Innovation Job Market Papers 2024 (3/3)
Dozens of papers from new PhDs about innovation
(This is post #3 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 third post. The first post is here, and the second is here. Subscribers should receive all three in their email.
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.
Technology Choice, Spillovers, and the Concentration of R&D by Todd Lensman
The Impact of Wage Differentials on R&D Offshoring and Invention Value by Divya Sebastian
Technology Rivalry and Resilience Under Trade Disruptions: The Case of Semiconductor Foundries by Weiting Miao
Open Source Software Policy in Industry Equilibrium by Jeff Gortmaker
Infrastructural Shocks and University Success in the United States by Jian Qi
Teams and Text: Collaborative Innovation in the Knowledge Space by Joseph Emmens
Green Innovation Under Pressure by Xintong Li
Not on Terra FIRRMA: Foreign Investment in US Startups and Innovation by Fiona Paine
The Geography of Innovation in the United States by Weiliang Tan
Where do toxic innovations come from? A study of competition and innovation in the US shale oil and gas industry by Divya Saxena
Awakening Latent Human Capital: The Opening-Up and Entrepreneurship in 19th-Century China by Li Duan
Industry Shakeouts after an Innovation Breakthrough by Xiaoyang Li
Are Societal Promises in Science and Technology Substantiated? A Study of Value Expressions in Patents by Sergio Pelaez
A New Order? Digital Disruption and Entrepreneurial Opportunities by Javad Shamsi
Titles and Abstracts
41. Technology Choice, Spillovers, and the Concentration of R&D
Todd Lensman
The direction of innovation shapes both current technologies and future innovation opportunities, as firms acquire expertise and create public knowledge through discovery. But how do firms choose which technologies to develop, and why might they fail to exploit new technological paradigms? I study these questions in a tractable new model of directed innovation and firm dynamics, highlighting a novel connection between market structure, the direction of innovation, and economic growth: Expertise in a current technology gives incumbents a comparative advantage at innovating it relative to entrants, who instead favor a new technology with higher growth potential. Each firm’s innovation decisions influence others through knowledge spillovers, which can inefficiently delay or prevent the emergence of the new technology. Concentrating R&D resources in a small number of firms can exacerbate this problem by amplifying the influence of incumbents, even though it accelerates growth in the absence of a technology choice. I provide empirical evidence for the theory using data on firm patenting and R&D expenditures, and I apply it to explain the historical development of mRNA vaccines.
42. The Impact of Wage Differentials on R&D Offshoring and Invention Value
Divya Sebastian
Over the past forty years, the international organization of R&D has globalized, as evidenced by an increased reliance of US firms on overseas inventors. However, there is little evidence of the nature and direction of inventions produced overseas as compared to those at home. Using a simple framework of location choice of R&D, this paper provides evidence for an offshoring penalty and considers which firms can overcome the offshoring penalty. Amid restrictive immigration policies to hire overseas talent in the US, the paper also shows timely evidence of how the relative cost of inventing at home can change the nature of inventions produced at home and overseas. Using a sample of patents from publicly traded US firms that invent both at home and overseas, I test the predictions from the framework empirically.
43. Technology Rivalry and Resilience Under Trade Disruptions: The Case of Semiconductor Foundries
Weiting Miao
This paper studies the impact of industrial policies on technology competition and consumer welfare amid rising global trade disruption risks. Distilling key empirical features from novel data on the semiconductor foundry industry, I develop and estimate a dynamic oligopoly model that integrates step-by-step innovation, trade disruption risk, and industrial policies. While distortions from market power and technological externalities justify subsidies, their optimal levels depend on the magnitude of trade disruption risk: when the risk is low, the optimal subsidy rate remains low, as the welfare benefits are distributed globally, but the costs are borne exclusively by the subsidizing government. My quantitative model shows that a 35% trade disruption risk makes the 25% investment subsidy under the US CHIPS Act optimal, resulting in a 6% welfare improvement for the U.S. The paper also analyzes the CHIPS Act’s restrictions on investments in rival countries, intended to secure technological leadership against their firms. Its efficacy depends on the strength of technology spillover restrictions and the scale of the rival home market secured for rival firms.
44. Open Source Software Policy in Industry Equilibrium
Jeff Gortmaker
Open source software (OSS) is a form of public knowledge widely provided and relied on by the private sector. To study the effects of growing government involvement in this critical public good, I build a new empirical model where high-tech firms choose software inputs and developer labor in competitive equilibrium. For estimation, I create a new dataset of OSS and in-house investment for the global web development industry, where software choices are directly observable. I simulate counterfactuals to assess the global impact of China tightening its recent internet restrictions on crossborder OSS collaboration or increasing its financial support for domestic OSS. I find that stricter restrictions do little to boost domestic OSS investment. Instead, lost spillovers raise web development costs in China by $2 per dollar of disincentive and $7 globally. Heightened subsidies prove more effective at increasing domestic investment and cut global costs by $11 per dollar of subsidy—tripling if the US responds in kind.
45. Infrastructural Shocks and University Success in the United States
Jian Qi
What factors lead some universities to flourish while others falter? Using newly digitized data on historical college enrollments, the spatial distribution of World War II military surplus, and institutional-level research output, I leverage quasi-random variation in access to military property surpluses from the postwar demobilization to estimate the impact of infrastructural inputs on enrollment and other institutional performance metrics. Constructing a balanced panel of colleges spanning each decade from the 1930s to the 2010s, I find that exposure to military real property surplus enabled U.S. institutions, particularly public universities, to expand enrollments in the postwar years and boost research output in the long run. Individual-level analyses further reveal that successful universities generate positive spillovers within the local labor market. These findings underscore the enduring benefits of investing in higher education infrastructure.
46. Teams and Text: Collaborative Innovation in the Knowledge Space
Joseph Emmens
In this paper, I study the impact of an expanding scientific and technological frontier on team innovations. To do so, I present a novel framework that integrates inventor teams and their patent texts. I model collaboration directly through a Bayesian model of Natural Language Processing. Applied to patent text data, this model builds a map of inventors, teams, and research fields, referred to as the knowledge space. Trained on over 400,000 U.S. patents from the USPTO PatentsView database, this framework allows me to tackle unanswered questions on how teams create new knowledge. Specifically, I investigate the effect of prior work on a team’s ability to produce a breakthrough—an innovation that sparks a new and successful research field. Leveraging high-dimensional patent text data, I back out two new measures: breakthrough patents and a team’s knowledge field, the set of research fields accessible to the team. I combine this with data on premature inventor deaths as a quasi-natural experiment. This identifies how team innovations change as they pivot to more or less advanced research fields. The framework unifies key elements of collaboration. Teams build on existing knowledge, and prior work both supports and obstructs innovation. I show that teams generate more breakthroughs when building on enough prior work to incorporate valuable knowledge, but not so much as to stifle novelty.
47. Green Innovation Under Pressure
Xintong Li
As the impacts of climate change intensify, firms must overcome the technical challenges of emission reduction while coping with damage from frequent disasters. This paper provides novel evidence on how firms adjust the pace and direction of their innovation in response to costly physical disasters. Leveraging granular data on the joint spatial distribution of climate hazards and economic activity across the U.S., we do not find firms exposed to acute physical risks cut their R&D expenditure after disaster shocks. Instead, our patent analysis reveals a subsequent shift in these firms’ innovation efforts toward green technologies. To examine the underlying mechanisms, we extend the directed technical change framework by incorporating regulatory incentives and firms’ learning about future risks. Our findings demonstrate that post-disaster recovery, when the advantage of “dirty” vintages weakens, presents a unique window of opportunity for policies to accelerate the low-carbon transition while enhancing climate resilience.
48. Not on Terra FIRRMA: Foreign Investment in US Startups and Innovation
Fiona Paine
Countries have increasingly been using economic policies to further geopolitical and national security goals. Thus far, economists have focused on studying tariffs and subsidies despite a broader range of economic tools actually being implemented. How costly are these other policies and what are their effects on capital markets, investment, and the economy more broadly? In this paper, I examine a 2018 U.S. law (FIRRMA), which expanded the government’s ability to review and block transactions on national security grounds to include venture capital (VC) investments by foreign investors. I use the passing of FIRRMA, its differential impact on specific VC industries, and the role of Chinese investors in U.S. venture capital to study whether foreign investment screening impacts capital supply. I find that FIRRMA had a negative effect on capital supply in impacted industries due to two factors: 1) the specialization of VC investing (such that the substitution of outside capital into impacted industries is low) and 2) networks in VC investing (there are spillovers to domestic syndication partners in impacted industries). I further find that the change in capital supply is costly, leading to lower innovation by startups. I introduce a novel way of measuring innovation early in the life of a startup using text from startup websites. I use this measure to show there is a selection effect where VCs give first round funding to less innovative startups after FIRRMA. Finally, in a case study of the biotechnology industry, I show that impacted startups suspend drug projects at higher rates, and in particular their risky projects.
49. The Geography of Innovation in the United States
Weiliang Tan
A defining trend in U.S. innovation is its increasing geographic concentration, exemplified by the growth of high-tech clusters like Silicon Valley. What factors drive this increasing spatial concentration, and what are its implications for regional and aggregate growth? Using comprehensive data on patents, firms, and inventors from 1976 to 2018, I find that innovation became more concentrated in high-skill cities only after 1990, with the sudden rise of information and communication technologies (ICT) playing two distinct roles in this process. First, there was a compositional shift in innovation towards ICT, which is colocated with ICT production and concentrated in high-skill cities. Second, firms that were initially concentrated in high-skill cities produced more non-ICT patents likely due to spillovers from ICT innovation and ICT enabled reductions in communication costs, which allowed these firms to expand production to lower-cost regions and enhanced the profitability of new ideas. Worker migration to high-skill cities amplified the effects of these mechanisms, intensifying the spatial concentration of innovation. To better understand the mechanics of innovation across space and its consequences for macroeconomic growth, I develop a model of spatial growth with endogenous and directed innovation, technology diffusion, and worker mobility. The model provides an analytical characterization of the spatial direction of innovation on the transition path and how its steady-state distribution across space determines long-run aggregate growth.
50. Where do toxic innovations come from? A study of competition and innovation in the US shale oil and gas industry
Divya Saxena
I study the effect of competition on the nature of innovation, particularly innovations that generate negative environmental externalities. I argue that competitive pressures drive firms to undertake innovations that have the potential to enhance yields but also pose significant risks to the environment. I examine the effect of competition on the toxicity of innovations in the design of chemical cocktails (exploratory formulae) used in the production of shale oil and gas in the US between 2011 and 2016. Utilizing the negative oil price shock of 2014 as an instrument to competition for firms in the industry, I show that competition is positively associated with using exploratory formulae that have toxic chemicals, especially by poorly performing firms. In exploring the origins of such toxic innovations, I show that poor-performing firms act as conduits for experimentation with toxic chemicals by suppliers under the conditions of high competition. In discussing the productivity implications, I show that the productivity gains from using toxic exploratory formulae are positive but short-term. I highlight how changes in competitive intensities can impact the nature of innovation generated by firms which can be detrimental to environmental health.
51. Awakening Latent Human Capital: The Opening-Up and Entrepreneurship in 19th-Century China
Li Duan
This study exploits a special historical case-openings of treaty ports in 19th-century China- to examine how upper-tail human capital, quantified via book creation, impacted modernization when facing external pressures. Employing a prefecture-level panel dataset from 1840 to 1904, the study establishes book density, indicative of knowledge endowment, as a significant and positive predictor of modern firm entry following the opening of treaty ports. To understand the mechanism, a critical aspect lies in understanding the Civil Service Examination (keju), an indigenous institution that historically dominated talent accumulation and allocation in China. By integrating data with keju, we find that exposure to Western influence mobilized the segment of upper-tail human capital at the bottom or outside of the keju system into entrepreneurship. This paper illustrates the dynamics between indigenous institutions and external pressures.
52. Industry Shakeouts after an Innovation Breakthrough
Xiaoyang Li
Conventional wisdom suggests that after a technological breakthrough, the number of active firms first surges, and then sharply declines, in what is known as a “shakeout”. This paper challenges that notion with new empirical evidence from across the U.S. economy, revealing that shakeouts are the exception, not the rule. I develop a statistical strategy to detect breakthroughs by isolating sustained anomalies in net firm entry rates, offering a robust alternative to narrative-driven approaches that can be applied to all industries. The results of this strategy, which reliably align with well-documented breakthroughs and remain consistent across various validation tests, uncover a novel trend: the number of entry-driven breakthroughs has been declining over time. The variability and frequent absence of shakeouts across breakthrough industries are consistent with breakthroughs primarily occurring in industries with low returns to scale and with modest learning curves, shifting the narrative on the nature of innovation over the past forty years in the U.S.
53. Are Societal Promises in Science and Technology Substantiated? A Study of Value Expressions in Patents
Sergio Pelaez
This study explores the relationship between value expressions (VEs) in patent documents—narrative statements that describe societal or commercial problems, solutions, or promises—and the technological orientation of patents in artificial intelligence and nanotechnology. Using generative and discriminative large language models (LLMs), we categorize public value expressions (PVEs), private value expressions (PRIVEs), and combined expressions (PVE-PRIVEs) from 175,730 U.S. patents (2005-2023), totaling 7.1 million sentences. While all patents have a technological orientation based on their technical features, only some are considered socially oriented—those whose technological capabilities align with societal challenges as defined by the UN's Sustainable Development Goals (SDGs). Using a technology-based mapping of patents to SDGs provided by LexisNexis Intellectual Property Solutions, we analyze how narrative VEs correlate with this objective technological orientation. Our findings reveal that patents containing PVEs are more likely to be socially oriented based on their core technical features, while those with PRIVEs show the opposite pattern. Notably, patents articulating both public and private values (PVE-PRIVEs) demonstrate the strongest alignment with social orientation. These results challenge the notion that value-based statements in patents are merely rhetorical, suggesting instead that they meaningfully reflect or signal an invention's potential societal impact. This study contributes to the ongoing discussion on the role of value-based statements in science, technology, and innovation (STI) and highlights the potential of VEs as useful elements in responsible innovation frameworks.
54. A New Order? Digital Disruption and Entrepreneurial Opportunities
Javad Shamsi
Does the rise of digital marketplaces primarily benefit large incumbent firms or facilitate the entry of entrepreneurs, including those from minority backgrounds? This paper studies the growth of food delivery applications in the UK—UberEats and Deliveroo—and their impacts on local restaurants. To study this, I construct a novel dataset that measures the staggered spatial expansion of these apps and I employ a dynamic differencein-differences framework. I find that app entry increases local restaurant counts (by 35%) and employment (by 12%) over four years and does not crowd out dine-in expenditures. This increase is driven by the entry of small and independent businesses, with ethnic minority entrepreneurs gaining disproportionately from lower entry costs and reduced dependence on prime locations. This democratization in entrepreneurship fosters greater diversity in cuisine offerings, enhancing consumer choice.
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