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on Technology and Industrial Dynamics |
| By: | Gu, Grace (University of California, Santa Cruz); Mulalic, Ismir (Department of Economics, Copenhagen Business School); Pozzoli, Dario (Department of Economics, Copenhagen Business School); Wu, Jinhong (The Technical University of Denmark) |
| Abstract: | Climate-related risks have increased significantly over the past two decades, including both physical risks (such as extreme weather events) and transition risks (arising from climate change mitigation policies). This paper examines how these risks relate to firms’ innovation outcomes, including those related to green technologies. We first develop a model in which firms choose how many workers to employ for R&D and production activities in response to rising climate risks. The model predicts an increase in green innovation and overall innovation under certain conditions. Empirical evidence from Danish administrative data generally supports these predictions, showing that firms exposed to climate risks exhibit higher innovation activity, especially in green technologies. |
| Keywords: | Climate change; Physical risks; Transition risks; Firms’ innovation |
| JEL: | Q54 Q55 Q56 |
| Date: | 2026–01–23 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cbsnow:2026_003 |
| By: | Tate, Anya |
| Abstract: | The late 19th-century reforms to the British patenting system reduced the cost of obtaining a patent from over £100 in 1851 to just £4 by 1883. While increasing accessibility, this cost reduction led to an increase of low-quality patents often replicating previous inventions, raising concerns about the system's effectiveness. As a result, the 1902 policy proposed novelty examination for the first time, increasing the cost by 25%. This paper examines whether the implementation of this policy in 1905 had a differential effect on patenting activity across British regions. Despite the significance of this policy, it has received extremely limited academic attention. This research aims to fill this gap and add to the literature on the regional impacts of patent system reforms in this period. This study employs panel regressions using data on every geocoded patent sealed between 1895-1915 in the PatentCity database with regional employment in 28 industries as controls. Results indicate no change in the regional distribution of patenting activity as a result of the novelty examination. These findings are consistent with those of Nicholas (2011) for the 1883 policy and have important implications for the geography of inventive activity and the distributional impacts of invention policies. |
| JEL: | O30 R10 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:wpaper:129440 |
| By: | Andre Mouton (Department of Economics, Wake Forest University) |
| Abstract: | This paper develops methods and tools for measuring the exposure of occupational tasks to technological substitution. Patent abstracts and task statements are matched and classified by a small, open-source language model. The model is fine-tuned and validated against a foundation AI, achieving accuracy improvements of roughly 5X over conventional ‘word embedding’ approaches. Model fine-tuning and a rules-based match threshold are critical for realizing these gains. The approach replicates stylized facts about IT exposure, but diverges sharply from survey-based measures of AI automation risk, which systematically understate exposure among high-wage occupations. A living dataset and Python package allow researchers to measure exposure across user-defined technology and task categories, with minimal time lag and at fine temporal resolution. |
| Keywords: | Technological Exposure; Task Automation; Language Models; Patent Analysis |
| JEL: | C45 C82 J20 O33 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:ris:wfuewp:022172 |
| By: | Sueyoul Kim; Ginger Zhe Jin; Eungik Lee |
| Abstract: | Using a comprehensive dataset of posts from a major platform for anime- and manga-style artwork, we study the impact of the launch of a prominent text-to-image generative AI. Focusing on the majority of incumbent creators who do not adopt AI as a primary tool, we show that the AI launch led to a significant decline in post uploads by illustrators, whereas comic artists were less affected, reflecting the need for tight stylistic alignment across sequential images in comics. We present empirical evidence for two underlying mechanisms. First, illustration posts experience a loss of viewer attention, measured by bookmarks, following the AI launch, which can significantly harm creators’ business models. Second, direct competition from AI-generated content plays an important role: illustrators working on intellectual properties (IPs, such as Pokémon) that are more heavily invaded by AI reduce their uploads disproportionately more. We further examine creators’ responses and show that illustrators with greater exposure to AI avoid using tags favored by AI-generated content after the AI launch and broaden the range of IPs they work on, consistent with a risk-hedging response to AI invasion. |
| JEL: | D22 J24 L86 O14 O33 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34733 |
| By: | Franziska L. Ohnsorge; Richard Rogerson; Zoe Xie |
| Abstract: | Benchmark models of structural transformation focus on the reallocation of employment across sectors while assuming that overall employment stays constant. We show that this assumption does not match facts for developing economies. We study a panel of 48 mostly developing economies over the period 1990--2018 and document a strong positive relationship between the share of the population employed in agriculture and the overall employment rate. That is, the early part of the development process is associated with a substantial decline in the total employment rate. Motivated by this finding, we extend a benchmark model of structural change featuring Stone-Geary preferences to allow for endogenous labor supply. We show that this model can account for the patterns we document in the data both qualitatively and quantitatively. We use a calibrated version of our model to study the employment dynamics in several developing economies and show that structural change is a quantitatively important source of employment changes during the early stages of development. |
| JEL: | E24 J22 O11 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34718 |
| By: | Daron Acemoglu; Ufuk Akcigit; Simon Johnson |
| Abstract: | This chapter presents a tractable framework for the study of technology adoption and diffusion in the context of economic development. Firms in countries behind the world technology frontier can rapidly adopt new techniques from the world frontier. Lower absorptive capacity (because of weak education systems, poor management practices, or barriers to technology adoption), institutional distortions, mismatch between frontier technologies and the needs of firms in the country (i.e., “inappropriate technology”), and credit market frictions slow down technology adoption and cause the economy in question to have a greater distance to the frontier and thus lower income per capita—although the long-run growth rate of the country still remains equal to that of the frontier. This framework is extended to study the choice between innovation and imitation, as well as the role of selection for higher-productivity and higher-absorptive capacity firms during the process of economic development. We illustrate the main comparative statics of our framework with a number of correlations based on cross-country and firm-level data. The tractability of the framework makes it amenable to a range of additional extensions. |
| JEL: | O1 O3 O4 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34730 |
| By: | Kyoji FUKAO; YoungGak KIM; Hyeog Ug KWON |
| Abstract: | This study examines the dynamics of total factor productivity (TFP) by firm size to clarify the recent drivers of productivity growth in the Japanese economy, utilizing firm-level financial data from Teikoku Databank (TDB) spanning the years 1999 to 2020. In particular, we examine Japan’s distinctive “negative exit effect†by differentiating among various types of firm exit, including bankruptcy, closure, dissolution, and mergers. Our analysis shows that while within-firm productivity improvements at large firms played a dominant role in driving productivity growth through the 2000s, reallocation effects have become increasingly important since the 2010s. Notably, a substantial share of high-productivity firms exited the market through mergers, accounting for nearly half of the overall negative exit effect. Furthermore, while TFP among acquiring firms tends to stagnate in the short term after mergers, their labor productivity shows a significant and sustained increase, likely driven by capital deepening. These findings provide new insights into the shifting drivers of productivity growth in Japan—from within-firm productivity growth to market-driven resource reallocation—as well as into firm-size heterogeneity and the role of mergers in shaping productivity dynamics. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26007 |
| By: | Mauro Caselli; Arpita Chatterjee; Shengyu Li |
| Abstract: | This paper introduces a method for estimating productivity and quality at the firm-product level using a transformation function framework. We use firm optimization conditions to establish a one-to-one mapping between observed data and unobserved productivity and quality. We do not need to impute firm-product input shares and can avoid imposing productivity evolution processes. The method is scalable to numerous products and can address the bias caused by unobserved heterogeneous intermediate input prices. We apply the method to a set of Mexican manufacturing industries and examine the roles of across-firm and within-firm technological spillovers, accounting for the trade-off between productivity and quality. Our quantitative analysis shows that an exogenous, product-specific technological improvement generates substantial gains in welfare, amplified by both within-firm and across-firm spillovers by approximately 17 percent and 5 percent, respectively. Moreover, within-firm resource reallocation toward the most productive products accounts for 60 percent of the resulting firm-level productivity gains. |
| Keywords: | Productivity; Technology; Industrial organization |
| JEL: | D24 L11 L15 O33 |
| Date: | 2026–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:102364 |
| By: | Kauhanen, Antti; Rouvinen, Petri |
| Abstract: | Abstract We examine the impact of generative AI on the youth labor market in Finland by replicating the key analyses of Brynjolfsson et al. (2025) with comprehensive population-level data. Contrary to the US findings, we find no systematic displacement effects linked to AI exposure among youth in Finland. Employment trends reflect demographic shifts rather than AI-driven changes, with early career groups showing modest declines and senior workers experiencing growth. Wage trajectories show no persistent differences across AI exposure levels. These results suggest that Finland’s labor market is resilient to immediate AI-induced disruptions in entry-level roles, likely because of structural and policy factors. |
| Keywords: | Generative artificial intelligence, Technological change, Employment, Wages, Occupations |
| JEL: | E24 J21 O33 |
| Date: | 2026–01–27 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:135 |
| By: | Giorgia Giovannetti; Luca Lodi; Enrico Marvasi |
| Abstract: | Geopolitical tensions are reshaping Global Value Chains (GVCs), yet little is known about the magnitude of these effects and, especially, how they translate into uneven exposures at the subnational level. This paper argues that subnational regions are a critical unit for understanding GVCs and their changes under geopolitical fragmentation. We develop a regional exposure index that links global sensitivities from structural gravity estimations of GVC-related trade with granular regional trade data. Evidence from Italian regions reveals pronounced heterogeneity in both upstream and downstream exposure, depending on sectoral specialization and partner composition. These findings suggest that geopolitical fragmentation not only reshapes GVCs but also reconfigures regional economic vulnerabilities, with direct implications for cohesion, competitiveness, and policy design. |
| Keywords: | Global Value Chains, Regional Development, Gravity, Geopolitical tensions, Trade policy. |
| JEL: | F14 F23 F51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2026_02.rdf |