Techies, Trade, and Skill-Biased Productivity

70 Pages Posted: 26 Nov 2018 Last revised: 14 Feb 2021

See all articles by James Harrigan

James Harrigan

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Ariell Reshef

Paris School of Economics (PSE); CNRS; Université Paris I Panthéon-Sorbonne - CES/CNRS; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Farid Toubal

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Date Written: November 2018

Abstract

We study the impact of firm level choices of ICT, R&D, exporting and importing on the evolution of productivity, its bias towards skilled workers, and the implications for labor demand. We use a novel measure of firm-level technology: firms' employment of workers in occupations related to R&D and ICT adoption, who we call “techies”. We develop a methodology for estimating nested CES production functions at the firm level, which allows us to measure both Hicks-neutral and skill-augmenting technology differences. 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 does not affect low-skill employment even as it raises the ratio of skilled to unskilled workers, due to the cost-reducing effect of higher productivity. ICT techies account for large increases in aggregate demand for skill, mostly due to their effect on firm size, less so through within-firm changes. Exporting, importing, and R&D techies have smaller aggregate effects.

Suggested Citation

Harrigan, James and Reshef, Ariell and Toubal, Farid, Techies, Trade, and Skill-Biased Productivity (November 2018). NBER Working Paper No. w25295, Available at SSRN: https://ssrn.com/abstract=3290430

James Harrigan (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Ariell Reshef

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

CNRS ( email )

France

Université Paris I Panthéon-Sorbonne - CES/CNRS ( email )

106 bv de l'Hôpital
Paris, 75013
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

Farid Toubal

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management ( email )

France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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