nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒05‒22
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Thinking the green transition: evidence from the automotive industry By Andrea Orame; Daniele Pianeselli
  2. Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors By Ufuk Akcigit; Nathan Goldschlag
  3. Industrial dynamics throughout the ICT innovation cycle: The rise and decline of business dynamism in Portugal during 1986-2018 By Ernesto Nieto-Carrillo; Carlos Carreira; Paulino Teixeira
  4. Towards regenerative regional development in responsible value chains: An agentic response to recent crises By Markus Grillitsch; Bjørn T. Asheim
  5. The impact of public support for innovation on SME performance and efficiency By Raphaël CHIAPPINI; Sophie POMET
  6. Structural Change, Income Distribution and Unemployment Related to COVID-19: An Agent-based Model By Branimir Jovanović; Michael Landesmann; Oliver Reiter; Bernhard Schütz
  7. Do Renewables Create Local Jobs? By Natalia Fabra; Eduardo Gutiérrez; Aitor Lacuesta; Roberto Ramos
  8. Generative AI at Work By Erik Brynjolfsson; Danielle Li; Lindsey R. Raymond
  9. The Political Economy of AI: Towards Democratic Control of the Means of Prediction By Kasy, Maximilian
  10. The Unintended Consequences of Censoring Digital Technology - Evidence from Italy's ChatGPT Ban By Kreitmeir, David; Raschky, Paul Anton

  1. By: Andrea Orame (Bank of Italy); Daniele Pianeselli (Bank of Italy)
    Abstract: We study the European automotive industry in the 2013-2018 period. Volkswagen's Dieselgate scandal and the Paris Agreement, both in 2015, substantially caused a technological shock prompting firms to produce low-emissions cars. By using patent and mergers and acquisitions (M&A) data, we test how firms reacted to that shock. We provide evidence that Italian firms intensified their internal R&D activity but, unlike the rest of Europe, they did not increase their M&A activity. This can potentially reduce the speed of the green transition of Italian firms to the advantage of their competitors.
    Keywords: automotive, green transition, technical change, mergers and acquisitions, innovation, patents, electric car
    JEL: G34 L62 O14 O3
    Date: 2023–04
  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 where an inventor with a new idea has the possibility to work for an entrant or incumbent firm. Strategic considerations encourage the incumbent to hire the inventor, offering higher wages, and then not implement her idea. We then combine data on 760 thousand U.S. inventors with the LEHD data. We find that when an inventor is hired by an incumbent, their earnings increases by 12.6 percent and their innovative output declines by 6 to 11 percent.
    Keywords: Inventors, innovation, R&D, firms, dynamism, reallocation
    JEL: O3 O4
    Date: 2023–04
  3. By: Ernesto Nieto-Carrillo (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics); Carlos Carreira (Univ of Coimbra, CeBER, Faculty of Economics); Paulino Teixeira (niversity of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: Increasing evidence shows that business dynamism has weakened in most developed economies. However, except for the US literature, most previous research has only portrayed the new century’s changes in firm dynamics. Instead, we focus on a longer period, 1986-2018, assembling an extensive longitudinal database with a time-consistent industry classification covering the population of Portuguese firmsin the manufacturing and service sectors. The BaiPerron estimate for unknown break dates in time series indicates two structural changes in industrial dynamics, one in its ascending wave (1993) and another in the declining phase (2003). Accordingly, our (HP) estimated trends show that, after an initial period of intense creative destruction, firm dynamics have become less turbulent since 2003, with lower entry, declined job reallocation, and decreased growth rates. Furthermore, survival and counterfactual firm-level regressions suggest that an otherwise-equal post-2003 start-up faced a significantly higher exit hazard than its pre-1993 counterpart (i.e., without any structural change). As a result, new and young companies have seen their share in aggregate employment and net job creation decline, notwithstanding the increasingly higher performance of young, high-growth firms. Lower labour and firm turnover suggest a weakened contribution of reallocation to productivity growth. On the other hand, decreased entry and the higher exit hazard have likely undermined the disruptive potential of transformative entrepreneurship
    Keywords: Firm dynamics; Entry; High-growth firms; Resource reallocation; Survival.
    Date: 2023–04
  4. By: Markus Grillitsch; Bjørn T. Asheim
    Abstract: In this paper, we empirically and theoretically present regenerative regional development in responsible value chains as an alternative to the prevailing traditional, neoliberal economic rationale of globalization. We develop the argument on the back of a longitudinal in-depth case study on actors’ engagement in the recurring crises in the maritime industry in Sunnmøre/Norway. The alternative perspective is an agentic response from the business community in the wake of recent crises. It builds on advanced manufacturing capabilities, automation, and precision technologies, which promise local economic regeneration while reducing the reliance on low-cost labor, substantially cuts emissions through reduced long-haul transport, use of green energy, and more energy-efficient production processes. To succeed, however, it calls for policies that promote the building of local capabilities and penalize practices causing environmental and social harm in global value chains, making it possible to move towards responsible and shorter value chains.
    Keywords: Regional resilience, sustainability transformation, human agency, global value chains, automation and industry 4.0, innovation, industrial and innovation policy
    JEL: R10 R11 R50 R58 O30
    Date: 2023–04
  5. By: Raphaël CHIAPPINI; Sophie POMET
    Abstract: This article examines the impact of two types of financial support for innovation granted by French public institutions to French SMEs on a set of firm performance measures. Using an original database that provides information on repayable advances and subsidies obtained by 5, 448 French SMEs over the period 2010-2016, we evaluate the effectiveness of such financial support using a quasi-experimental design. Our findings indicate that both repayable advances and subsidies significantly improve targeted SMEs’ turnover, level of intangible assets and total employment at one year and three years after support is granted. The impact on firm-level TFP is only positive and significant after three years, while being negative in the very short run. Our results also provide evidence that the combination of both instruments for a given innovation project within a year does not entail significantly higher effects. A heterogeneous analysis reveals that the impact of financial support instruments for innovation is significantly higher for young, micro and small firms. Furthermore, our analysis shows that innovation support benefits more to firms located in the Paris region than in other regions and this tends to exacerbate regional inequalities. Finally, our findings indicate that the transformation of Oséo into Bpifrance in December 2012 has led to an increase in the effectiveness of the innovation policy.
    Keywords: Innovation policy, firm performance, policy evaluation, Mahalanobis distance matching, difference-in-difference.
    JEL: O33 O38 C14 C21
    Date: 2023
  6. By: Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw); Bernhard Schütz (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: We study the distributional consequences of COVID-19 by using a stock-flow consistent agent-based model that captures some of the aspects of pandemic-related lockdowns. In particular, the model distinguishes between ‘essential’ and ‘non-essential’ industries, between jobs that can be done from home and jobs that must be carried out on site, and takes into account that firms need to hire a certain amount of overhead labour. Allowing for government-financed short-time working schemes and loan guarantees, we find that these policies significantly reduce the rise in firm liquidations and income inequality (the ‘Keynesian’ result). However, we also find that the absence of government policies leads to higher levels of productivity and GDP in the aftermath of the crisis, as it means that more of the less productive firms face liquidation during lockdowns (the ‘Schumpeterian’ result). The last finding must be taken with adequate caution as our model is designed to describe the short run, while statements about the long run would require the inclusion of additional features such as technological progress and the entry of new firms.
    Keywords: stock-flow consistent agent-based models, COVID-19, creative destruction, income inequality, short-time work, public loan guarantees
    JEL: E24 E25 E65
    Date: 2023–02
  7. By: Natalia Fabra (UNIVERSIDAD CARLOS III); Eduardo Gutiérrez (Banco de España); Aitor Lacuesta (Banco de España); Roberto Ramos (Banco de España)
    Abstract: We investigate whether investments in renewable energy – solar and wind plants – create jobs in the municipality where they are located. Using 13 years of monthly data, we exploit the variation in the timing and size of investment projects across more than 3, 200 municipalities in Spain, a country with substantial investments in this area. We use a new estimator for staggered differences-in-differences analysis that extends the local projections approach with clean controls (Dube et al., 2022). We find strong heterogeneity in the magnitude and pattern of the impacts of solar and wind investments. On average, solar investments increase employment by local firms, but the effects on the unemployment of local residents are weak. The effects of wind investments on local employment and unemployment are mostly non-significant. These findings have important implications for public policy.
    Keywords: renewable energy, employment, unemployment, NIMBY, spatial effects
    JEL: L94 C33 O25 R23
    Date: 2023–01
  8. By: Erik Brynjolfsson; Danielle Li; Lindsey R. Raymond
    Abstract: We study the staggered introduction of a generative AI-based conversational assistant using data from 5, 179 customer support agents. Access to the tool increases productivity, as measured by issues resolved per hour, by 14 percent on average, with the greatest impact on novice and low-skilled workers, and minimal impact on experienced and highly skilled workers. We provide suggestive evidence that the AI model disseminates the potentially tacit knowledge of more able workers and helps newer workers move down the experience curve. In addition, we show that AI assistance improves customer sentiment, reduces requests for managerial intervention, and improves employee retention.
    JEL: D8 J24 M15 M51 O33
    Date: 2023–04
  9. By: Kasy, Maximilian
    Abstract: This chapter discusses the regulation of artificial intelligence (AI) from the vantage point of political economy, based on the following premises: (i) AI systems maximize a single, measurable objective. (ii) In society, different individuals have different objectives. AI systems generate winners and losers. (iii) Society-level assessments of AI require trading off individual gains and losses. (iv) AI requires democratic control of algorithms, data, and computational infrastructure, to align algorithm objectives and social welfare. I address several debates regarding the ethics and social impact of AI, including (i) fairness, discrimination, and inequality, (ii) privacy, data property rights, and data governance, (iii) value alignment and the impending robot apocalypse, (iv) explainability and accountability for automated decision-making, and (v) automation and the impact of AI on the labor market and on wage inequality. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2023–04–19
  10. By: Kreitmeir, David; Raschky, Paul Anton (Monash University)
    Abstract: We analyse the effects of the ban of ChatGPT, a generative pre-trained transformer chatbot, on individual productivity. We first compile data on the hourly coding output of over 8, 000 professional GitHub users in Italy and other European countries to analyse the impact of the ban on individual productivity. Combining the high-frequency data with the sudden announcement of the ban in a difference-in-differences framework, we find that the output of Italian developers decreased by around 50\% in the first two business days after the ban and recovered after that. Applying a synthetic control approach to daily Google search and Tor usage data shows that the ban led to a significant increase in the use of censorship bypassing tools. Our findings show that users swiftly implement strategies to bypass Internet restrictions but this adaptation activity creates short-term disruptions and hampers productivity.
    Date: 2023–04–18

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