Knowledge that Transforms

This paper provides new evidence on the increasing dispersion in wages and productivity using a unique micro-aggregated firm-level data source, representative for the full population of firms in 12 countries. First, we document an increase in wage and productivity dispersions, for both manufacturing and market services, and show that the increase is mainly driven by the bottom of the wage and productivity distributions. Second, we show that between-firm wage dispersion increased more in sectors that experienced an increase in productivity dispersion; the estimated elasticity is larger at the bottom than at the top of the wage/productivity distributions, consistent with a framework in which more productive firms charge higher mark-ups and/or larger wage mark-downs. Third, we find that both globalisation and digitalisation strengthen the link between productivity and wage dispersion. Our results suggest that policies designed to mitigate wage inequality must take into consideration gaps between firms of the same sectors, and how both globalisation and digitalisation affect these gaps.

Does ethnolinguistic diversity prevent policy adoption? The implementation of the Italian Start-up Act of 2012 in the bilingual (German and Italian) region of Trentino-Alto Adige offers the ideal setting to investigate this question. The Act sets up a scheme of benefits which young firms can access by registering as “innovative start-ups” on a voluntary basis. We find that policy take-up has been persistently lower in areas of the region with more German speakers, as local firms with German-named administrators are less likely to register as start-ups than firms with Italian-named ones. These findings are robust to firm characteristics and regional heterogeneity and are also visible within mixed-language municipalities. Furthermore, text analysis on press sources suggests that this national policy was much more extensively covered in the Italian-language local media, while a survey of local residents indicates that German speakers have lower knowledge of national policies unless they are embedded in multilingual networks. • We study the implementation of the Italian Start-Up Act in a bilingual region. • Minority-language firms are less likely to take-up a national policy. • Minority-language press is less likely to report on the policy. • Minority-language residents are less likely to be aware of the policy. • Our findings are robust to territorial-level industrial policies and characteristics.

We study funding gaps on Kickstarter across multiple ethnic groups from 2009 to 2021. Scaling the concept of racially salient events, we quantify the close co-movement of minority funding gaps in crowd-funding to inflamed political rhetoric surrounding migration. The funding gap for minorities more than doubles in the most inflamed periods compared to baseline. Results are especially acute for Hispanic creators. Distant, mostly white backers are typically important for projects reaching a critical threshold of funding support. Retractions in support for minority creators during tense periods are even spatially, as present in liberal cities as in conservative ones.

Patent protection can generate holdup problems for follow-on innovators when technologies protected in early patents complement their inventions. This study investigates whether institutional shareholder overlap between firms with precursory patents and follow-on innovators can reduce such patent holdup problems. Using patent citation links to track complementary patents, we find empirical support for such a holdup attenuation hypothesis of institutional shareholder overlap. Follow-on innovators with greater institutional shareholder overlap to precursory patent owners enjoy greater success with their patent portfolio, face less patent conflict as measured by patent litigation , and feature higher levels of R&D investments. The holdup attenuation effect is stronger if product complexity makes securing ex ante patent licenses more difficult.

What drove the UK productivity slowdown post-Global Financial Crisis, and how is the post-Covid recovery expected to differ? This paper traces the sources of TFP growth in the UK over the last two decades through the lens of a structural model of innovation, using registry data on the universe of firms. The dominant innovation source in the pre-GFC decade were improvements by incumbent firms on their own products, whereas creation of new varieties by entrants took a leading role post-GFC. In the Covid recovery, survey data (as of July 2021) suggested that creative destruction (i.e., innovation replacing other firms' products) was expected to gain importance. Innovation remains key for the UK economy to secure sustainable productivity growth. Once the recovery is underway, growth policies should prioritize labor and capital reallocation across firms, in addition to R&D support and human capital investment. • This study traces the sources of TFP growth in the UK over the last two decades. • Incremental innovation by incumbent firms was the key source of innovation before 2008. • Creation of new varieties by entrants took a leading role post-GFC. • Innovation remains key for the UK economy to secure sustainable productivity growth. • Growth policies should prioritize labor and capital reallocation across firms.

Understanding how science and technology advance has long been of interest to diverse scholarly communities. Thus far, however, such understanding has not been easy to map to, and thus to improve, the operational practice of research and development. Indeed, one might argue that the operational practice of research and development, particularly its exploratory research half, has become less effective in recent decades. In this paper, we describe a rethinking of how science and technology advance, one that is consistent with many (though not all) of the perspectives of the scholarly communities just mentioned, and one that helps bridge the divide between theory and practice. The result is an architecture we call “Bell's Dodecants,” to reflect its six mechanisms and two flavors, and their balanced nurturing at Bell Labs, the iconic 20th century industrial research and development laboratory.