This article uses British firm-level panel data on actual innovative activity drawn from different statistical sources to identify the effect of technical change on jobs. Previous work tends to find positive associations of proxies for technical change and employment, but such studies suffer from various statistical drawbacks. In this study, even when one controls for fixed effects, dynamics, and endogeneity, innovations have a positive and significant effect on employment, which persists over several years. There seems to be little direct role for spillover effects from industry innovations, or any role for industry wages or union power

We develop a dynamic model of the adoption of financial innovations. Each period, firms decide whether or not to adopt an innovation of uncertain value, and the profitability of each period’s adoptions reveals information about the innovation’s value. We show that characteristics of financial innovation waves cited by critics as evidence of irrational excess are, in fact, consistent with fully rational behavior. We also show that social welfare is enhanced when more firms adopt innovations of questionable value and that financial intermediaries have an incentive to encourage such adoption

This paper shows that in a frictional labour market part of the productivity gains from general training will be captured by future employers. As a result, investments in general skills will be suboptimally low, and contrary to the standard theory, part of the costs may be borne by the employers. The paper also demonstrates that the interaction between innovation and training leads to an amplification of this inefficiency and to a multiplicity of equilibria. Workers are more willing to invest in their skills by accepting lower wages today if they expect more firms to innovate and pay them higher wages in the future. Similarly, firms are more willing to innovate when they expect the quality of the future workforce to be higher, thus when workers invest more in their skills

This paper develops a model of repeated innovation with knowledge spillovers. The model's novel feature is that firms compete on two dimensions: (1) product quality, where one firm's innovation ultimately spills over to other firms; and (2) distribution costs, where there are no spillovers across firms and where learning-by-doing on the part of incumbent firms gives them a competitive advantage over would-be entrants. Such firm-specific learning-by-doing has two important consequences: (1) it can in some circumstances dramatically reduce the long-run average level of innovation; (2) it leads to endogeneous bunching, or waves, in innovative activity

This book demonstrates alternatives to the lecture and chalkboard approach that dominates the teaching of economics, providing a range of innovative teaching techniques and examples aimed at engaging undergraduates in the learning of economics

Analysts have been found to underweight the innovation in the most recent quarterly earnings when forecasting next‐quarter earnings, and these expectations have been posited as an explanation for post‐earnings‐announcement drift. This study uses an experimental asset market to examine whether similar errors in forecasting quarterly earnings are made by student‐subjects. We examine two aspects of their behavior: (1) do subjects underestimate the autocorrelation in quarterly earnings when forming earnings expectations? and (2) are asset prices consistent with a subject's underestimation of the autocorrelation in quarterly earnings? We observe subject errors in forecasts that underweight extreme innovations in the most recent quarterly earnings by approximately 40 percent. The prices in the experimental markets also fail to reflect fully the most recent innovation in quarterly earnings. We are able to predict the sign of the incorrect pricing, from the mean initial earnings predictions of the subjects, in 74 percent of the 135 markets. These forecast errors observed in this study are consistent with forecast errors observed for analysts, and this consistency suggests that errors in analysts' forecasts may be at least partially attributable to the use of judgmental heuristics

The authors investigate the productivity effects of innovative employment practices using data from a sample of thirty-six homogeneous steel production lines owned by seventeen companies. The productivity regressions demonstrate that lines using a set of innovative work practices, which include incentive pay, teams, flexible job assignments, employment security, and training, achieve substantially higher levels of productivity than do lines with the more traditional approach, which includes narrow job definitions, strict work rules, and hourly pay with close supervision. Their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

This paper proposes a methodology to investigate the process of technical change with a focus on the dynamic effects of R&D investments on productivity, and on the induced innovation hypothesis for both inputs and outputs. The approach builds on a nonparametric representation of the underlying technology. An application to U.S. agriculture is presented. By distinguishing between private and public R&D investments, the analysis provides useful insights into the source and the dynamic nature of technical progress

For conditional heteroskedasticity models, the authors study the identification condition that is required for consistency of a non-Gaussian quasi-maximum-likelihood estimator. They show that, if the conditional mean is zero or if a symmetry condition is satisfied, then the identification condition is satisfied. Without symmetry, an additional parameter, for the location of the innovation density, must be added for identification. For the conditional variance parameters of a GARCH process, there is no efficiency loss from adding the parameter under symmetry, when the parameter is not needed

The paper tests whether technological change has been neutral in Canadian manufacturing industries, using a system of translog cost share equations for 1962 through 1986. The model features two classes of labor treated as distinct inputs. Tests rejected homotheticity in all industries. Hicks neutrality was also rejected in 16 of 18 industries. The most common pattern of nonneutral technical change was a bias away from blue-collar workers. Formal tests for skill-neutral innovation rejected the hypothesis in ten industries in favor of skill-using technical change. The results suggest that in studies of Canadian manufacturing, aggregation across labor inputs is inappropriate