|
on Technology and Industrial Dynamics |
| By: | Hasna, Z.; Hatton, H.; Jaumotte, F.; Kim, J.; Mohaddes, K.; Pienknagura, S. |
| 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:camdae:2544 |
| By: | Wesley M. Cohen; Matthew J. Higgins; William D. Miles; Yoko Shibuya |
| Abstract: | Using detailed product- and invention-level data from the pharmaceutical industry, we demonstrate that firms with particularly high-selling “blockbuster” products concentrate their development efforts on new products that both target the same customer segments and are more likely to be technically similar to existing blockbuster products. This behavior, driven by an expectation of the stickiness of demand for existing product offerings, limits firms' incentives to invest in entirely new products targeting different customer segments. Our findings offer insights into how blockbuster products shape firms' customer segment and innovation choices, with implications for understanding the dynamics of technological change in R&D-intensive industries. |
| JEL: | O3 O31 O33 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33957 |
| By: | David Autor; Neil Thompson |
| Abstract: | When job tasks are automated, does this augment or diminish the value of labor in the tasks that remain? We argue the answer depends on whether removing tasks raises or reduces the expertise required for remaining non-automated tasks. Since the same task may be relatively expert in one occupation and inexpert in another, automation can simultaneously replace experts in some occupations while augmenting expertise in others. We propose a conceptual model of occupational task bundling that predicts that changing occupational expertise requirements have countervailing wage and employment effects: automation that decreases expertise requirements reduces wages but permits the entry of less expert workers; automation that raises requirements raises wages but reduces the set of qualified workers. We develop a novel, content-agnostic method for measuring job task expertise, and we use it to quantify changes in occupational expertise demands over four decades attributable to job task removal and addition. We document that automation has raised wages and reduced employment in occupations where it eliminated inexpert tasks, but lowered wages and increased employment in occupations where it eliminated expert tasks. These effects are distinct from—and in the case of employment, opposite to—the effects of changing task quantities. The expertise framework resolves the puzzle of why routine task automation has lowered employment but often raised wages in routine task-intensive occupations. It provides a general tool for analyzing how task automation and new task creation reshape the scarcity value of human expertise within and across occupations. |
| JEL: | E24 J11 J23 J24 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33941 |
| By: | Kyle R. Myers; Lauren Lanahan; Evan Johnson |
| Abstract: | Small businesses have long supplied a disproportionate share of major innovations in the United States. We review a centerpiece policy on this topic: the US Small Business Innovation Research (SBIR) program. We trace its legislative history and summarize program evaluations over the past four decades. Using newly matched data on SBIR awards and venture capital investments into small businesses, we show that, despite often being compared to venture-backed businesses, SBIR-backed businesses pursue very different strategies. We use simple economic theories to motivate the SBIR program as a vehicle for the government to invest in small-scale, well-defined, but risky technologies that have large externalities, and we highlight a number of case studies consistent with this framework. Because the motivating friction lies at the level of ideas, our perspective encourages future evaluations to determine how the SBIR program influences not just who does the inventing, but what gets invented. Looking forward we discuss how rising industrial concentration and the diffusion of artificial intelligence may reshape the program’s comparative advantage in the innovation policy toolkit. |
| JEL: | O30 O32 O38 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33945 |
| By: | Filippo Belloc; Antonino Lofaro |
| Abstract: | We investigate how government subsidies influence the productivity of new firms, by leveraging data on more than 30, 000 government subsidy initiatives and about 1.2 million manufacturing firms distributed worldwide in the years 2012- 2019. First, using a DiD framework with multiple time periods, we document that sectors exposed to subsidies experience a statistically significant increase in new firm entry rates. We then examine the firm-level data through a series of augmented 3-way FE DiD models. Our findings reveal that subsidies have significant effects on the productivity of new firms. On average, subsidies lead to the entry of new firms with 5.53% lower productivity compared to those entering untreated markets. The productivity gap of new firms in subsidized markets persists in the years after entry. We also apply a text recognition method to analyze the effects of specific subsidy attributes. We find that unconditional tax breaks and loans are mostly responsible for the negative effects of subsidies, while subsidies promoting firm internationalization and investments by small firms may lead to the establishment of more productive firms. Subsidies aimed at supporting the adoption of green and automation technologies do not always reduce the productivity of new firms. |
| Keywords: | Government subsidies; Firm entry; Diff-in-diff methods Jel Classification:C20, H20, L52 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:usi:wpaper:927 |
| By: | Joel P. Flynn; Antoine B. Levy; Jacob Moscona; Mai Wo |
| Abstract: | This paper studies how innovation reacts to foreign political risk and shapes its economic consequences. In a model with foreign political shocks that can disrupt the supply of foreign inputs, we show that greater political risk abroad increases domestic innovation, thereby lowering reliance on risky sourcing countries. We then combine data on sector-level technology development with time-varying measures of industry-level exposure to foreign political risk and report three sets of empirical findings. First, sectors and commodities with higher exposure to foreign political risk exhibit significantly greater innovative activity. This finding holds across sectors in the US, across country-sector pairs in a global sample, and across critical minerals that are essential for modern economic activity. Second, the response of innovation is particularly strong when risk emanates from geopolitical adversaries. This is consistent with our finding that trade restrictions are more likely to emerge between non-allies following a rise in political risk in either country. Third, directed innovation reduces countries’ reliance on imports from risky foreign markets. In doing so, technological change amplifies the negative effects of domestic political risk on export performance. |
| JEL: | F50 O3 O31 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33964 |
| By: | S. Shuyang You; L. Wang (Audencia Business School); K. Zheng Zhou; L. Liangding Jia |
| Abstract: | While geography-related factors are critical to determining the functioning of networks, prior studies have overlooked how they may shape the impact of structural holes on firm innovation. Building on structural hole theory and the industrial cluster literature, we propose that structural holes negatively influence firm innovation in industrial clusters. Such negative impact can be attributed to broker firms' social and political embeddedness in these clusters, and is thus moderated by social factors (i.e., local information density and intra-cluster partner ratio) and political factors (i.e., local government coordination and political connection importance). Our predictions receive support from a matched sample of on-site survey and secondary data from 221 firms in industrial clusters in China. This study contributes to structural hole theory by incorporating geographic factors and offers important implications for policymakers aiming to promote firm innovation. |
| Keywords: | Structural holes, Innovation, Industrial clusters, Social embeddedness, Political embeddedness |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05133753 |
| By: | Pablo Acevedo; Elias Albagli; Gonzalo García-Trujillo; María Antonia Yung |
| Abstract: | This project uses unique Chilean administrative data to shed light on how production networks might play a key role in shaping the macroeconomic impacts of green transition policies. First, using customs and firm-to-firm transaction data that covers the universe of firms in Chile, we build the fossil fuel consumption and the direct CO2 emissions at the firm, sectoral, and aggregate levels. In line with the official national sources, the electricity generation sector is the most important contributor to aggregate CO2 emissions, followed by the manufacturing, transport, and mining sectors. Then, we study the role of input-output linkages in propagating CO2 emissions to the rest of the economy. To do so, we construct the production network and the carbon footprint at the firm level using firm-to-firm transaction data from the Chilean IRS, and we validate our results with the input-output tables approach used in the literature. The results show that the electricity generation sector is central in the network, with potentially important downstream spillover effects, while the mining sector is located in the outer part of the network with rich upstream connections. Also, we show that the copper mining industry is the most exposed one to a carbon tax scheme implemented on all the firms in the economy and also to one that only targets the electricity generation sector. |
| Keywords: | carbon emissions, production network, carbon footprint, downstream and upstream propagation, administrative firm-level data |
| JEL: | E01 D24 D57 E23 H23 Q54 Q56 Q58 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1277 |
| By: | Matteo Cacciatore; Giacomo Candian |
| Abstract: | We study how uncertainty propagates through production networks. First, we construct a highly disaggregated, forward-looking measure of industry-level uncertainty using option-implied volatility data for U.S. firms. Second, we identify the effects of higher uncertainty within industries, across the supply chain, and at the aggregate level. We find that heightened uncertainty in upstream industries (e.g., chemical manufacturing, iron and steel mills) behaves like a negative supply shock—raising prices and lowering employment across the production network. In contrast, greater uncertainty in downstream industries (e.g., automotive manufacturing, insurance carriers) behaves like an adverse demand shock, reducing both prices and employment. At the aggregate level, the inflation response depends on where uncertainty originates within the supply chain. A multi-sector model with time-varying sectoral uncertainty demonstrates that production linkages play a central role in explaining these empirical findings. |
| JEL: | E23 E31 E32 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33953 |