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on Technology and Industrial Dynamics |
| By: | Fabian Gaessler (University Pompeu Fabra , Barcelona School of Management, Barcelona School of Economics, MPI-IC); Dietmar Harhoff (MPI-IC, LMU Munich, CEPR); Stefan Sorg (MPI-IC); Georg von Graevenitz (Queen Mary University of London) |
| Abstract: | We study the blocking effect of patents on follow-on innovation by others. We posit that follow-on innovation requires freedom to operate (FTO), which firms typically obtain through a license from the patentee holding the original innovation. Where licensing fails, follow-on innovation is blocked unless firms gain FTO through patent invalidation. Using large-scale data from post-grant oppositions at the European Patent Office, we find that patent invalidation increases follow-on innovation, measured in citations, by 16% on average. This effect exhibits a U-shape in the value of the original innovation. For patents on low-value original innovations, invalidation predominantly increases low-value followon innovation outside the patentee’s product market. Here, transaction costs likely exceed the joint surplus of licensing, causing licensing failure. In contrast, for patents on high-value original innovations, invalidation mainly increases high-value follow-on innovation in the patentee’s product market. We attribute this latter result to rent dissipation, which renders patentees unwilling to license out valuable technologies to (potential) competitors. |
| Keywords: | follow-on innovation; freedom to operate; licensing; patents; opposition; |
| JEL: | O31 O32 O33 O34 |
| Date: | 2024–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:494&r=tid |
| By: | Omer Majeed; Jonathan Hambur; Robert Breunig |
| Abstract: | This paper examines whether monetary policy and economic conditions affect innovative activity and productivity in Australia, a small open economy that tends to import innovation from overseas. Most interestingly, United States monetary policy spills over and affects Australian firms’ innovation. Within Australia, contractionary monetary policy reduces aggregate R&D spending and this leads to reduced productivity growth. However, using firm-level data and a survey measure of innovation that also captures adoption, we find heterogenous responses across different firm types. Small firms decrease innovation in response to contractionary monetary policy shocks whereas large firms increase innovation. This heterogeneity appears to reflect differing exposures to the demand and financial constraint channels of monetary policy. Overall, our results suggest that monetary policy and economic conditions have medium-run effects on productivity, though the effects are more heterogeneous than previously documented. |
| Keywords: | innovation, monetary policy, firm-level data |
| JEL: | E32 E52 G32 O30 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2024-13&r=tid |
| By: | Keraga, Mezid N. (Ethiopian Civil Service University); Lööf, Hans (Royal Institute of Technology); Stephan, Andreas (Linnaeus University) |
| Abstract: | This paper presents new insights into the relationship between innovation and employment in low-income countries. We use firm-level data sourced from the World Bank Enterprise Survey (ES) and focus on six sub-Saharan African (SSA) economies over the period 2003-2019. The econometric results from difference-in-differences (DiD) estimations, in conjunction with propensity score matching show a positive influence of product innovation on both permanent and total firm-level employment. The evidence for employment impact of process innovations is weak. Considering relations between firms, we find a positive intra-industry spillover effect from both product and process innovation on employment in firms operating within the same two-digit industry, while the results for inter-industry spillovers are non-significant or negative. |
| Keywords: | Innovation; Employment; Sub-Saharan; Spillover effects; DID; Matching approach |
| JEL: | J20 O30 |
| Date: | 2024–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0497&r=tid |
| By: | Ma, Song (Yale U); Wang, Wenyu (Indiana U); Wu, Yufeng (Ohio State U) |
| Abstract: | This paper argues that firms proactively use innovation decisions to influence the mobility and human capital accumulation of their workers. We develop a dynamic model in which workers conduct R&D projects, accumulating both general and firm-specific human capital. Firms choose the scope of innovation, influencing the type of human capital workers accumulate during the process. Pursuing more general innovation leads to increased knowledge redeployability for the firm at the cost of more difficult employee retention. We estimate the model using granular innovation production and mobility data of three million inventors. Our model closely matches the observed mobility and innovation specificity over inventors' life cycles. Empirical estimates of the model parameters imply that 24% of observed innovation specificity among U.S. firms is driven by their labor market considerations, which enhances the firm value but lowers the inventors' surplus. |
| JEL: | J24 J63 O31 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2023-29&r=tid |
| By: | Wagner, Joachim |
| Abstract: | The use of robots by firms can be expected to go hand in hand with higher productivity, higher product quality and more product innovation, which should be positively related to export activities. This paper uses firm level data from the Flash Eurobarometer 486 survey conducted in February - May 2020 to investigate the link between the use of robots and export activities in manufacturing enterprises from the 27 member countries of the European Union. Applying standard parametric econometric models and a new machine-learning estimator, Kernel-Regularized Least Squares (KRLS), we find that firms which use robots do more often export, do more often export to various destinations all over the world, and do export to more different destinations. The estimated robots premium for extensive margins of exports is statistically highly significant after controlling for firm size, firm age, patents, and country. Furthermore, the size of this premium can be considered to be large. Extensive margins of exports and the use of robots are positively related. |
| Keywords: | Robots, exports, firm level data, Flash Eurobarometer 486, kernel-regularized leastsquares (KRLS) |
| JEL: | D22 F14 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kcgwps:283903&r=tid |
| By: | Bart Hobijn; Robert S. Kaplan |
| Abstract: | During the Second Industrial Revolution, in the late nineteenth century, the proliferation of automation technologies coincided with substantial job creation but also a “hollowing out” of middle-skilled job opportunities, which historically offered reliable paths to prosperity. We use recently linked U.S. census data to document three main facts: (i) declining demand for middle-skilled labor in manufacturing corresponded to greater reallocation of workers into comparatively less-skilled occupations; (ii) older workers were more likely to switch to unskilled physical labor; (iii) younger workers led switching into growing occupations affected by automation technologies. |
| Keywords: | Automation; Occupational choice |
| JEL: | J62 N31 N32 O33 |
| Date: | 2024–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:97793&r=tid |
| By: | Michele Cascarano (Bank of Italy); Filippo Natoli (Bank of Italy); Andrea Petrella (Bank of Italy) |
| Abstract: | Climate change has long-term effects on the size and composition of a country's business sector. Using administrative data on the universe of Italian firms, we find that an increase in the number of very hot days per year persistently reduces the growth rate of active firms in the market in the medium run. This is due to a drop in firm entry and an increase in firm exit, with relocation playing a minor role. A firm-level investigation reveals a dichotomy between firms that persistently suffer as a result of higher temperatures and those that improve their profitability by adapting to a hotter climate: a combination of size and age best identifies the two groups, where older, smaller-sized firms lie at one extreme and younger, larger firms at the other. According to an average climate scenario, the projected evolution of local temperatures will impact firm demography further, also exacerbating the divergent effects across warmer and colder areas over the current decade. |
| Keywords: | climate change, temperatures, firm dynamics |
| JEL: | D22 R12 Q54 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1418_23&r=tid |
| By: | Bena, Jan (U of British Columbia); Erel, Isil (Ohio State U and ECGI); Wang, Daisy (Ohio State U); Weisbach, Michael S. (Ohio State U and ECGI) |
| Abstract: | The hold-up problem can impair firms' abilities to make relationship-specific investments through contracts. Ownership changes can mitigate this problem. To evaluate changes in the specificity of human capital investments, we perform textual analyses of patents filed by lead inventors from both acquirer and target firms before and after acquisitions. Inventors whose human capital is highly complementary with the patent portfolios of their acquisition partners are more likely to stay with the combined firm post-deal and subsequently make their investments more specific to the partner's assets. As ownership of another firm results in increasingly specific investments to that firm's assets, contracting issues related to relationship-specific investments is likely a motive for acquisitions. |
| JEL: | G34 L14 L22 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2023-27&r=tid |
| By: | Manish Jha; Jialin Qian; Michael Weber; Baozhong Yang |
| Abstract: | We create a firm-level ChatGPT investment score, based on conference calls, that measures managers' anticipated changes in capital expenditures. We validate the score with interpretable textual content and its strong correlation with CFO survey responses. The investment score predicts future capital expenditure for up to nine quarters, controlling for Tobin's q and other determinants, implying the investment score provides incremental information about firms' future investment opportunities. The investment score also separately forecasts future total, intangible, and R&D investments. High-investment-score firms experience significant negative future abnormal returns. We demonstrate ChatGPT's applicability to measure other policies, such as dividends and employment. |
| JEL: | C81 E22 G14 G31 G32 O33 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32161&r=tid |
| By: | Hvide, Hans K. (U of Bergen and U of Aberdeen); Meling, Tom (Ohio State U) |
| Abstract: | How does the economy adapt to new technologies? While existing literature focuses on the response by established firms, we highlight the response by entrepreneurs. The context is a natural experiment: the staggered rollout of broadband internet in Norway. We find that the new technology had small effects on the survival, employment, and asset growth of established firms, but led to a sustained 25% increase in startup rates. Startup quality did not decline. Our findings support ideas from Schumpeter (1934) and Arrow (1962) that startups play an important role in adapting the economy to new technologies. |
| JEL: | D21 D24 G39 J23 L11 L25 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2023-19&r=tid |
| By: | Daniele Angelini (University of Konstanz); Stefan Niemann (University of Konstanz); Florian Roeser (University of Konstanz) |
| Abstract: | We analyze the policy trade-offs facing fiscal policy in a dynamic growth model with au-tomation, education choice, and human capital formation. Although beneficial for economic growth, automation contributes to wage inequality. When human capital formation is affected by government spending, fiscal policy can enhance welfare through a coordinated increase in labor and robot taxes. The composition of taxes financing spending on transfers and educa-tion is key in determining the effects on economic growth and inequality, as the robot tax is the more redistributive instrument. We calibrate our model to the US economy and determine the welfare-maximizing tax policy. Optimality requires an initial reduction in the robot tax to foster automation-driven growth, followed by its gradual increase to address widening inequal-ity. Education subsidies can be welfare-improving if they are financed through the labor tax without compromising higher education spending. Finally, we explore robustness under private contributions to higher education. |
| Keywords: | Automation; Education; Human capital; Innovation-driven growth; Inequality; Policy responses |
| JEL: | E23 E25 H23 H52 O31 O33 O40 |
| Date: | 2024–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:knz:dpteco:2401&r=tid |
| By: | Gaetano Basso (Bank of Italy); Fabrizio Colonna (Bank of Italy); Domenico Depalo (Bank of Italy); Graziella Mendicino (Bank of Italy) |
| Abstract: | The paper discusses the role of labour in the transition to a net zero economy and provides an analysis for Italy over the period 2011-2021. First, we observe that the emissions generated from production activities declined over this period. We estimate that the contribution of employment reallocation across sectors was modest, while that of sectoral efficiency – particularly the shift in the energy mix towards cleaner sources – was decisive. Second, we show that the share of employment in the environmental goods and services sector was small in 2020 and has remained broadly stable since 2014. Our results suggest that, so far, labour has not played a prominent role in the green transition. However, this trend could change in the near future, as CO2 emission reduction targets take on an increasingly key role in production activities. |
| Keywords: | labour demand, green economy, ecological transition, public investments |
| JEL: | J23 Q52 Q56 H54 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_811_23&r=tid |