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on Technology and Industrial Dynamics |
| By: | James Driver |
| Abstract: | I analyze whether a change in patent systems differentially affects firm-level innovation investments at patent-valuing firms of different sizes. Using legally required, economically representative, U.S. Census Bureau microdata, I separate firms into groups based on a firm’s response to a question asking it to rank the degree of patent importance to its business and firm-size. I then measure how firms’ innovation inputs/outputs respond to the America Invents Act (AIA). Results show the AIA reduced innovation investments at smaller, patent-valuing firms while increasing innovation investments at larger, patent-valuing firms, highlighting differential firm-size effects of patent policy and policy’s importance to investments. |
| Keywords: | Investments, innovation, patents, firm size |
| JEL: | L25 O3 O51 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-31 |
| By: | Yoshiki Ando; James Bessen; Xiupeng Wang |
| Abstract: | R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas but these ideas may also render rivals’ technologies obsolete, making innovations more transient. |
| Keywords: | R&D, innovation, productivity, obsolescence |
| JEL: | O32 O33 L10 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-29 |
| By: | Hasna, Z.; Hatton, H.; Jaumotte, F.; Kim, J.; Mohaddes, K. |
| Abstract: | This paper investigates how climate policies affect low-carbon innovation (as measured by patents) and assesses the link between such innovation and economic activity. Climate policies, including international cooperation, spur both specific and overall innovation, with regulations, emissions-trading systems, and expenditure measures such as R&D subsidies and feed-in tariffs being particularly impactful. In turn, low-carbon innovation raises economic activity as much as other types of innovation and past technological revolutions. However, the mechanisms are different: low-carbon innovation increases capital accumulation, while other types of innovation increase total factor productivity (TFP). |
| Keywords: | Low-Carbon Innovation, Growth, Climate Policies, Climate Change, Porter Hypothesis |
| JEL: | F64 H23 O33 O44 Q55 Q56 Q58 |
| Date: | 2025–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camjip:2516 |
| By: | Federico Fabio Frattini; Francesco Vona; Filippo Bontadini; Italo Colantone |
| Abstract: | What are the job multipliers of the green industrialization? We tackle this question within EU regions over the period 2003-2017, building a novel measure of green manufacturing penetration that combines green production and regional employment data. We estimate local job multipliers of green penetration in a long-difference model, using a shift-share instrument that exploits plausibly exogenous changes in non-EU green innovation. We find that a 3-years change in green penetration per worker increases the employment-to-active population ratio by 0.11 pp. The effect is: persistent both in manufacturing and outside manufacturing; halved by agglomeration effects that increase the labour market tightness; stronger for workers with high and low-education; and present also in regions specialized in polluting industries. When focusing on large shocks in a staggered DiD design, we find ten times larger effects, particularly in earlier periods. |
| Keywords: | green industrialisation, local job multipliers, employment effects of the green transition, shift-share IV design, difference-in-differences |
| JEL: | J21 O14 R11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11939 |
| By: | Rik Rozendaal |
| Abstract: | This paper studies the relationship between climate policy, market power and innovation. Using data on patenting and firms' balance sheets, I document that firms with a higher degree of market power are, on average, more invested in dirty technologies than their direct competitors. I then develop a model of directed technical change with strategic innovation incentives, incorporating the empirical evidence. A carbon tax affects market power and both the intensity and the direction of innovation. In the calibrated model, a carbon tax lowers aggregate markups and increases clean innovation while also increasing dirty innovation by some firms. |
| Keywords: | climate policy, market power, innovation, directed technical change |
| JEL: | O30 O44 Q55 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11938 |
| By: | Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Francesca Micocci; Armando Rungi |
| Abstract: | This paper investigates how the presence of foreign direct investment (FDI) contributes to domestic innovation with a focus on green technologies in the European regions between 2013 and 2018. Using a rich dataset combining patent data, firm-level data and FDI proxies, we identify a clear pattern when foreign investors are technologically sophisticated, domestic firms in the regions where they invested show a higher propensity for patenting. The patenting activity by the parent companies of multinational enterprises (MNEs) and their corporate perimeter plays a more crucial role than local foreign subsidiaries. Furthermore, we find that the technological focus of MNEs – green vs. non-green – shapes the direction of these spill-overs. Notably, we provide novel evidence of linkages between the green patenting activity of MNE parents located abroad and the green innovation of domestic firms in the European Union, mediated through foreign subsidiaries operating in close proximity. Policy efforts aiming to foster green innovation should therefore prioritise attracting foreign investors with strong innovation records in environmentally sustainable technologies. |
| Keywords: | technological spill-overs, multinational enterprises, FDI, domestic innovation, firm-level data |
| JEL: | O32 F23 O34 L23 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:266 |
| By: | Ufuk Akcigit; Harun Alp; Jeremy Pearce; Marta Prato |
| Abstract: | This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly positive among transformative entrepreneurs. Transformative entrepreneurs, often with higher IQ and education levels, significantly drive R&D and business growth, thereby providing substantial opportunities for inventors. In contrast, average entrepreneurs are more influenced by their family's entrepreneurship background. Our economic model links these dynamics to overall economic progress, highlighting how higher education influences career paths in entrepreneurship and invention. We identify talent misallocation caused by unequal education access, particularly affecting lower-income families. Our findings indicate the most effective policies strengthen the interplay between higher education, innovation, and entrepreneurship to foster transformative businesses and achieve long-run economic growth. |
| Keywords: | Entrepreneurship; R&D Policy; Innovation; IQ; Endogenous Growth |
| JEL: | O31 O38 O47 J24 |
| Date: | 2025–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:1410 |
| By: | Yoshiki Ando; Emin Dinlersoz; Jeremy Greenwood; Ruben Piazzesi |
| Abstract: | How do advanced technology adoption and venture capital (VC) funding impact employment and growth? An analysis of data from the US Census Bureau suggests that while both advanced technology use and VC funding matter on their own for firm outcomes, their joint presence is most strongly correlated with higher employment levels. VC presence is linked with a high increase in employment, though primarily among a limited subset of firms. In contrast, technology adoption is associated with a smaller rise in employment, yet it influences a considerably larger number of firms. A model of startups is created, focusing on decisions to use advanced technology and seek VC funding. The model is compared with firm-level data on employment, advanced technology use, and VC investment. Several thought experiments are conducted using the model. Some experiments assess the importance of advanced technology and VC in the economy. Others examine the reallocation effects across firms with different technology choices and funding sources in response to shifts in taxes and subsidies. |
| JEL: | E13 G24 O30 O40 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33993 |
| By: | Davide M. Coluccia; Gaia Dossi |
| Abstract: | Novel products, processes and technologies are important drivers of economic growth. Davide Coluccia and Gaia Dossi show how migrants from Britain to the United States in the late 19th and early 20th century not only took new ideas with them, but also helped to bring American innovations back to the old country. |
| Keywords: | age of mass migration, innovation, networks, out-migration |
| Date: | 2025–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:708 |
| By: | Hisaki KONO; Hoang-Minh LE; Manabu NOSE; Yasuyuki SAWADA |
| Abstract: | This paper examines the local economic impacts of industrial zones (IZs) in Vietnam, focusing on how their sectoral orientation within production networks shapes effectiveness. Using panel data on registered firms and a newly compiled dataset on IZ locations and sectoral compositions, we estimate the dynamic effects of IZ establishment on firm entry and employment through staggered difference-in-differences and synthetic control methods. We find that IZs lead to sustained increases in both firm and worker density over a 6–10 year horizon, indicating substantial local economic gains. These effects are particularly pronounced in zones oriented toward downstream industries—those that create demand for upstream suppliers—while upstream orientation does not predict stronger outcomes. We further show that backward production linkages mediate these gains, suggesting that demand-side constraints, rather than input frictions, may be more binding in developing country contexts. The results highlight not only the overall effectiveness of IZs but also the importance of aligning industrial policy design with the structure of production networks to maximize spatial development benefits. |
| Keywords: | Industrial zones, production linkage |
| JEL: | O12 O14 R11 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-25-005 |
| By: | Amitabh Chandra; Connie Xu |
| Abstract: | Fundamental knowledge in the life sciences has consequential implications for medicine and subsequent medical innovations. Using publications in leading life science journals to measure fundamental knowledge, we document large agglomerations in the institutions where it is discovered and a robust correlation between knowledge and subsequent citations in patents. We assess whether the institution where research is produced affects the output of scientists by using a scientist-mover design, which compares annual research output before and after a move for the same scientist. Between 50 − 60% of a scientist’s research output is attributable to the institution where they work, and two thirds of this effect is driven by the presence of star researchers. The magnitude of these effects has not decreased in more recent time periods, in the wake of technologies that make cross-institution collaborations easier, nor is it larger for moves to larger agglomerations, nor concentrated in particular scientific fields. We discuss the implications of these findings for research allocations in science and scientists’ leaving one institution for another. |
| JEL: | H5 I2 O3 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33996 |
| By: | Hylke Dijkstra; Konstantin M. Wacker (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | In this paper, we analyse how robotisation is associated with industry output and its production inputs. We therefore link data on employment, robotisation and input-output relations for 15 manufacturing industries across 35 countries. Analysing the decade prior to 2018, we show that robotising industries experience increases in output and approximately equiproportional increases in value added, employment, domestic intermediate inputs and foreign intermediate inputs. Owing to this equiproportionality, robotising industries do not see a significant change in their domestic input ratios (value added plus domestic intermediates relative to total inputs). Our empirical results document that robotising industries are thriving in terms of output generation, that those thriving industries are internationally well integrated, and that their output expansion is associated with employment generation. Industries that use an increasing share of domestic production inputs generally experience less favourable output and employment developments, although this association is imprecisely estimated. |
| Keywords: | Robots, reshoring, employment, labour, production location, global value chains, GVCs |
| JEL: | E23 J23 O30 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:267 |
| By: | Xienan Cheng; Mustafa Dogan; Pinar Yildirim |
| Abstract: | This study investigates the effects of artificial intelligence (AI) adoption in organizations. We ask: (1) How should a principal optimally deploy limited AI resources to replace workers in a team? (2) In a sequential workflow, which workers face the highest risk of AI replacement? (3) How does substitution with AI affect both the replaced and non-replaced workers' wages? We develop a sequential team production model in which a principal can use peer monitoring -- where each worker observes the effort of their predecessor -- to discipline team members. The principal may replace some workers with AI agents, whose actions are not subject to moral hazard. Our analysis yields four key results. First, the optimal AI strategy involves the stochastic use of AI to replace workers. Second, the principal replaces workers at the beginning and at the end of the workflow, but does not replace the middle worker, since this worker is crucial for sustaining the flow of information obtained by peer monitoring. Third, the principal may choose not to fully exhaust the AI capacity at her discretion. Fourth, the optimal AI adoption increases average wages and reduces intra-team wage inequality. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.12337 |
| By: | García-Suaza, Andres; Caiza-Guamán, Pamela; Sarango-Iturralde, Alexander; Romero-Torres, Bernardo; Buitrago, Catalina |
| Abstract: | The green transition represents one of the most significant transformational forces in the labor market in the coming years. This paper analyzes the incidence of green jobs in four Latin American countries using information from job vacancy data. The results reveal a low incidence of demand for jobs with green potential or for new and emerging occupations related to the green transition. Such occupations are characterized by requiring high levels of education and offer a significant wage premium. These results highlight the main challenge of the green transition, which lies in the need to implement training processes, while revealing opportunities for the creation of high-quality jobs in the region. |
| Keywords: | Labor demand, green jobs, green transition, climate change, skills |
| JEL: | J24 J62 Q52 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1625 |