nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒04‒24
eight papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Breakthrough Innovations and Productivity: An International Perspective By Kuusi, Tero; Nevavuo, Jenni
  2. The Changing Value of Employment and Its Implications By Davide Alonzo; Giovanni Gallipoli
  3. Italy and the trap of GVC downgrading: labour dependence in the European geography of production By Lorenzo Cresti; Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito
  4. Employment Effects of Offshoring, Technological Change and Migration in a Group of Western European Economies: Impact on Different Occupations By Michael Landesmann; Sandra M. Leitner
  5. Racial Discrimination and Lost Innovation: Evidence from US Inventors, 1895–1925 By Davide M. Coluccia; Gaia Dossi; Sebastian Ottinger
  6. Strapped for Cash: The Role of Financial Constraints for Innovating Firms By Esther Ann Bøler; Andreas Moxnes; Karen Helene Ulltveit-Moe
  7. Misallocation and Productivity Growth: a Meta-analysis By Maurice Bun; Theoplasti Kolaiti; Tolga Özden
  8. Revisiting Productivity Dynamics in Europe: A New Measure of Utilization-Adjusted TFP Growth By Diego Comin; Javier Quintana; Tom Schmitz; Antonella Trigari

  1. By: Kuusi, Tero; Nevavuo, Jenni
    Abstract: Abstract In this paper, we shed new light on the productivity impact of breakthrough patents, as well as their role in the variability of productivity across countries. We use text analysis and machine learning–based estimates of the number of breakthrough patents and show that there was a significant drop in quantity in the early 2000s. According to our econometric analysis, the slowdown in innovation activity has a clear temporal connection with the later slowdown in productivity in the 2010s. Breakthrough patents increased productivity on a large scale until the beginning of the 2010s, in particular in industrial information and communications technology (ICT) industries. In sectors other than ICT, productivity growth was more differentiated so that productivity growth is observed in industries that invested significantly in R&D after the emergence of breakthrough patents. We also identify large differences across countries in the link between productivity and breakthrough patents.
    Keywords: Productivity, Innovation, Breakthroughs, Patents
    JEL: D24 O31 O33
    Date: 2023–03–31
  2. By: Davide Alonzo (Université de Montréal); Giovanni Gallipoli (Vancouver School of Economics, UBC)
    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 J20 J30 J62
    Date: 2023–03
  3. By: Lorenzo Cresti; Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito
    Abstract: How does Italy position inside the European structure of trade relationships? How labour bilateral flows have changed over time? Which type of employment activity has been outsourced? Which insourced? Focusing on a three-country perspective, what are the employment bilateral relationships between Italy-Germany-Poland (descending periphery-core-ascending periphery)? To address these questions we develop a novel set of bilateral labour dependence indicators inside I-O production networks. Overall, we provide evidence of the reconfiguration of Italy as falling into the trap of GVC downgrading, with an increasing number of trade relationships in employment requirements, particularly in the most strategic productions, as insourced from abroad. The offshoring strategy conducted so far has resulted in a weakening of its internal production capacity and employment absorption, even more harshly when compared to other European countries.
    Keywords: Input-output; global value chains; international division of labour; core-periphery.
    Date: 2023–04–02
  4. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper estimates conditional demand models to examine the impact of offshoring, technological change, and migration on the labour demand of native workers differentiated by four different types of occupational groups managers/professionals, clerical workers, craft (skilled) workers and manual workers. The analysis is conducted for an unbalanced panel of five economies Austria, Belgium, France, Spain, and Switzerland covering the period 2005-2018. Our results point to important and occupation-specific effects offshoring seems to have beneficial employment effects for native craft workers in this set of economies, while negative effects for native manual workers across a wide set of industries (including manufacturing and services industries) and managers/professionals in manufacturing. Furthermore, there are important distinctions whether offshoring occurs in other advanced economies, in the EU13 or in developing countries. The analysis of the impact of technological change shows the strong positive impact which the additional IT equipment has on most occupational groups of native workers (with the exception of manual workers), while robotisation in manufacturing showed strongly negative impacts on the employment of all groups of workers and especially of craft workers. Increasing immigrant shares in the work forces showed strongly negative impacts on native workers – however, considering only the partial substitution effects and not including the potential for productivity and demand effects – and this is mostly accounted for by immigration from low- to medium-income source countries.
    Keywords: Employment, occupational groups, offshoring, technological change, immigration
    JEL: F16 F22 F66 O33
    Date: 2023–03
  5. By: Davide M. Coluccia; Gaia Dossi; Sebastian Ottinger
    Abstract: How can racial discrimination harm innovation? We study this question using data on US inventors linked to population censuses in 1895-1925. Our novel identification strategy leverages plausibly exogenous variation in the timing of lynchings and the name of the victims. We find an immediate and persistent decrease in patents granted to inventors who share their names with the victims of lynchings, but only when victims are Black. We hypothesize that lynchings accentuate the racial content of the victim’s name to patent examiners, who do not observe inventor race from patent applications. We interpret these findings as evidence of discrimination by patent examiners and provide evidence against alternative mechanisms.
    Keywords: Discrimination; Innovation; Lynchings;
    JEL: J15 N31 N32 O11 O31
    Date: 2023–03
  6. By: Esther Ann Bøler; Andreas Moxnes; Karen Helene Ulltveit-Moe
    Abstract: This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role.
    Keywords: intangible capital, patents, credit constraints, misallocation, productivity
    JEL: D25 G32 L25 L26 O34 O47
    Date: 2023
  7. By: Maurice Bun; Theoplasti Kolaiti; Tolga Özden
    Abstract: We use a meta-analysis to quantify the impact of misallocation of production factors on aggregate productivity. A key estimate in empirical studies on misallocation is the implied aggregate total factor productivity (TFP) loss due to the sub-optimal allocation of resources across firms. In our meta-analysis, we correlate this effect size with various study characteristics. First, we find that the TFP growth effect size is smaller than the level effect size. Second, we make a distinction between studies following a direct or indirect approach, where the former relates misallocation to one or more specific factors while the latter quantifies the overall effect of all possible sources. We find that studies following a direct approach generally report a smaller TFP loss than those using an indirect approach. Third, we find that the extent of misallocation and the corresponding productivity loss depends on the country of analysis. In particular, there is a negative correlation between TFP loss and the level of income.
    Keywords: meta-analysis; misallocation; productivity
    JEL: C40 D24 O47
    Date: 2023–04
  8. By: Diego Comin; Javier Quintana; Tom Schmitz; Antonella Trigari
    Abstract: We compute new estimates for Total Factor Productivity (TFP) growth in five European countries and in the United States. Departing from standard methods, we account for positive profits and use firm surveys to proxy for unobserved changes in factor utilization. These novelties have a major impact in Europe, where our estimated TFP growth series are less volatile and less cyclical than the ones obtained with standard methods. Based on our approach, we provide annual industry-level and aggregate TFP series, as well as the first estimates of utilization-adjusted quarterly TFP growth in Europe. JEL Codes: E01, E30, O30, O40
    Date: 2023

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