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Volkswagen Stiftung project
Prague 5-6 May, 2022

Partners:

- Halle Institute for Economic Research e.V. (IWH) - Prof. Dr. Steffen Müller    

- Economics Institute of the Czech Academy of Sciences (EI) – Prof. Ing. Štěpán Jurajda, Ph.D., Alena Bičáková, Ph.D., Jakub Grossmann, Ph.D.

- University of Nottingham (UN) - Prof. Richard Upward    

The project asks about sources of European populism, including historical events, immigration, technological change, the Covid pandemic, and it ask about EU funding effects on populism. The Prague-based research focuses on the effects of municipality-level over-indebtedness (distressed warrant propensity) on voting behavior, and on the effects of the Covid pandemic, measured at municipality and personal level, on political preferences and voting behavior. 

Gustavo Moreira de Souza, Ph.D.

Stockholm University, Sweden

Join at Zoom: https://cuni-cz.zoom.us/j/96545304754?pwd=d2Q2REhJcnlBbEI2TS9CUlpLcEpNUT09
                       Meeting ID: 965 4530 4754
                       Passcode: 156694

Abstract: Developing countries rely on technology created by developed countries. This paper shows using model and data that the dependence of developing countries on technology made by developed countries increase wage inequality but leads to higher production in developing countries. I study a Brazilian innovation program that taxed the leasing of international technology to subsidize innovation. Exploiting heterogeneous exposure, I show that the innovation program led firms to replace technology licensed from developed countries by in-house innovations. The replacement of international technology by national technology led to a decline in employment and in the share of high-skilled workers in the firm. I explain these facts with a model of directed technological change and cross-country technology transactions. Firms in a developing country can either innovate or lease technology from a developed country. These two technologies endogenously differ in productivity and skill bias due to factor supply differences in the two countries. I show that the difference in skill bias and productivity can be identified with closed-form solutions by the effect of the innovation program on the firm's expenditure share and employment. Calibrating the model to reproduce these elasticities, I find that increasing the share of firms patenting in Brazil by 1 p.p. decreases the skilled wage premium by 0.02% and production by 0.2%.

Full Text: The Labor Market Consequences of Appropriate Technology