Working Paper: CEPR ID: DP15815
Authors: James Harrigan; Ariell Reshef; Farid Toubal
Abstract: We study the impact of firm-level choices on ICT, R&D, exporting and importing on the evolution of productivity, its bias towards skilled workers, and implications for labor demand. We use a novel measure of firm-level R&D and ICT adoption: employment of “techies” who perform these tasks. We develop methodology for estimating nested-CES production functions and for measuring both Hicks-neutral and skill-augmenting technology differences at the firm level. Using administrative data on French firms we find that techies, exporting and importing raise skill-biased productivity. In contrast, only ICT techies raise Hicks-neutral productivity. On average, higher firm-level skill biased productivity hardly affects low-skill employment, even as it raises relative demand for skill, due to the cost-reducing effect. ICT accounts for large increases in aggregate demand for skill, mostly due to the effect on firm size, less so through within-firm changes. Exporting, importing, and R&D have smaller aggregate effects.
Keywords: productivity; skill bias; skill augmenting; labor demand; outsourcing; globalization; R&D; ICT; techies; stem skills
JEL Codes: D2; D24; F1; F16; F6; F66; J2; J23; J24; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| employment of techies (O33) | skill-biased productivity (J24) |
| ICT techies (L63) | Hicks-neutral productivity (O49) |
| exporting (F10) | skill-augmenting productivity (J24) |
| importing (F10) | skill-augmenting productivity (J24) |
| exporting (F10) | Hicks-neutral productivity (O49) |
| importing (F10) | Hicks-neutral productivity (O49) |
| higher firm-level skill-biased productivity (J24) | low-skill employment (F66) |
| employment of techies (O33) | skilled labor employment (J24) |
| employment of techies (O33) | unskilled labor employment (F66) |