The role of industry variety in the creation of innovative start-ups in Italy

This paper aims to ascertain whether related and unrelated industry variety affects the creation of innovative as opposed to other start-ups in Italian local labor market areas. The analysis combines elements from the knowledge spillover theory of entrepreneurship, the recombinant growth approach, and evolutionary economic geography. Using data on Italian innovative start-ups created between 2012 and 2015, and on firms newly registered with the Italian Chambers of Commerce, and applying appropriate count data models, our estimates show that innovative start-ups are more frequently created in areas where unrelated variety is higher. This is because innovative startups find more opportunities to recombine different pieces of knowledge or maximize their portfolio of demand opportunities, in such a setting, whereas a higher related variety stimulates the creation of other types of new start-up, for which it is easier to combine similar, complementary knowledge sources. We also find that half of the effect of related and unrelated variety comes from the localization of (innovative) start-ups in large urban areas

International linkages, local externalities, innovation and productivity. A structural model of Italian manufacturing firms

Using a large sample of Italian manufacturing firms, in this paper we estimate a structural model of research, innovation, productivity and export performance augmented to take account for the role played by local externalities. This model, which is an "enlarged" version of Crepon, Duguet and Mairesse (1998) model, comprises four main equations. The first identifies the factors underlying the intensity of Research and Development (R&D) investments; the second links R&D capital to innovation output; the third focuses on Total Factor Productivity (TFP) as determined by innovation; the fourth relates export performance to TFP. Our estimates show the significant role played by local externalities in these processes. In particular, related variety and urbanization positively affect the creation of new ideas through R&D, while specialization impacts on TFP to complement innovation output. Finally, urbanization economies support TFP in driving firms' export performance.export, innovation, productivity, R&D, spatial agglomeration

Techno-organizational change and skill formation: Evidence from Italian manufacturing firms

This paper emphasizes the role of labour demand as a determinant of working skill formation. In particular, we study the relationship between techno-organizational innovation and skill formation from a labour demand perspective. In this respect, we investigate if activities aimed at increasing the international commitment and the technological and organizational change do have an effect on both the propensity of firms to train and on the intensity of training. On this purpose, by relying on a job-competition-like framework about the operation of the labour market in allocating skills, we first estimate which factors do affect the propensity of firms to invest in work-based training activities, and, secondly, we estimate if the same factors do also play a role in determining the degree of intensity of such a training activity. Relying on a new dataset on Italian manufacturing firms active over the period 2001-2006, we first estimate a probit model on the probability for a firm to train; then we employ a Heckman two-stage selection model on the share of trainees with which we can control for selectivity bias. Our results point to a positive and significant effect of both firms’ characteristics, like size, specialization and capital intensity, and firms' techno-organisational activities on both training incidence and on training intensity. A particularly significant role, in this respect, is played by the combination of process innovation and the adoption of new organizational practices.human capital, international commitment, labour demand, organizational change, skill, technological innovation, work-based training

Spatial Agglomeration, Technology and Outsourcing of Knowledge Intensive Business Services Empirical Insights from Italy

Aim of this paper is to explore the main drivers of outsourcing of knowledge intensive business services by Italian manufacturing firms. While anecdotal and empirical evidence has emphasized labour cost and scale economies as behind firms’ choices to outsource production or service activities, here we focus on spatial agglomeration and technology as important factors. Using microeconomic data on a repeated cross-section of Italian manufacturing firms for the period 1998-2003, we develop a two-stage model in order to avoid selection bias: first, we estimate the determinants of the firm's decision to outsource business-related services; second, we estimate the main factors underlying the intensity and complexity of KIBS outsourcing, expressed by the number of service activities that are externalized. Our results show that labour cost-savings are not relevant in driving the decision to outsource KIBS, but ICT, R&D and location within a dense and technologically developed industrial district have very positive effects.KIBS, Service Outsourcing, R&D, ICT, Spatial Agglomeration

Production Offshoring and the Skill Composition of Italian Manufacturing Firms: A Counterfactual Analysis

This work explores the effects of cross-border relocation of production on the skill composition of Italian manufacturing firms. Its aim is to assess if the firms’ strategy to offshore production activities towards cheap labor countries determines a bias in the relative employment of skilled versus unskilled workers. Using a balanced panel of firm-based data across the period 1995-2003, we test this skill-bias hypothesis by means of a counterfactual experiment in which we employ a difference-in-differences propensity score matching estimator in order to control for selectivity bias without relying on a specific functional form of the relations of interest. In line with the literature, our results point to confirm a general, although weak, skill bias effect of production offshoring on the labor-force composition of Italian manufacturing: in particular, we find that firms farming out production stages in 1998-2000 show an upward shift in the skill ratio with respect to the counterfactual of firms not moving their production abroad. However, when we look at the single components of the skill ratio, we find that the skill bias effect is primarily driven by a fall in the employment of production workers, while a weak or not significant effect is found with respect to the employment of skilled personnel.Production Offshoring, Skill Bias, Difference-in-Differences, Propensity

Innovation, productivity and export Evidence from Italy

Recent developments in the new international trade theory stressed the relationship between firm heterogeneity and internationalization performance. The key prediction of these models is that firms with different levels of productivity - the main source of firm heterogeneity - will generally engage in different modes of internationalization depending on the level of sunk costs incurred in acquiring information on foreign markets, establishing distribution channels, and so on. However, in these theoretical models the sources of productivity are generally unexplained, considering firm heterogeneity as exogenous. A few papers try to open the 'black box' of firm heterogeneity and to show that internationalized firms are generally more innovative, use more knowledge-intensive workers, and are characterized by superior organizational and managerial practices. Using a large sample of over 3000 Italian manufacturing firms for the period 2001-2003, we contribute to this debate employing, and extending the basic Crépon, Duguet and Mairesse (CDM) model. We estimate a five-equation model which identifies the links (correlations) between innovation investment, innovation output, firm productivity and export performance.innovation, R&D, productivity, export, CDM-model

Production offshoring and the skill composition of Italian manufacturing firms: a counterfactual analysis

In this work we explore how the international outsourcing of production (offshoring) impacts the skill composition of Italian manufacturing firms. In particular, our aim is to assess if the choice to offshore production activities to cheap-labour countries implies a bias in the employment of skilled workers relative to unskilled workers. Using a balanced panel of firms across the period 1995-2003, we set up a counterfactual analysis in which, by using a difference-in-differences propensity score matching estimator, we compare the dynamics of skill demand for treated and control firms while addressing the possible problem of selection bias. Our results point to identify a "potential" skill bias effect of production offshoring. In particular, we find that treated firms tend to show an upward shift in the skill ratio with respect to the counterfactual sample, but coefficients are not significantly different from zero. When we look at the elements of the skill ratio separately, we find that the skill bias is significantly driven by a fall in the employment of production workers (blue collars), rather than by the increase in the employment of nonproduction workers (white collars), thus providing further evidence on the unskilled labour-saving nature of international outsourcing.production offshoring, skill-bias, difference-in-differences, propensity score matching

Education and Training in a Model of Endogenous Growth with Creative Destruction

By formulating an endogenous growth model that combines elements from Romer (1990), Aghion and Howitt (1992), and van Zon and Yetkiner (2003), the present paper studies the contribution of education and training on economic growth through their impact on the rate of innovation. The article addresses two main issues. The first is the optimum provision of on-the-job training necessary to be able to adopt, and adapt to new technologies. The second is the impact of both formal education and on-the-job training on the innovative capacity of an economic system that is the ultimate cause of output growth. In our set-up, education enhances R&D activities and lowers adjustment costs to new technologies, thus facilitating their adoption, while on the other hand on-the-job training ensures the possibility to implement the new coming technologies and reap all the related future profits. We assume that the adoption of a new technology consists of two periods, i.e. the training phase during which newly hired workers acquire the right amount of know how in order to become familiar with the specific new technology, and the implementation or production phase in which profit flows arise for firms and in which the cost savings that can be realized arise from productivity increases in the previous phase. By extending the training phase, entrepreneurs run a greater risk of shortening the production phase for a given arrival rate of new technologies that progressively erode the profit flows obtained from existing technologies. The paper shows first that it is possible to find a profit-maximizing, endogenously determined, amount of training that depends on the workers’ educational attainment. Thus, a situation in which better educated workers may be disproportionately selected for training issues is possible, especially in times of rapid technological change. However, the paper also shows that a non-linear relationship between education and technological change (and growth) exists, so that an increase in the formal level of education can even result in a reduction in the rate of growth. The reason for this is the increase in creative destruction that raises ‘technology adoption costs’ in terms of output foregone during re-training spells that arrive at a faster rate. The results offer some insights that are interesting from an education policy perspective.labour economics ;

Human Capital, Sport Performance, and Salary Determination of Professional Athletes

Thanks to the high availability of data, professional sport represents a unique laboratory in order to test labour market theories and predictions. In particular, one of the most important propositions concerns the role that human capital plays in shaping the life-cycle earnings patterns of workers. To the extent that sport can be considered as a type of human capital investment, human capital theory can help to understand, and empirically assess, how the professional sports labour market rewards performance attributes of players. On this purpose, this piece of work reviews the most important economic contributions focused on the wage determination of professional athletes with the aim of outlining both the emerging common features and the main issues. In so doing, a distinction between professional team-sports and professional single-player sports is done, where the former is represented by the most popular sports in North America and Europe, such as baseball, basketball, hockey and soccer, whereas the latter is primarily represented by professional golf in the US

The skill content of technological change. Some conjectures on the role of education and job-training in reducing the timing of new technology adoption

This positional contribution has a twofold aim: the first is to explore the recent empirical literature developed around the issue of how the adoption of new technologies within the firm has changed the skill requirements of occupations; the second is to conjecture on the relationship, and on the relative sign, between technology adoption and firm sponsored onthe- job training. The basic idea is that the time-consuming dimension of the adoption process plays a direct role both in determining the profitability of the investment in new technology and in assessing the size of the productivity slowdown the firm eventually occurs after its introduction. On the extent that the timing of adoption depends on the workers’ skill composition and on the distance between the skills acquired for the job and the skills required by the job, the deep understanding of the interplay between the mechanisms of human capital accumulation can be helpful in order for the firm to set suitable and efficient job-training strategies. During the last two decades the discussion around the impact of technological change on workers’ human capital has been intense: the rapid diffusion of information and communication technologies (ICT) and computer-based machines (CNC, CAD), together with the large increase in the supply of highly-educated workers and rising returns to education, favoured the argument that technological change is characterized by a skill-biased nature (SBTC), leading to substantial changes in the division of labour and shifting labor demand towards employees with higher levels of education. On this purpose, different approaches have developed in the last decades that provide different evidence to a common research question. While a lot of national and international evidence still continues to support the SBTC hypothesis by employing ‘traditional’ aggregate measures of technological change and indirect measures of skill upgrading, a smaller literature is emerging that considers the heterogeneity of both technologies and skills at the workplace and aims at determining the demand of skills by the tasks occupations require. Even if new and interesting results emerge, many ‘black holes’ still remain, the most important of which seem to be the lack of theoretical and empirical models analyzing the role that school education and on-the-job training, and their interplay, can play in reducing the timing of new technolog