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 betweencapital and occupational tasks. Specifically, CEI associated with task-similar capi-tal reduces the relative labor demand, whereas CEI related to task-dissimilar capitalraises it. Between 1980 and 2015, capital used by high-wage occupations experiencedmore innovations in task-dissimilar capital and fewer in task-similar capital. CEI canexplain 51% of the relative wage growth in high-wage occupations and significantlycontributes to routine- and abstract-biased labor market changes.

Work in Progress