Working Papers

*Supersedes 'Growth and Labor Reallocation: Vertical versus Horizontal Innovation' 


I study the relationship between long-run growth and labor reallocation when incumbent producers both innovate over their previous products (own-product improvements) and expand to new product markets (product expansion). I calibrate a quality ladder model of endogenous growth with an establishment panel survey data that distinguish different innovation types. I discover that own-product improvements account for 90% of productivity growth and 81% of the welfare gains from faster growth after R&D incentives. Since own-product improvements have smaller effects to reallocate labor between establishments, despite an increase in growth rates, labor reallocation rates barely change in response to R&D incentives.

*CESifo Working Paper N.11037. *Supersedes 'Innovation on Tools and the Rise of Skill Premium'


This paper develops an occupation-level measure of Capital-Embodied Innovation(CEI) by matching patents with capital goods based on their text similarity. The im-pact of CEI on labor demand is heterogeneous, depending on the similarity between capital and occupational tasks. Specifically, CEI associated with task-similar capi-tal reduces the relative labor demand, whereas CEI related to task-dissimilar capital raises it. Between 1980 and 2015, capital used by high-wage occupations experienced more innovations in task-dissimilar capital and fewer in task-similar capital. CEI can explain 51% of the relative wage growth in high-wage occupations and significantly contributes to routine- and abstract-biased labor market changes.


This paper shows that faster worker turnover between employers encourages firms to choose disruptive technologies and accelerates long-run growth. In the US, metropolitan areas with more worker transitions across jobs have more disruptive innovation and faster productivity growth. Also, state-level institutional changes that increase employment-to-employment transitions of workers make innovations more disruptive in metropolitan areas. This paper reconciles these empirical facts with an endogenous growth model with a frictional labor market where firms choose the rate of technology upgrades and new technologies make existing worker skills obsolete. The calibrated model replicates the effect of worker turnover on disruptive innovation and suggests a substantial composition change of long-run growth in response to the changes in worker turnover rates.

Work in Progress