nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2024‒04‒15
twelve papers chosen by
Fulvio Castellacci, Universitetet i Oslo

  1. Scenarios for the Transition to AGI By Anton Korinek; Donghyun Suh
  2. Are Firms Able to Take Advantage of Academic Advances? By OROKU Masahiro
  3. Sectoral Development Multipliers By Francisco J. Buera; Nicholas Trachter
  4. Public procurement can hinder innovation By Krieger, Bastian; Pruefer, Malte; Strecke, Linus
  5. UK Levelling Up R&D mission effects: A multi-region input-output approach By Huanjia Ma; Raquel Ortega-Argilés; Matthew Lyons
  6. Product Liability Litigation and Innovation: Evidence from Medical Devices By Alberto Galasso; Hong Luo
  7. Collaboration and Connectivity: Historical Evidence from Patent Records By Berger, Thor; Prawitz, Erik
  8. Size Matters: Matching Externalities and the Advantages of Large Labor Markets By Enrico Moretti; Moises Yi
  9. Work Organization and High-Paying Jobs By Dylan Nelson; Nathan Wilmers; Letian Zhang
  10. Untangling regional opportunity spaces: The role of narratives and place leadership By Roessler, Max; Grillitsch, Markus; Miörner, Johan; Schiller, Daniel
  11. Structural Change at a Disaggregated Level: Sectoral Heterogeneity Matters By Sen, A.
  12. Unpacking Economic Uncertainty — Measuring the Firm, Sector and Aggregate Components By Siavash Mohades; Giulia Piccillo; Tania Treibich

  1. By: Anton Korinek; Donghyun Suh
    Abstract: We analyze how output and wages behave under different scenarios for technological progress that may culminate in Artificial General Intelligence (AGI), defined as the ability of AI systems to perform all tasks that humans can perform. We assume that human work can be decomposed into atomistic tasks that differ in their complexity. Advances in technology make ever more complex tasks amenable to automation. The effects on wages depend on a race between automation and capital accumulation. If automation proceeds sufficiently slowly, then there is always enough work for humans, and wages may rise forever. By contrast, if the complexity of tasks that humans can perform is bounded and full automation is reached, then wages collapse. But declines may occur even before if large-scale automation outpaces capital accumulation and makes labor too abundant. Automating productivity growth may lead to broad-based gains in the returns to all factors. By contrast, bottlenecks to growth from irreproducible scarce factors may exacerbate the decline in wages.
    JEL: E24 J23 J24 O33 O41
    Date: 2024–03
  2. By: OROKU Masahiro
    Abstract: This study uses patents granted by the U.S. Patent and Trademark Office (applied before 2011) to analyze the relationship among the value of patents, account information of patent-holding firms, and citations of academic papers empirically. The results are summarized as follows: First, profitable firms tend to cite papers more frequently than other firms. Second, patents that cite academic papers have more forward citations than other patents do. Third, patents that cite academic papers are cited in a wider range of technical fields than those that do not. These results imply that incorporating academic knowledge increases patent value, expands utilization range, and increases firm profitability. This situation has implications for science and technology policy. Providing public support may be important if firms with low-profit firms cannot access academic knowledge because of the lack of human and material resources.
    Date: 2024–03
  3. By: Francisco J. Buera; Nicholas Trachter
    Abstract: How should industrial policies be directed to reduce distortions and foster economic development? We study this question in a multi-sector model with technology adoption, where the production of goods and modern technologies features rich network structures. We provide simple formulas for the sectoral policy multipliers, and provide insights regarding the power of alternative policy instruments. We devise a simple procedure to estimate the model parameters and the distribution of technologies across sectors, which we apply to Indian data. We find that technology adoption greatly amplifies the multipliers' magnitudes, and it changes the ranking of priority sectors for industrial policy. Further, we find that adoption subsidies are the most cost-effective instrument for promoting economic development.
    Keywords: Sectoral policy; technology; economic development
    JEL: L52 O33
    Date: 2024–03–13
  4. By: Krieger, Bastian; Pruefer, Malte; Strecke, Linus
    Abstract: Public procurement accounts for 15 to 20 percent of global GDP and is considered an effective innovation policy. However, the detrimental effects of non-innovative public procurement - public procurement tenders awarded solely based on their price - on firm innovations have been largely neglected, even though it represents the majority of all tenders. We contribute by i) developing a comprehensive theory on the effects of winning non-innovative public procurement tenders as a firm and ii) empirically testing our theory by combining representative German data with two-way fixed effect difference-in-differences estimations. In total, the estimations demonstrate winning non-innovative public procurement reduces firms' product and process innovations on the one hand, and increases firms' focus on their established products and services on the other hand. These results confirm our theory and empirically hold at the level of the individual firm and the German enterprise sector.
    Keywords: Public procurement, Firm innovation, Demand side
    JEL: O31 O32 O38 H57
    Date: 2024
  5. By: Huanjia Ma (City-REDI Institute, The University of Birmingham); Raquel Ortega-Argilés (Manchester Institute of Innovation Research and TPI Institute, The University of Manchester); Matthew Lyons (City-REDI Institute, The University of Birmingham)
    Abstract: This paper examines the UK implications for regional and national growth associated with different geographical investment patterns of publicly-funded R&D, in the light of the recommendations of the 2022 Levelling Up White Paper, aimed at balancing the national economy. The White Paper outlines twelve main "missions" focused on science, technology, and education to achieve this goal. One of these missions aims to increase domestic public Research and Development (R&D) by at least 40% outside the Greater South East (GSE) by 2030. We develop three scenarios based on different assumptions about extra R&D allocation. We use data from UKRI and ONS to determine the current distribution of R&D investment in the UK, and then using the multi-regional Socio-Economic Impact Model for the UK we evaluate our three proposed R&D spending scenarios. Our findings suggest that the regional impact varies significantly across the different proposed scenarios. The scenario that allocates more GERD to areas with previously low funding levels yields the largest effect. On average, output, employment and GVA in regions outside GSE increase by 0.33%, 0.37% and 0.34%, respectively, showing a potentially positive effect on the levelling up of R&D in the country. Our analysis of both internal and external multipliers highlights the importance of investing in regional redistribution. We demonstrate that the GSE is more self-sufficient as it has much higher internal multipliers than the rest of the UK. However, we identified a potential obstacle: the capacity to absorb human capital, which could reduce the expected positive results of a more spatially balanced R&D expenditure across the UK.
    Keywords: Multi-region input-output, R&D, Levelling-up, UK
    Date: 2024–03
  6. By: Alberto Galasso; Hong Luo
    Abstract: We examine the relationship between product liability litigation and innovation by systematically combining data on product liability lawsuits with data on new product introductions in a panel dataset of leading medical device firms. We first document a decline in the propensity to introduce new products for both defendant firms and other firms operating in litigated device categories. This decline, however, does not spill over to other device categories, and we also do not find any slowing down in firms' patenting activities. We then show that changes in two features of the regulatory environment---(1) the availability of public information regarding adverse events and (2) federal law taking precedence over state law---substantially affect the likelihood of litigation. These changes also provide quasi-exogenous variations in litigation that confirm our baseline findings. Finally, we show that litigation appears to induce firms to develop safer devices. Overall, our findings suggest that product liability litigation affects the rate and direction of technological progress, and that safety regulation and liability regimes interact with one another in significant ways.
    JEL: K13 K41 L51 O32
    Date: 2024–03
  7. By: Berger, Thor (Department of Economics and Statistics); Prawitz, Erik (Department of Economics and Statistics)
    Abstract: Why has collaboration become increasingly central to technological progress? We document the role of lowered travel costs by combining patent data with the rollout of the Swedish railroad network in the 19th and early-20th century. Inventors that gain access to the network are more likely to produce collaborative patents, which is partly driven by long-distance collaborations with other inventors residing along the emerging railroad network. These results suggest that the declining costs of interacting with others is fundamental to account for the long-term increase in inventive collaboration.
    Keywords: Innovation; Collaboration; Transport infrastructure; Railroads
    JEL: L91 N73 O18 O31
    Date: 2023–03–28
  8. By: Enrico Moretti; Moises Yi
    Abstract: Economists have long hypothesized that large and thick labor markets facilitate the matching between workers and firms. We use administrative data from the LEHD to compare the job search outcomes of workers originally in large and small markets who lost their jobs due to a firm closure. We define a labor market as the Commuting Zone×industry pair in the quarter before the closure. To account for the possible sorting of high-quality workers into larger markets, the effect of market size is identified by comparing workers in large and small markets within the same CZ, conditional on workers fixed effects. In the six quarters before their firm’s closure, workers in small and large markets have a similar probability of employment and quarterly earnings. Following the closure, workers in larger markets experience significantly shorter non-employment spells and smaller earning losses than workers in smaller markets, indicating that larger markets partially insure workers against idiosyncratic employment shocks. A 1 percent increase in market size results in a 0.014 and 0.023 percentage points increase in the 1-year re-employment probability of high school and college graduates, respectively. Displaced workers in larger markets also experience a significantly lower need for relocation to a different CZ. Conditional on finding a new job, the quality of the new worker-firm match is higher in larger markets, as proxied by a higher probability that the new match lasts more than one year; the new industry is the same as the old one; and the new industry is a “good fit” for the worker’s college major. Consistent with the notion that market size should be particularly consequential for more specialized workers, we find that the effects are larger in industries where human capital is more specialized and less portable. Our findings may help explain the geographical agglomeration of industries—especially those that make intensive use of highly specialized workers—and validate one of the mechanisms that urban economists have proposed for the existence of agglomeration economies.
    JEL: H0 J0 R0
    Date: 2024–03
  9. By: Dylan Nelson (Massachusetts Institute of Technology Sloan School of Management); Nathan Wilmers (Massachusetts Institute of Technology Sloan School of Management); Letian Zhang (Harvard Business School)
    Abstract: High-paying factory jobs in the 1940s were an engine of egalitarian economic growth for a generation. Are there alternate forms of work organization that deliver similar benefits for frontline workers? Work organization varies by type of complexity and degree of employer control. Technical and tacit knowledge tasks receive higher pay for signaling or developing human capital. Higher-autonomy tasks elicit efficiency wages. To test these ideas, we match administrative earnings to task descriptions from job postings. We then compare earnings for workers hired into the same occupation and firm, but under different task allocations. When jobs raise task complexity and autonomy, new hires’ starting earnings increase and grow faster. However, while half of the earnings boost from complex, technical tasks is due to shifting worker selection, worker selection changes less for tacit knowledge tasks and very little for adding high-autonomy tasks. We also study which employers provide these jobs: frontline tacit knowledge tasks are disproportionately in larger, profitable manufacturing and retail firms; technical tasks are in newer health and business services; and higher-autonomy jobs are in smaller and fast-growing firms. These results demonstrate how organization-level allocations of tasks can undergird high-paying jobs for frontline workers.
    Keywords: Wage level and structure, wage differentials, human capital, skills, occupational choice, labor productivity, labor management
    JEL: J24 J31 M54
    Date: 2024–03
  10. By: Roessler, Max (University of Greifswald); Grillitsch, Markus (CIRCLE, Lund University); Miörner, Johan (CIRCLE, Lund University); Schiller, Daniel (University of Greifswald)
    Abstract: This paper aims to identify micro-level processes shaping the narratives about regional opportunity spaces. A process perspective is applied to investigate how place leaders engage in shaping narratives to influence the perception of regional opportunity spaces. The empirical research is based on a comparative case study of four peripheral regions in Germany including ninety-two interviews with regional stakeholders complemented by two cross-regional focus groups. Our findings emphasize the central role of place leadership in influencing the perception of regional opportunity spaces, show two pathways of changing dominant narratives (outside-in and inside-out) and provide a multiple-phase framework for their analysis.
    Keywords: opportunity spaces; narratives; place leadership; agency; peripheral regions
    JEL: O33 P52 R11 R58
    Date: 2024–03–21
  11. By: Sen, A.
    Abstract: I analyze a disaggregated structural change model for the US economy in the post-Second World War period. My results reveal that the positive correlation between the relative price and the relative quantity of services with respect to goods, a fact that challenges CES preferences commonly used in the structural change literature, largely reflects the heterogeneous makeup of the services sector. I show that a preference specification where service industries with high productivity growth (progressive services) are separated from the rest of services can account for this positive correlation without any income effects. Consistent with the development facts, the disaggregated structural change model I consider implicates a hump for the relative price of investment. Regarding structural change in investment, the results of the disaggregated model differ from the existing literature. More specifically, the price of services relative to goods declines over time and the rise of the services sector in investment reflects the substitutability between goods and services.
    Keywords: Structural Change, Services, Investment, Income Effects, Heterogeneity, Input-Output Tables
    JEL: O41 O51 E22 D57
    Date: 2024–03–14
  12. By: Siavash Mohades; Giulia Piccillo; Tania Treibich
    Abstract: We introduce a novel method for measuring economic uncertainty at the firm, sector, and aggregate levels using sales volatility and validate it by comparison with existing macroeconomic uncertainty measures. We use Compustat firms data in the period 2000-2022 to construct our uncertainty measures for the U.S. economy. Our findings highlight that 1) macroeconomic conditions are the predominant source of firms’ uncertainty, 2) diverse firm traits yield notable heterogeneity, and 3) the manufacturing sector exhibits the highest uncertainty among sectors. Our findings shed light on the importance of firm and sectoral heterogeneity in studying uncertainty and its effects on economic activity.
    Keywords: measuring uncertainty, firm heterogeneity, balance sheet data, business fluctuations
    JEL: D80 D22 E32 L11 L25
    Date: 2024

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