting firms and negative outcomes on competitors in the same industry. Our worker-level results show that directly-affected workers (e.g., bluecollar workers performing routine or replaceable tasks) face lower earnings and employment rates, while other workers indirectly gain from robot adoption. We also find that the negative effects from competitors' robot adoption load on directly-affected workers, while other workers benefit from this industry-level robot adoption. Overall, our results highlight the uneven effects of automation on the workforce.
    Keywords: robots, workers, technology, productivity, the Netherlands
    JEL: D63 E22 E23 E24 J24 O33
    Date: 2023–03
  4. By: Flavio Calvino; Luca Fontanelli
    Abstract: This report analyses the use of artificial intelligence (AI) in firms across 11 countries. Based on harmonised statistical code (AI diffuse) applied to official firm-level surveys, it finds that the use of AI is prevalent in ICT and Professional Services and more widespread across large – and to some extent across young – firms. AI users tend to be more productive, especially the largest ones. Complementary assets, including ICT skills, high-speed digital infrastructure, and the use of other digital technologies, which are significantly related to the use of AI, appear to play a critical role in the productivity advantages of AI users.
    Keywords: AI, artificial intelligence, productivity, technology adoption
    Date: 2023–04–11
  5. By: Maria Garcia-Vega; Apoorva Gupta; Richard Kneller
    Abstract: This paper examines how acquisition-FDI during a financial crisis, or fire-sale FDI, affects the R&D investments of target firms. We compare these effects with acquisitions that occur during periods of strong economic growth. Using a panel of Spanish firms from 2004 to 2014, we find that irrespective of when in the business cycle the acquisition occurs, the best domestic firms are cherry-picked by foreign multinationals. Using propensity score matching and difference-in-difference regressions, we find that firms acquired during crises experience smaller declines in domestic R&D than firms acquired during periods of robust growth. To explain why fire-sale FDI does not result in large declines in R&D in target firms, we rely on the macroeconomic literature on the opportunity cost of R&D over the business cycle. Consistent with this theory, we find that firms acquired during crises search for new markets and technologies by becoming more exploratory in their innovation than firms acquired during non-crisis periods.
    Keywords: foreign acquisition; recession; innovation; business cycle
    Date: 2023
  6. By: Jun Wang; Yi Qian
    Abstract: This paper contributes to the literature on innovation policies and institutional theory on conditions for effective institutional changes. The "three rights" reform of 26 universities and the mixed ownership reform of Southwest Jiaotong University are important explorations made by China in recent years to promote innovations and the commercialization of patents in universities. The two reforms have adopted different models in the allocation of university patent ownership. The former completely allocated the patent ownership to universities, while the latter allocated 70% of the patent ownership to the inventors. Based on Chinese patent data and university statistical data, we empirically test the effects of these two university-patent ownership allocation models on innovations and the commercialization of patents. We find that the institutional environment caused unexpected effects in both reform models. The "three rights" reform has a significant impact on patent-licensing in 26 universities. The mixed ownership reform has significantly increased the number of patent transfers and patent applications of Southwest Jiaotong University, yet has tilted R&D toward experimental research with relatively low creativity. The findings yield broader implications for organization and innovation.
    JEL: K11 O30 O32 O38
    Date: 2023–03
  7. By: Horbach, Jens
    Abstract: The paper analyses the relationship between digitalisation and sustainability strategies at the firm level. In a first step, operational definitions of digitalisation and sustainability allowing the development of fitting empirical indicators are discussed. The possible technical and social transmission channels of the effects of digitalisation on a sustainable firm development are analysed. From a technical side of view, less energy consumption induced by intelligent sensoring systems or the reduction of meetings in presence by video conferences or the promotion of home office work leading to less travel activities might lead to a more sustainable production. Digitalisation might also act as pre-condition of eco-process innovations (e. g. the introduction of intelligent control systems leading to material and energy savings). From a societal perspective, digitalisation might lead to a higher availability of information on sustainability issues promoting a faster spread of environmentally related social norms. The empirical analysis is based on firm data of the recent Eurobarometer 486/2020 of the European Commission. The econometric results show that 'digitally active' firms seem to be more sustainable for all available indicators. All considered digitalisation measures such as artificial intelligence, machine learning, or the use of smart devices and intelligent sensors are positively correlated to eco-innovation and other sustainability-related activities of the questioned firms.
    Keywords: Digitalisation, sustainability, eco-innovation, probit analysis, negative binomial regression
    JEL: C35 O31 Q01 Q55
    Date: 2023
  8. By: Commander, Simon (IE Business School, Altura Partners); Estrin, Saul (London School of Economics); De Silva, Thamashi (Capital Economics)
    Abstract: It has been argued that Asia's remarkable economic achievements of the past 50 years build on institutional arrangements very different from the West, notably the central role of business groups (BGs). As Asian economies move from extensive to intensive growth, we enquire whether the business group organsational format will be as effective going forward. We argue that the ubiquity of BGs has been associated with the accretion of major market power, as well as overall concentration. Our empirical work, drawing on a sample of more than 9000 Asian firms, finds that while BGs are more innovative than non-affiliates, this is unsurprising given their access to additional resources. However, when we look at innovation at the country level, we find that the wider consequences of BGs on innovation may be negative.
    Keywords: innovation, R&D, Asian business groups, market power, overall concentration
    JEL: L22 O30 O53
    Date: 2023–03
  9. By: Zhi-Guang Li (School of Management, Hefei University of Technology, Hefei, China); Yanrui Wu (Business School, The University of Western Australia); Yao-Kuang Li (School of Management, Hefei University of Technology, Hefei, China)
    Abstract: Technology entrepreneurship and corporate innovation are important for the development of indigenous innovation. In the digital age, founders are subject to fundamental changes in their strategy choices, which in turn affect corporate innovation performance. This paper aims to explore the strategic choices adopted by technical founders of listed companies in China’s STAR market to reap the rewards of innovation in a digital context. Based on the annual reports of 124 listed companies in China’s STAR Market, this paper applies machine learning methods to quantify digital transformation of enterprises, and empirically analyzes the relationship between technical founders and innovation performance by constructing a moderated mediating model. Our results show that companies with technical founders are more likely to adopt digital transformation and thus show better innovation performance. In terms of heterogeneity, the empirical results demonstrate that firms with technical founders show better performance in digital transformation, followed in turn by those with business founders and academic founders. Both the positive relationship between enterprise digital transformation and innovation performance and the mediating effect of digital transformation are positively moderated by venture capital or private equity support. The findings reveal the microscopic mechanism of the role of technology-based founders on corporate innovation performance and hence have practical implications for promoting corporate digital transformation and enhancing firm technological innovation.
    Keywords: Technical founder; Technological Innovation; Technology entrepreneurship; Digital transformation; Innovation performance; STAR Market
    Date: 2023
  10. By: Andrés Mauricio Gomez-Sanchez (Universidad del Cauca, Colombia.); Juan A. Máñez Castillejo (Universidad de Valencia and ERICES, Valencia, España.); Juan Alberto Sanchis-Llopis (Universidad de Valencia and ERICES, Valencia, España.)
    Abstract: The objective of this document is to explore the effect of ICT on the performance of Colombian manufacturing SMEs in export markets. To our knowledge, this is the first piece of evidence that explores this issue for an emerging economy. In doing so, we include some cutting-edge novelties such as persistence in export intensity; cross effect from imports to exports, and the role of initial conditions problem. We replicate the Tobit II-Heckman model procedure by using a dynamic Generalized Linear Model (GLM) because the export intensity is a proportion and include the inverse Mills ratio to deal with the selection problem. We merge three databases namely The Annual Manufacturing Survey (EAM); the Innovation and Technological Development Survey (EDIT) and the Annual ICT Manufacturing Survey (EAM-TIC); published by the National Administrative Department of Statistics (DANE) in six waves since 2013 to 2018. In general, our main results suggest that the impacts of information technologies on export intensity are always positive, regardless of the ICT analysed. Other results show persistence in exports, cross effects and self-selection in export markets, among others.
    Keywords: ICT, Exports, Sunk costs, Cross effects, Empirical Studies of Trade, Emerging economies, Empirical Analysis
    JEL: L16 L96 F14 O33 C23 D22 D24
    Date: 2023–04
  11. By: Tyna Eloundou; Sam Manning; Pamela Mishkin; Daniel Rock
    Abstract: We investigate the potential implications of Generative Pre-trained Transformer (GPT) models and related technologies on the U.S. labor market. Using a new rubric, we assess occupations based on their correspondence with GPT capabilities, incorporating both human expertise and classifications from GPT-4. Our findings indicate that approximately 80% of the U.S. workforce could have at least 10% of their work tasks affected by the introduction of GPTs, while around 19% of workers may see at least 50% of their tasks impacted. The influence spans all wage levels, with higher-income jobs potentially facing greater exposure. Notably, the impact is not limited to industries with higher recent productivity growth. We conclude that Generative Pre-trained Transformers exhibit characteristics of general-purpose technologies (GPTs), suggesting that as these models could have notable economic, social, and policy implications.
    Date: 2023–03
  12. By: Francesca Borgonovi; Justine Hervé; Helke Seitz
    Abstract: The paper discusses the implications of recent advances in artificial intelligence for knowledge workers, focusing on possible complementarities and substitution between machine translation tools and language professionals. The emergence of machine translation tools could enhance social welfare through enhanced opportunities for inter-language communication but also create new threats because of persisting low levels of accuracy and quality in the translation output. The paper uses data on online job vacancies to map the evolution of the demand for language professionals between 2015 and 2019 in 10 countries and illustrates the set of skills that are considered important by employers seeking to hire language professionals through job vacancies posted on line.
    JEL: J21 J23 J28 Z13
    Date: 2023–03–30
  13. By: Stansbury, Anna; Turner, Dan; Balls, Ed
    Abstract: The UK is one of the most regionally unequal industrialised economies. In this paper, we analyze the UK’s regional economic inequality from the perspective of productivity disparities between large regions, focusing on the gap between London/South East vs the rest. We look at four important economic inputs – education, infrastructure, innovation, and access to finance – for each one building up a collage of evidence to gauge the extent to which it is a binding constraint on regions’ productivity growth. We then analyze interregional migration. We find little evidence consistent with the hypotheses (i) that low shares of university graduates remain the primary constraint on growth for the UK’s regions; (ii) that there is a generalized issue with access to finance for firms outside the South East; or (iii) that low or falling regional migration rates are to blame for the persistence of the UK’s regional economic inequalities. Instead, we find evidence consistent with (i) a specific relative shortage of STEM skills; (ii) binding transport infrastructure constraints within major non-London conurbations; (iii) a failure of public innovation policy to support clusters beyond the South East, in particular through the regional distribution of public support for Research and Development (R&D); and (iv) missed opportunities for higher internal mobility due to London’s overheating housing market.
    Date: 2023–03–04
  14. By: Guerzoni, Marco (Università degli Studi di Milano-Bicocca); Riso, Luigi (Catholic University Milan); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    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: 2023–03
  15. By: Luca Citino (Bank of Italy); Edoardo Di Porto (INPS); Andrea Linarello (Bank of Italy); Francesca Lotti (Bank of Italy); Enrico Sette (Bank of Italy)
    Abstract: We study the creation, destruction and reallocation of jobs in Italy over a period of almost forty years, until 2021. The size of gross job flows was large and in line with other developed economies. Every year, around 13 per cent of jobs are created and 12 per cent are destroyed. Most of this creation and destruction occurs within narrowly defined sectors, highlighting the crucial role that firm heterogeneity – rather than sectoral shocks – plays in driving job flows. Although employment at incumbent firms is more influenced by the business cycle, the entry and exit of firms both contribute, respectively, to one third of job creation and destruction. During the pandemic, and contrary to what has been documented for the US and the UK, Italy experienced a decline in excess job reallocation, entirely due to within-sector flows, while between-sector reallocation increased only slightly. ICT services and the construction sector received larger inflows of workers. The former did so as a result of the opportunities brought about by the shift to a digital economy, while the latter was prompted by hefty fiscal incentives targeted at the industry.
    Keywords: reallocation, job creation, job destruction, COVID-19, recession, pandemic
    JEL: E24 E32 J63 O4
    Date: 2023–03

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