Innovation Job Market Papers 2024 (1/3)
Dozens of papers from new PhDs about innovation
(This is post #1 of 3)
In this special annual edition of What’s New Under the Sun, we have a big bundle of the titles, abstracts, and links to innovation-related PhD job market papers from 2024. Some were sent my way following my request in the last newsletter, but to find the majority of these, I looked at the titles of job market papers from graduating PhDs at ~175 economics, business, and other departments. Even so, I’m sure I missed some great papers. If that’s you, email me and I’ll add you to the posts.
I’ve split this post into three to make it a bit easier to navigate. This is the first post. The second post is here, and the third is here. Subscribers should receive all three in their email.
But first, a few announcements.
Two new living literature reviews have recently launched, with support from Open Philanthropy. Check them out and subscribe if you are interested in the topic:
Migration Literature Review by Lauren Gilbert, on all things immigration. See her first post on the academic literature spawned by The Mariel Boatlift.
Governing with AI by Justin Bullock, a review on the impact of AI on governance. See his first post on the history of AI in bureaucracy.
These join other living literature reviews on social collapse, the research to policy pipeline, AI in science, scaling in human societies, and interdisciplinarity!
The National Bureau of Economic Research is seeking research proposals related to investments in early career researchers for a forthcoming conference. More information here.
Finally, for all PhD students interested in innovation, note the Eighth Annual Wharton Innovation Doctoral Symposium is accepting proposals now. More information here.
Email me to suggest an announcement for the next newsletter. Now for the job market papers!
Titles Index
Titles are presented in random order. There might be additional authors on these papers - I’ve listed the associated job market candidate only.
Self-Selection and the Diminishing Returns of Research by Lorenz K.F. Ekerdt
A structural model of mentorship in startup accelerators: Matching, learning, and value creation by Mohaddeseh Heydari Nejad
Is green technological change skill biased? by Maren Holthe Hedne
Knowledge and Firm Growth in Space by Jack Liang
Innovation, Financial Frictions, and Hysteresis Effects of Monetary Policy by Ozgen Ozturk
Monetary Policy, Price of Risk, and Growth by Anindo Sarkar
How Do Robot Subsidies Affect Aggregate Productivity and Firm Dispersion? Theory and Evidence from China by Runhong Ma
Regulation-Driven Innovations: A Textual Analysis of U.S. Patents and Federal Regulations by Zhoudan Xie
Exporting State-Promoted Technologies and the Direction of Global Innovation: Evidence from 5G Standardization by Myeongwan Kim
Patent Protection in Developing Economies: The Role of Market Power and Technology Access by Weili Chen
Early Mentors for Exceptional Students by Ian Calaway
Minding Your Business or Your Child? Motherhood and the Entrepreneurship Gap byValentina Rutigliano
The Effect of Transport Infrastructure on Innovation: The Role of Market Access in the English Railway Boom by Giorgio Ravalli
Knowledge is (Market) Power by Jinglun Yao
Amenity-Biased Technical Change by Gerard Maideu-Morera
Asymmetric Information and Digital Technology Adoption: Evidence from Senegal by Deivy Houeix
Innovation and Technological Mismatch: Experimental Evidence from Improved Seed by Sergio Puerto
Human Capital and Growth: The Role of High-Skill Labor Concentration by Julio Brandao-Roll
Production Outsourcing and Innovation: Evidence from China’s Pharmaceutical Industry by Shi Gu
Learning from Multinationals by Minyoung Song
Titles and Abstracts
1. Self-Selection and the Diminishing Returns of Research
Lorenz K.F. Ekerdt
The downward historical trend of research productivity has been used to suggest that there are severe permanent diminishing returns of knowledge production. We argue that a substantial portion of the declining research productivity is a transitory phenomenon caused by self-selection in researchers' ability and the expansion of the research sector. To quantify these transitory diminishing returns, we develop a model of self-selected researcher supply and estimate it using data on the labor force share and earnings distribution of researchers. Our results suggest that the average ability of researchers has fallen dramatically. We then use our findings to revisit the estimation of the knowledge production function and its resulting prediction on long-run economic growth. We find that switching from an accounting framework without considering self-selection to one with nearly doubles the long-run growth rate of per capita income predicted by semi-endogenous growth models.
2. A structural model of mentorship in startup accelerators: Matching, learning, and value creation
Mohaddeseh Heydari Nejad
Entrepreneurial success depends on reducing uncertainty about the quality of ideas and selecting effective strategies to bring the idea to market. Mentorship plays a critical role in this process. In this paper, I examine how mentorship improves entrepreneurial outcomes within the Creative Destruction Lab (CDL), a global mentorship-driven startup accelerator, through two channels: the direct effect of improving startup quality and the screening effect of identifying high-quality startups. Using mentorship interaction data from CDL, I apply machine learning algorithms to generate quantifiable measures of mentors' advice. I propose and estimate a structural model of mentorship, where the dynamics of quality accumulation are influenced by both the direct effect of mentors' advice and the screening effect from mentors' learning. I find that mentorship generates value through both direct and screening effects, with significant spillovers of quality signals between mentors. This model enables a counterfactual analysis, quantifying the value added by mentors when they actively shape the strategic direction of startups, compared to a more passive role where they support the execution of the entrepreneurs' original plans. The counterfactual analysis shows that entrepreneurs benefit from mentors' strategic guidance, with significant heterogeneity across sectors. In emerging sectors like quantum, mentors' strategic input has minimal impact, especially early on, suggesting that a more passive mentorship approach may be more beneficial. In these sectors, screening gains grow over time as mentors accumulate information and provide guidance that better reflects the true quality of the startups. These results offer important managerial implications for the design of intermediaries, such as accelerators that provide mentorship, suggesting that guidance approaches should be tailored to the specific needs and developmental stages of each sector.
3. Is green technological change skill biased?
Maren Holthe Hedne
Technologies that limit greenhouse gas emissions have become a key component of modern technological change, but little is known about their impact on labour market inequality. This paper studies whether and when green technology increases the demand for workers with and without higher education. Green technologies differ from technologies previously shown to be skill biased because their main function is to improve clean relative to dirty production, rather than augment or replace types of labour. Using linked employer-employee data and a novel shift-share instrument to account for endogenous technology choices, I show that the skill-bias of green technologies is highly heterogeneous. Specifically, I find that firms in manufacturing increase their share of high-skilled workers in response to an imported green technology shock, while firms in most other sectors (such as construction) decrease their skill ratio. The political feasibility of climate policies depends on the winners and losers of the green transition. My results imply that the green transition is not inherently skill-biased — instead, the labour demand and income inequality effects of green technologies vary significantly depending on the sector where the green transition occurs.
4. Knowledge and Firm Growth in Space
Jack Liang
I study how knowledge facilitates firm-level growth across space. Using US Census microdata, I identify establishments specialized in knowledge production for other establishments of the firm. Firm growth is disproportionately concentrated near these establishments, suggesting that within-firm geographic frictions inhibit the perfect replication of knowledge across production units in space. I show that these specialized knowledge establishments relate to increased learning and adoption of firm knowledge in the firm’s production establishments. These findings motivate a dynamic model of firm growth via the accumulation of knowledge in which firms jointly determine where to locate their production of knowledge and output. The firm’s problem is dynamic, combinatorial, and features many continuous state and choice variables, so I solve it using a novel computational algorithm. I estimate the model and use it to understand the effects of geographic shocks. Counterfactual analysis demonstrates that firms’ knowledge investment decisions amplify the welfare effects of local productivity shocks by 21% and propagate these effects to other regions.
5. Innovation, Financial Frictions, and Hysteresis Effects of Monetary Policy
Ozgen Ozturk
This paper examines the link between access to external finance and the long-term impact of monetary policy on productivity growth. By leveraging loan-level data merged with firm-level balance sheet information, we show that firms' R&D expenditures decline after a monetary tightening, with heterogeneous responses. Firms that lack access to external finance for funding R&D activities experience sharper cuts in R&D spending compared to those with better access. Within an endogenous growth model with nominal rigidities and financial frictions, we interpret this pattern as access to external finance enables firms to sustain innovation during periods of monetary tightening. Our model findings suggest that these short-term impact of monetary policy on R&D investment can have long-lasting effects on productivity, as current R&D efforts drive future productivity growth. Additionally, we show that when firms are provided with the financial flexibility to borrow to finance innovation activities, and monetary policy targets the output gap, it is possible to stabilise output without inducing hysteresis effects.
6. Monetary Policy, Price of Risk, and Growth
Anindo Sarkar
We uncover a novel channel by which monetary policy affects the economy’s supply side through affecting risk premia. In this channel, monetary policy affects the effective risk aversion, that is, the price of risk in the economy. This impacts equilibrium R&D investments and, eventually, TFP growth. Using an asset pricing model, we construct measures of the price of risk shocks and show that increases in the price of risk decrease aggregate R&D. We then quantify the contribution of our channel to the overall R&D and TFP growth response to monetary policy shocks by constructing an endogenous growth model with time-varying risk aversion. Using the model, we find that the price of risk channel accounts for 20% of reaction of R&D and 33% of the reaction of TFP growth to unanticipated monetary Policy.
7. How Do Robot Subsidies Affect Aggregate Productivity and Firm Dispersion? Theory and Evidence from China
Runhong Ma
This study examines the effects of robot subsidies in China’s manufacturing sector. Exploiting differences in the timing of the subsidy implementation across municipalities, I find the introduction of a robot subsidy has heterogeneous impacts across firms of different scale. Although the subsidy results in a 13 percent increase in applications for robot patents, the facilitated access to robotics leads to a 14 percent reduction in new firm's entry in the manufacturing sector, along with a significant increase in turnovers of bigger industrial enterprises. Using a stylised model, I show that the interaction between financial frictions and endogenous automation helps reconcile the empirical findings: ex-ante capital misallocation causes a uniform subsidy to disproportionately benefit firms with better access to capital. The distortion creates an efficiency trade-off: while a subsidy can enhance overall automation, it also exacerbates automation dispersion, which reduces efficiency. To quantify the net efficiency impact of these competing forces, I embed this mechanism into a dynamic heterogeneous firm model, calibrated to match key features of the Chinese industrial sector. The model indicates that a robot subsidy of 20% narrows the gap between mean and optimal automation levels by 22 percentage points, while raising automation dispersion by 49 percentage points. This leads to a 1.2 percent increase in aggregate output, along with a 2.4 percent decline in total factor productivity.
8. Regulation-Driven Innovations: A Textual Analysis of U.S. Patents and Federal Regulations
Zhoudan Xie
Some innovations are developed to comply with or circumvent legal and regulatory requirements. While these regulation-driven innovations can generate societal benefits, they may also incur unintended economic costs. This paper explores this unique type of innovation and examines its relationship with firm dynamics, creative destruction, and economic growth. I present a simple Schumpeterian model demonstrating how regulation-driven innovations can serve as a strategy for firms to achieve higher growth, deter competitors, and reduce the rate of creative destruction. Guided by the model’s implications, I identify regulation-driven innovations from U.S. patents issued between 1976 and 2020 by measuring the degree of alignment between patents and federal regulations. I construct this measure by estimating textual similarities between patent documents and regulatory texts using natural language processing techniques. Linking the measure with patent- and firm-level data, I find that innovation-regulation alignment is positively associated with the economic value of patents and the growth in size and market power of innovating firms. At the aggregate level, however, the static gains for innovating firms fail to offset the dynamic social costs from reduced reallocation and competition.
9. Exporting State-Promoted Technologies and the Direction of Global Innovation: Evidence from 5G Standardization
Myeongwan Kim
Standardization ensures compatibility but potentially shapes innovation by locking in certain technologies. Unlike other countries, the Chinese government coordinates its firms to advance specific domestic technologies in international standard-setting organizations (SSOs). This paper studies the impact of this policy on global innovation in 5G. In the SSO for 5G, which is an economically and geopolitically significant arena in which this policy is implemented, firms compete to have their patented technologies adopted as part of the 5G standards. Using a large language model, I build a new database linking SSO technical documents, 5G policy documents published by the Chinese government, and 5G patents. I show that the policy promotes Chinese technologies in areas where China lags behind foreign competitors. If adopted as standards, these lagging technologies become the basis for subsequent 5G innovation across countries, as measured by 5G patents in close textual alignment with the SSO documents describing these technologies. These follow-on patents account for two-fifths of total 5G patents filed worldwide after standardization. In addition, many of the promoted technologies span both civilian and military applications. China's objectives in 5G extend beyond commercial interests.
10. Patent Protection in Developing Economies: The Role of Market Power and Technology Access
Weili Chen
This paper examines the trade-off between market power and access to advanced technologies in the context of patent protection policy in developing economies. I exploit a policy shock in China that unevenly strengthened patent enforcement across provinces, combining it with a novel dataset that links Chinese firm-level production data to multinational firms’ global patent portfolios. I find that stronger patent protection incentivizes multinationals to adopt their best technologies in Chinese affiliates and encourages domestic inventors to produce higher-quality innovations. However, both groups also raise their markups. To rationalize and quantify these findings, I develop a multi-product model where inventors endogenously reduce markups but withhold higher-quality products due to concerns over local imitation. Enhanced patent enforcement drives out imitators, incentivizing inventors to adopt superior products while raising markups across their portfolios. The calibrated model reveals an inverted U-shaped relationship between patent protection and aggregate welfare, with strong heterogeneity across industries.
11. Early Mentors for Exceptional Students
Ian Calaway
Although we are acquainted anecdotally with extraordinary people like Mozart and Marie Curie, there is little systematic research on how children with exceptional ability develop into truly extraordinary talents. Is the supply of extraordinary talent inelastic, dependent on a rare combination of innate gifts and the availability of mentors who are themselves world-class (Irène Joliot-Curie and her mother Marie)? Or, could the supply be fairly elastic because mentors need only have abilities within the normal range? I analyze these questions in the context of mathematics, where there is a consensus on how exceptional ability presents itself in children. I show that mathematics teachers who organize clubs and competitions can identify and foster exceptional math students, causing them to win honors, attend selective universities, major in STEM fields, and have careers in which they disproportionately spur economic growth. I demonstrate that there are many exceptional math students without mentors who could be reached with modest investments.
12. Minding Your Business or Your Child? Motherhood and the Entrepreneurship Gap
Valentina Rutigliano
Women are less likely than men to start firms and female entrepreneurs are less likely to succeed. This paper studies the effect of childbirth on women’s entrepreneurial activity. Drawing on rich administrative data from Canada and using an event study and instrumental variable design, I show that childbirth has substantial negative effects on women’s founding rates and firm performance, accounting for a large portion of the gender gap in entrepreneurship. The impact spills over onto workers, who experience a decrease in earnings. The effects are permanent: entrepreneurial outcomes never recover to their pre-birth levels. The results are not due to a reduction in risk-taking and cannot be fully explained by household specialization based on labor market advantage. Childcare availability, progressive gender norms, and access to credit reduce the adverse effect of childbirth on the entrepreneurship gap.
13. The Effect of Transport Infrastructure on Innovation: The Role of Market Access in the English Railway Boom
Giorgio Ravalli
What is the impact of transport infrastructure on innovation? I study the historically unprecedented boom of the railway network in 19th Century England, which reduced average travel time between London and Birmingham by 80% between 1830 and 1911. Using "accidentally connected" locations I show that building a rail station caused patents per capita to increase by over 75% in a district. I find no evidence that this effect was due to the relocation of existing inventors. The positive railroad effect is driven by an increase in market access (a demand-induced innovation effect). Across 1823-1861 the median Donaldson-Hornbeck measure of market access approximately doubles; a doubling of market access increases innovation by over 50%. This mechanism is economically and statistically significant. I also find that the railroad induced greater knowledge flows through improved communication between inventors; this effect appears distinct from the market access channel.
14. Knowledge is (Market) Power
Jinglun Yao
US corporate concentration has been persistently rising over the past century with flattening Pareto tails, and productivity growth has been concurrently declining. This paper builds a continuous-time Schumpeterian growth model that interprets higher concentration as a result of lower growth, which complements the existing Schumpeterian literature that focuses on the opposite direction. In the model, laggards benefit from dynamic growth advantage, while leaders possess the static advantage inherent to their leading position. A uniform decline in research productivity hurts endogenous growth of all firms but in particular that of laggards, increasing the relative growth of leaders and fattening the Pareto tail of productivity distribution. With a demand system featuring variable demand elasticities, the proposed mechanism stemming from declining research productivity explains a majority of the changes in productivity growth, corporate concentration, markup, labor share, R&D cost, entry and exit rates, and job creation and destruction rates in the US since 1980s. The model can accommodate increasing concentration with stable markup and labor share in the pre-1980 period by introducing economic integration in addition to declining research productivity.
15. Amenity-Biased Technical Change
Gerard Maideu-Morera
I argue that technical change has raised living standards not only by increasing wages but also by making work more pleasant and safer. Yet, traditional growth, distributional, or welfare accounting abstract from non-pecuniary job characteristics. By estimating shadow prices for job amenities, I first document an amenity-biased shift in labor demand in the US from 1980 to 2015, which reallocated workers from low- to high-amenity occupations. This reallocation significantly alters our understanding of several major macroeconomic changes. First, I theoretically show that the shadow value of amenities should be included in output to measure productivity growth. Otherwise, conventional measures---that only account for the costs of amenities---can underestimate it. Quantitatively, I find that total compensation (wage plus the value of amenities) grew 40% more than wages from 1980 to 2015. Compared to conventional estimates, this implies 25% higher productivity growth but a larger slowdown since 2004. Second, I find no labor market polarization along the distribution of total compensation; employment and relative wages declined the most at the bottom of the distribution instead of in the middle.
16. Asymmetric Information and Digital Technology Adoption: Evidence from Senegal
Deivy Houeix
Digital technologies have the potential to increase firm productivity. However, they often come bundled with data observability, which can be a double-edged sword. Observability reduces information frictions and can increase efficiency, but some agents may lose their informational rent and thus resist adoption. I explore this trade-off between observability and adoption through two field experiments conducted over nearly two years. These experiments, guided by contract theory, introduce digital payments to the Senegalese taxi industry in partnership with the country's largest payment company. In the first experiment, I randomize access to digital payments for drivers (employees) and transaction observability to taxi owners (employers). I find that digital payments reduce drivers' cash-related costs by about half but also serve as effective monitoring tools for taxi owners. Transaction observability substantially increases driver effort, contract efficiency, and the duration of owner-driver relationships. However, 50% of drivers—primarily the worst-performing and poorest—decline to adopt digital payments when transactions are observable. The second experiment shows that the adoption rate doubles when drivers are assured that owners will not be able to observe their transactions. I develop a theoretical framework and use the experimental variations to estimate the welfare impacts of policy counterfactuals. I show that removing transaction observability would maintain moral hazard problems but broaden adoption and thus increase overall welfare—an approach ultimately implemented by the payment company. These findings highlight the crucial role of information embedded in digital technologies, as it magnifies gains for adopting firms but can deter initial adoption.
17. Innovation and Technological Mismatch: Experimental Evidence from Improved Seeds
Sergio Puerto
Biases in research and development create a mismatch between the attributes of new agricultural technology and the preferences of low-income farmers. In this paper, I estimate the impact of this mismatch on farmers’ adoption of new drought-resistant seeds. Using a randomized controlled trial in Costa Rica, I recreated counterfactual scenarios for innovators’ seed development decisions by offering some farmers seed matching their preferences and others a seed variety chosen by crop scientists as a blanket recommendation. Results show that mismatch has a significant impact on adoption, with 41% lower uptake among farmers who were offered the recommended new seed. This gap was larger for farms located farther from the research lab where the new seeds were developed and persisted even in areas with drought exposure. Moreover, the new seeds were 31% more productive among farmers who adopted their preferred variety. To explain these findings, I propose a model where research constraints limit innovators’ ability to account for farmer heterogeneity. Matching new seeds to farmer preferences relaxes those constraints and increases productivity by enabling better adaptation to specific farm-level conditions, which are usually private information unknown to innovators
18. Human Capital and Growth: The Role of High-Skill Labor Concentration
Julio Brandao-Roll
This paper raises and tests the hypothesis that the effects of human capital on economic growth depend crucially on the concentration of high-skill labor across firms. Importantly and surprisingly, an increase in human capital supply can actually lower growth if skill concentration across firms is high enough. Intuitively, large firms have limited financial incentives to innovate because they dominate the market and incur the risk of self-cannibalization when innovating; therefore, when increased skill supply primarily benefits these firms, the equilibrium growth impacts can be negative. I investigate this hypothesis in Brazil, establishing three results. First, in a difference-in-differences design across municipalities, I estimate that new colleges had a positive impact on local economic growth in municipalities with lower concentration of high-skill labor, but a negative effect in municipalities with higher skill concentration. Second, I isolate the causal effect of changes in local high-skill labor concentration on local growth using a shift-share design, leveraging loan shocks to firms. Third, I develop and estimate an endogenous growth model, which quantitatively matches the preceding results and which I use to assess policy counterfactuals. These results help explain why several middle-income countries, including Brazil, have experienced a slowdown in growth despite a fast increase in high-skill supply over the past decades.
19. Production Outsourcing and Innovation: Evidence from China’s Pharmaceutical Industry
Shi Gu
This paper examines how removing barriers in production outsourcing affects firms’ innovation activities. I exploit a reform in China’s pharmaceutical industry that permits the outsourcing of drug production. Using a triple-difference identification strategy, I find that drug innovators without production facilities engage in more drug development (clinical trials) after the policy. However, for those firms constrained by limited resources, the increase in drug development is accompanied by a reduction in drug research (patent applications), particularly in low-value patents. This shift occurs because outsourcing increases the marginal value of development more than that of research. Further analysis reveals that the increase in clinical trials is more evident in the development of incrementally innovative drugs, rather than entirely novel ones. These findings suggest that overall, production outsourcing positively contributes to innovation, though its effects are primarily observed in incremental improvements.
20. Learning from Multinationals
Minyoung Song
Multinational firms account for a large share of global trade and production and have a significant impact on productivity growth across countries. We develop a tractable model of international trade and multinational production (MP) to analyze their effects on productivity growth through knowledge diffusion across countries. We connect the theory to evidence by examining the impact of a 2004–2006 Chinese liberalization of outward investment on the productivity growth of its counterparts. Using an instrumental variable approach, we find a 1 percentage point increase in MP share from China resulted in a 1.85% increase in productivity. Mapping the reduced-form estimates to the rate of idea diffusion from foreign firms, we provide evidence on key parameters used in knowledge diffusion models. While long run productivity growth is primarily driven by domestic firms due to its larger knowledge diffusion parameter, MP can have a sizable impact on productivity growth, particularly when productivity differences between multinational and domestic firms are large. Increases in bilateral trade costs shift firm activity away from exporting to producing abroad, leading to productivity increases in the multinational’s production destination at the expense of the exporting nation. We quantify the impacts of Chinese liberalization of trade, as well as inward and outward MP, on the productivity growth of 59 countries.
Innovation Job Market Papers 2024 continues here.