nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒05‒08
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Robots at work: new evidence with recent data By Almeida, Derick; Sequeira, Tiago
  2. Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors By Ufuk Akcigit; Nathan Goldschlag
  3. LOCAL LABOUR TASKS AND PATENTING IN US COMMUTING ZONES By Marialuisa Divella; Alessia Lo Turco; Alessandro Sterlacchini
  4. Institutional Blockholders and Corporate Innovation By Bing Guo; Dennis C. Hutschenreiter; David Pérez-Castrillo; Anna Toldrà-Simats
  5. Green Technology Adoption, Complexity, and the Role of Public Policy: A Simple Theoretical Model By Sanjit Dhami
  6. Are digital technologies reshaping trade patterns? Evidence from European industries By Marco Sforza
  7. Military Spending and Innovation: Learning from 19th Century World Fair Exhibition Data By Danzer, Alexander M.; Danzer, Natalia; Feuerbaum, Carsten
  8. Related or unrelated diversification: What is smart specialization? By Nomaler, Önder; Verspagen, Bart
  9. Renewal of Companies Through Product Switching By Kuosmanen, Natalia; Valmari, Nelli
  10. Can Workers Still Climb the Social Ladder as Middling Jobs Become Scarce? Evidence from Two British Cohorts By Cecilia Garcia-Peñalosa; Fabien Petit; Tanguy van Ypersele
  11. Local and National Concentration Trends in Jobs and Sales: The Role of Structural Transformation By David Autor; Christina Patterson; John Van Reenen
  12. Technology diffusion and international business cycles By Uluc Aysun

  1. By: Almeida, Derick; Sequeira, Tiago
    Abstract: We reassess the relationship between robotization and the growth in labor productivity with more recent data. We discover that the effect of robot density in the growth productivity substantially decreased in the post-2008 period. In this period, the lower positive effect of robot density in the growth of labor productivity is less dependent on the increase in value added. The data analysis dismisses any positive effect of robotization on hours worked. Results are confirmed by several robustness checks, cross-sectional (and panel-data) IV and quantile regression analysis. By means of the quantile regression analysis, we learn that the effect of robots on labor productivity is stronger for low productivity sectors and that in the most recent period, the effect of robotization felt significantly throughout the distribution. This highlights one of the possible sources of stagnation in the era of robotization and have implication both for labor market and R&D policies.
    Keywords: New General Purpose Technologies, Robotization, Labor Productivity, Productivity Growth, Stagnation
    JEL: E23 J23 O30
    Date: 2023
  2. By: Ufuk Akcigit; Nathan Goldschlag
    Abstract: How are inventors allocated in the US economy and does that allocation affect innovative capacity? To answer these questions, we first build a model of creative destruction where an inventor with a new idea has the possibility to work for an entrant or incumbent firm. If the inventor works for the entrant the innovation is implemented and the entrant displaces the incumbent firm. Strategic considerations encourage the incumbent to hire the inventor, offering higher wages, and then not implement the inventor's idea. To test this prediction, we combine data on the employment history of over 760 thousand U.S. inventors with information on jobs from the Longitudinal Employer-Household Dynamics (LEHD) Program at the U.S. Census Bureau. Our results show that (i) inventors are increasingly concentrated in large incumbents, less likely to work for young firms, and less likely to become entrepreneurs, and (ii) when an inventor is hired by an incumbent, compared to a young firm, their earnings increases by 12.6 percent and their innovative output declines by 6 to 11 percent. We also show that these patterns are robust and not driven by life cycle effects or occupational composition effects.
    JEL: O3 O4
    Date: 2023–03
  3. By: Marialuisa Divella (Department of Political Sciences, Universita' degli Studi di Bari); Alessia Lo Turco (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (UNIVPM)); Alessandro Sterlacchini (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (UNIVPM))
    Abstract: In this paper we adopt a task approach to measure the local pool of capabilities which can more effectively spur innovation. By focusing on the core activities that workers undertake in their jobs, we build an abstract task intensity measure of occupations to proxy the ability in analysing and solving complex problems, as well as in coordinating and integrating people with different knowledge endowments, that should be especially relevant for the process of invention and innovation. We thus estimate the relationship between the local abstract intensity and the inventive performance, proxied by granted patents, of US Commuting Zones during the period 2000-2015. The evidence provided, robust to a wide array of sensitivity checks, points to the extent of workers’ engagement in abstract tasks across Commuting Zones as a crucial determinant of the local inventive activity.
    Keywords: human capital, labour tasks, local abstract intensity, patents, US Commuting Zones
    JEL: R10 R12 O31 O33
    Date: 2023–04
  4. By: Bing Guo; Dennis C. Hutschenreiter; David Pérez-Castrillo; Anna Toldrà-Simats
    Abstract: Institutional investors’ ownership in public firms has become increasingly concentrated in the last decades. We study the heterogeneous effects of large versus more dispersed institutional owners on firms’ innovation strategies and their innovation output. We find that large institutional investors induce managers to increase spending in internal R&D by reducing short-term pressure. However, to avoid empire building and dilution, large institutional investors prevent acquisitions, which reduces firms’ investment in external innovation. The overall effect on firms’ future patents and citations is negative. By acquiring less innovation from external sources, firms reduce the returns of their investment in internal R&D, jeopardizing their total innovation output. We use the mergers of financial institutions as exogenous shocks on firms’ institutional ownership concentration. Our findings complement the previously found positive effects of institutional ownership on firm innovation and indicate that the effects become negative when institutional investors become large owners.
    Keywords: institutional ownership, blockholders, innovation, acquisitions
    JEL: G32 G24 O31
    Date: 2023–04
  5. By: Sanjit Dhami
    Abstract: We consider technology choices between green and brown technologies by firms. We use insights from complexity theory and also take account of true uncertainty in designing public policy. The green technology offers relatively higher returns to scale from adoption, and there are type-contingent differences among firms in their suitability for the green technology. We show that the long-run outcome is unpredictable despite there being no fundamental uncertainty in the model; small accidents of history can lead to large effects; and the final outcome is an ‘emergent property’ of the system. We describe the role of taxes and subsidies in facilitating adoption of the green technology. We also consider issues of the conflict between optimal Pigouvian taxes and green technology adoption; optimal temporal profile of subsidies; and the desirability of an international fund to provide technology assistance to poorer countries. Despite the simplicity of the framework, several novel results are demonstrated that typically do not arise in the standard analysis of the problem.
    Keywords: technology choice, climate change, complexity, lock-in effects, increasing returns, green subsidies, public policy, Pigouvian taxes, stochastic dynamics
    JEL: D01 D21 D90 H32
    Date: 2023
  6. By: Marco Sforza (Department of Economics, Roma Tre University)
    Abstract: The paper explores the relationship between the industry-level diffusion of digital technologies and the regionalisation of trade in value added. Theoretical literature underlines two potential effects of these technologies. They may facilitate coordination, favouring higher fragmentation, but also redefine comparative advantages, pushing toward relocation. The aim of the paper is to provide empirical evidence on the relationship between digital technologies and trade regionalisation, for a panel of selected European countries and sectors over the period 2005-2018. I build a dataset combining data from TiVA-OECD, EU-KLEMS and Eurostat SBS. I define two regionalisation measures, comparing intra-EU against extra-EU trade flows, to capture the relative importance of the two regions for input sourcing and output destination. The econometric analyses show a differentiated effect on the two measures: digital capital reduces regionalisation of the input sourcing, while positively correlating with the regionalisation of the intermediate output. Finally, a differentiated effect is also found in magnitude between technologies, namely, physical ICT and software.
    Keywords: Digital technologies; Global Value Chains; Trade regionalisation
    JEL: O33 F10 F15
    Date: 2023–04
  7. By: Danzer, Alexander M. (Catholic University of Eichstätt-Ingolstadt); Danzer, Natalia (Free University of Berlin); Feuerbaum, Carsten (Catholic University of Eichstätt-Ingolstadt)
    Abstract: We provide quantitative evidence on the relationship between military spending and innovation in the 19th century. Combining innovation data from world fairs and historical military data across Europe, we show that national military spending is associated with national innovation towards war logistics such as food processing, but less towards war technology such as guns. This pattern reflects differences in the historical markets for war supplies. European patent data of 1990-2015 suggest a long-term correlation between historical and con- temporaneous innovation patterns.
    Keywords: military spending, innovation, war logistics, food processing, military supply, 19th century
    JEL: H56 O31 O14 N43
    Date: 2023–03
  8. By: Nomaler, Önder (Mt Economic Research Inst on Innov/Techn); Verspagen, Bart (RS: GSBE MGSoG, RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn, RS: UNU-MERIT Theme 1)
    Abstract: In this paper, we investigate the nature of the density metric, which is employed in the literature on smart specialization and the product space. We find that although density is supposed to capture relatedness between a country’s current specialization pattern and potential products that it may diversify into, density is also correlated strongly to the level of diversification of the country, and (less strongly) to the ubiquity of the product. Together, diversity and ubiquity capture 93% of the variance of density. We split density into a part that corresponds to related variety, and a part that does not (i.e., unrelated variety). In regressions for predicting gain or loss of specialization, both these parts are significant. The relative influence of related variety increases with the level of diversification of the country: only countries that are already diversified show a strong influence of related variety. In our empirical analysis, we put equal emphasis on gains and losses of specialization. Our data show that the specializations that were lost by a country often represented higher product complexity than the specializations that were gained over the same period. This suggests that “smart” specialization should be aimed at preserving (some) existing specializations in addition to gaining new ones. Our regressions indicate that the relative roles of related and unrelated variety for explaining loss of specialization are similar to the case of specialization gains. Finally, we also show that unrelated variety is also important in indicators that are derived from density, such as the Economic Complexity Outlook Index.
    JEL: F14 F63 O11
    Date: 2023–03–27
  9. By: Kuosmanen, Natalia; Valmari, Nelli
    Abstract: Abstract The past few decades have witnessed a slowdown in productivity growth in many advanced economies, including Finland. Against this backdrop, this study investigates product switching in Finnish manufacturing firms during the period of 2009–2019. The findings indicate a growing trend towards specialization, with more firms focusing on a single product. In general, product diversity has decreased over time. Multi-product firms and those with diverse output tend to be larger in terms of value added, sales, and employment. Additionally, these firms are also more likely to export their products compared to single-product firms. While single-product firms outperform multi-product firms in productivity, the study shows that product diversity is positively related to productivity. Furthermore, the study demonstrates that there is a positive relationship between product scope expansion and contraction and an increase in firm size, as compared to firms where product scopes remain unchanged. These findings suggest that product switching is closely related to the economic outcomes of Finnish manufacturing firms.
    Keywords: Manufacturing firms, Multi-product firms, Product switching
    JEL: D22 D24 L11 L25 O14
    Date: 2023–04–21
  10. By: Cecilia Garcia-Peñalosa; Fabien Petit; Tanguy van Ypersele
    Abstract: The increase in employment polarization observed in several high-income economies has coincided with a reduction in inter-generational mobility. This paper argues that the disappearance of middling jobs can drive changes in mobility, notably by removing a stepping stone towards high-paying occupations for those from less well-off family backgrounds. Using data from two British cohorts who entered the labour market at two points in time with very different degrees of employment polarization, we examine how parental income affects both entry occupations and occupational upgrading over careers. We find that transitions across occupations are key to mobility and that the impact of parental income has grown over time. At regional level, using a shift-share IV-strategy, we show that the impact of parental income has increased the most in regions experiencing the greatest increase in polarisation. This indicates that the disappearance of middling jobs played a role in the observed decline in mobility.
    Keywords: British cohort, inter-generational mobility, job polarization, parental income, occupational transition
    JEL: J21 J24 J62 O33 R23
    Date: 2023
  11. By: David Autor; Christina Patterson; John Van Reenen
    Abstract: National industrial concentration in the U.S. has risen sharply since the early 1980s, but there remains dispute over whether local geographic concentration has followed a similar trend. Using near population data from the Economic Censuses, we confirm and extend existing evidence on national U.S. industrial concentration while providing novel evidence on local concentration. We document that the Herfindhahl index of local employment concentration, measured at the county-by-NAICS six-digit-industry cell level, fell between 1992 and 2017 even as local sales concentration rose. The divergence between national and local employment concentration trends is attributable to the structural transformation of U.S. economic activity: both sales and employment concentration rose within industry-by-county cells; but reallocation of sales and employment from relatively concentrated Manufacturing industries (e.g., steel mills) towards relatively un-concentrated Service industries (e.g. hair salons) reduced local concentration. A stronger between-sector shift in employment relative to sales drove the net fall in local employment concentration. Holding industry employment shares at their 1992 level, average local employment concentration would have risen by about 9% by 2017. Instead, it fell by 5%. Falling local employment concentration may intensify competition for recent market entrants. Simultaneously, rising within industry-by-geography concentration may weaken competition for incumbent workers who have limited sectoral mobility. To facilitate analysis, we have made data on these trends available for download.
    JEL: E23 J42 L10 L11 L22 R11 R12
    Date: 2023–04
  12. By: Uluc Aysun (University of Central Florida, Orlando, FL)
    Abstract: This paper shows that the cross-country diffusion of innovations forms a critical channel through which macroeconomic shocks are transmitted across economies. This inference is obtained from a two country, medium scale DSGE model that includes an endogenous growth mechanism. R&D activity and innovation are the main components of this mechanism and they are introduced through a labor-augmenting technology. The model features international diffusion of technologies as the innovations by a firm are not only adopted by other firms within a country but also by those in the other country. Estimating the model with US and Euro Area data, I observe that foreign shocks contribute a high share to the macroeconomic volatility in each economy. By contrast, foreign shocks make a negligible contribution when the model is estimated after shutting down technology diffusion. The results, more generally, show that it is not technology shocks, nor any other shock, but the transmission of shocks through the diffusion of new technologies that is the key driver of international business cycles.
    Keywords: Research and development, international business cycles, endogenous growth, DSGE, Bayesian estimation.
    JEL: F42 F44 O30 O33
    Date: 2023–04

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