Results

Blog

VoxEU:

Regulation chills minor (but not radical) technological innovations

While there is suggestive evidence that regulations may have a stifling effect on innovation, there is as yet no rigorous economic framework to quantify the magnitude of such regulatory effects on innovation and the aggr...Read more...

CEP Covid-19 analysis

A major wave of UK business closures by April 2021? The scale of the problem and what can be done

This report presents an analysis of the financial health of UK businesses, which shows that immediate action is needed to prevent a wave of corporate failure in early April. We cannot delay action. Now is also the moment...Read more...

CEP discussion paper

The impact of regulation on innovation

Does regulation affect the pace and nature of innovation and if so, by how much? We build a tractable and quantifiable endogenous growth model with size-contingent regulations. We apply this to population administrative ...Read more...

CEP Covid-19 analysis

Innovation for a strong and sustainable recovery

In the recovery from Covid-19, innovation and diffusion will be key to addressing several structural challenges facing the UK economy. These include improving the UK’s longstanding poor productivity performance, addressi...Read more...

CentrePiece article

Innovation in the time of Covid-19

Businesses have rapidly adopted new technologies and new ways of working in response to the massive disruptions caused by the pandemic. A CEP report by Capucine Riom and Anna Valero suggests that if such innovation conti...Read more...

Blog

LSE Business Review:

COVID has forced many firms to innovate, with possible lasting impacts

A survey reveals greater UK innovation rates than what we might have expected in the absence of a pandemic, write Capucine Riom and Anna Valero....Read more...

CEP Covid-19 analysis

The business response to Covid-19: the CEP-CBI survey on technology adoption

We present new data from a survey of 375 UK businesses conducted in July 2020 in partnership with the Confederation of British Industry (CBI), which seeks to understand the way in which firms have innovated in response t...Read more...

Submissions to parliamentary inquiries and government consultations

Post-pandemic economic growth: Industrial Strategy

In our inquiry into Post-pandemic economic growth: Industrial strategy we will look at the options available to Government to secure our economic recovery from the impact of the coronavirus pandemic. We will want to exa...Read more...

Blog

LSE Business Review:

Dream jobs: managers in internationally active firms have higher lifetime wages

People at managerial level in international companies accumulate strong experience that is useful also in other firms, write Giordano Mion, Luca David Opromolla, and Gianmarco Ottaviano....Read more...

CEP discussion paper

Immigrant inventors and diversity in the age of mass migration

A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses ...Read more...

CEP discussion paper

Environmental preferences and technological choices: is market competition clean or dirty?

This paper investigates the joint effect of consumers' environmental concerns and product-market competition on firms’ decisions whether to innovate “clean” or “dirty”. We first develop a step-by-step innovation model to...Read more...

Blog

LSE Business Review:

Technology can benefit a few superstar workers, at the expense of everyone else

The rollout of television provides a natural experiment, creating an opportunity to isolate the impact of a technical disruption on the labour market, writes Felix Koenig....Read more...

CEP discussion paper

Automating labor: evidence from firm-level patent data

Do higher wages lead to more automation innovation? To answer this question, we first introduce a new measure of automation by using the frequency of certain keywords in patent text to identify automation innovations in ...Read more...

Blog

LSE Business Review:

Public investment in defence research can increase business innovation

That doesn't mean that defence R&D is the most efficient way to stimulate private sector innovation and productivity, write Enrico Moretti, Claudia Steinwender and John van Reenen....Read more...

CEP discussion paper

The innovation premium to soft skills in low-skilled occupations

Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true ...Read more...

Journal article

Fiscal Studies:

Have R&D Spillovers Declined in the 21st Century?

Slow growth over the last decade has prompted policy attention towards increasing R&D spending, often via the tax system. We examine the impact of R&D on firm performance, both by the firm's own investments and through p...Read more...

CEP discussion paper

The heterogeneous impact of market size on innovation: evidence from French firm-level exports

We analyze how demand conditions faced by a firm impacts its innovation decisions. To disentangle the direction of causality between innovation and demand conditions, we construct a firm-level export demand shock which r...Read more...

CEP discussion paper

Innovation union: costs and benefits of innovation policy coordination

In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillove...Read more...

Journal article

Journal of Economic Perspectives:

A Toolkit of Policies to Promote Innovation

Economic theory suggests that market economies are likely to underprovide innovation because of the public good nature of knowledge. Empirical evidence from the United States and other advanced economies supports this id...Read more...

CEP discussion paper

A toolkit of policies to promote innovation

Economic theory suggests that market economies are likely to under-provide innovation due to the public good nature of knowledge. Empirical evidence from the US and other advanced economies supports this idea. We summari...Read more...

Journal article

Journal of the European Economic Association:

Joseph Schumpeter Lecture, EEA Annual Congress 2017: Do Tax Cuts Produce more Einsteins? The Impacts of Financial Incentives VerSus Exposure to Innovation on the Supply of Inventors

Many countries provide financial incentives to spur innovation, ranging from tax incentives to research and development grants. In this paper, we study how such financial incentives affect individuals' decisions to pursu...Read more...

CEP discussion paper

Innovative events

We take a fresh look at firms’ innovation-productivity linkages, using novel data capturing new aspects of innovative activity. We combine UK administrative microdata, media and website content to develop experimental me...Read more...

CentrePiece article

Sustainable growth in the UK

Anna Valero and colleagues urge the UK government to put action on climate change and sustainability at the heart of its growth strategy....Read more...

CentrePiece article

When innovation policy trumped protectionism: the Reagan years

Giammario Impullitti and colleagues show that it was the Reagan administration's innovation policy - not a retreat from globalisation - that promoted US growth....Read more...

Journal article

Economics of Education Review:

The Economic Impact of Universities: Evidence from Across the Globe

We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at t...Read more...

CEP discussion paper

Do tax cuts produce more Einsteins? The impacts of financial incentives vs. exposure to innovation on the supply of inventors

Many countries provide financial incentives to spur innovation, ranging from tax incentives to research and development grants. In this paper, we study how such financial incentives affect individuals' decisions to pursu...Read more...

CEP discussion paper

Innovation and trade policy in a globalized world

How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions we build a dynamic general equilibrium growth mo...Read more...

CEP discussion paper

Technology, market structure and the gains from trade

We study the gains from trade in a new model with oligopolistic competition, firm heterogeneity, and innovation. Lowering trade costs reduces markups on domestic sales but increases markups on export sales, as firms do n...Read more...

CEP industrial strategy paper

Sustainable growth in the UK: seizing opportunities from technological change and the transition to a low-carbon economy

An overarching strategy for sustainable growth is required to address the dual challenges of restoring productivity growth and managing a transition to a low-carbon economy – priorities in both the UK and other G20 count...Read more...

CentrePiece article

Universities and industrial strategy in the UK

The UK’s higher education sector is a source of national strength with the potential to contribute to all areas of the government’s industrial strategy. Anna Valero and colleagues review the evidence on how the positive ...Read more...

CEP industrial strategy paper

Universities and industrial strategy in the UK: review of evidence and implications for policy

As producers of human capital, innovation and as large institutions in their own right, UK universities can make important contributions across the five foundations that underpin the government’s Industrial Strategy: peo...Read more...

CEP discussion paper

Have R&D spillovers changed?

This paper revisits the results of Bloom, Schankerman, and Van Reenen (2013) examining the impact of R&D on the performance of US firms, especially through spillovers. We extend their analysis to include an additional 15...Read more...

CentrePiece article

Lost Einsteins: who becomes an inventor in America?

Who are America’s most successful inventors – and what can we learn from their experiences in designing policies to stimulate innovation? To answer these questions, former CEP director John Van Reenen and his colleagues ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Cohesion Policy Incentives for Collaborative Industrial Research. The Evaluation of a Smart Specialisation Forerunner Programme

This paper evaluates a program of subsidies for Collaborative Industrial Research (co-) funded by the EU Cohesion Policy in Italy mobilizing over 1 billion euros. This program anticipated in the 2007-2013 funding cycle s...Read more...

CEP discussion paper

The social origins of inventors

In this paper, we merge three datasets - individual income data, patenting data, and IQ data - to analyze the deterninants of an individual’s probability of inventing. We find that: (i) parental income matters even after...Read more...

CEP discussion paper

Who becomes an inventor in America? The importance of exposure to innovation

We characterize the factors that determine who becomes an inventor in America by using de-identified data on 1.2 million inventors from patent records linked to tax records. We establish three sets of results. First, chi...Read more...

CentrePiece article

In brief ... Where top science gets done

Large-scale facilities like the Diamond Light Source synchrotron in Oxfordshire have the power to create concentrated geographical clusters of scientific research. According to new research scientists’ proximity to Diamo...Read more...

Journal article

Journal of Technology Transfer:

Academic inventors: collaboration and proximity with industry

This paper addresses a number of fundamental research questions on university-industry (U-I) collaborations. Are U-I collaborations intrinsically different from other forms of collaboration, such as inter-firm or inter-u...Read more...

CEP report

UK growth: a new chapter

The UK Economy is at a critical juncture. Leaving the EU creates economic challenges that necessitate widespread policy change. But this also generates an opportunity to tackle some of the long-standing challenges which ...Read more...

CentrePiece article

How universities boost economic growth

The expansion of higher education has helped to fuel economic growth around the world, according to research by Anna Valero and John Van Reenen. Analysing data on 15,000 universities in 78 countries for the period since ...Read more...

CentrePiece article

High-speed rail in China

Encouraging innovation is a perennial policy goal – and one common approach is to promote the adoption of foreign technology. Yatang Lin and colleagues examine the impact of China’s technology transfer policy, which has ...Read more...

CEP discussion paper

Colocation and knowledge diffusion: evidence from million dollar plants

This paper uses the entry of large corporations into U.S. counties during the 1980s and 1990s to analyse the effect of plant opening on knowledge spillovers to local inventors. We use a difference-in-differences identifi...Read more...

CEP discussion paper

The economic impact of universities: evidence from across the globe

We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at t...Read more...

CEP discussion paper

Do tax incentives for research increase firm innovation? An RD design for R&D

We present evidence of a causal impact of research and development (R&D) tax incentives on innovation. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regressi...Read more...

CEP discussion paper

International technology transfer and domestic innovation: evidence from the high-speed rail sector in China

How does the transfer of advanced technology spur innovation in developing countries? This paper exploits the large-scale introduction of high-speed railway (HSR) technology into China in 2004 as a natural experiment to ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Moving People with Ideas - Innovation, Inter-regional Mobility and Firm Heterogeneity

This paper looks at the link between inter-regional mobility, innovation and firms’ behavioural heterogeneity in their reliance on localised external sources of knowledge. By linking patent data (capturing inventors’ int...Read more...

CEP policy analysis

The impact of 'clean innovation' on economic growth: evidence from the transport and energy industries'

Policies on climate change that encourage 'clean innovation' while displacing 'dirty innovation' could have a positive impact on short-term economic growth while avoiding the potentially disastrous reduction in GDP that ...Read more...

CEP discussion paper

Knowledge Spillovers from Clean and Dirty Technologies

How much should governments subsidize the development of new clean technologies? We use patent citation data to investigate the relative intensity of knowledge spillovers in clean and dirty technologies in two technologi...Read more...

CEP discussion paper

HRM Practices and Knowledge Processes Outcomes: Empirical Evidence from a Quasi-Experiment on UK SMEs in the Tourism Hospitality and Leisure Sector

This paper presents empirical evidence of the relationship between human resources practices and the effectiveness of a firm to capitalise on investment in knowledge as measured by the returns to innovation and business ...Read more...

CEP report

Internationalization and Innovation of Firms: Evidence and Policy

We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European coun...Read more...

CEP discussion paper

Trapped Factors and China's Impact on Global Growth

When China’s accession to the WTO exposed European firms to import competition, they responded by increasing their investment in innovation. This response was stronger in industries and firms where factors of production ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Do Inventors Talk to Strangers? On Proximity and Collaborative Knowledge Creation

This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identifi...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Here Be Startups: Exploring a young digital cluster in Inner East London

The digital industries cluster known as 'Silicon Roundabout' has been quietly growing in East London since the 1990s. Now rebranded 'Tech City', it is now the focus of huge public and government attention. National and l...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Cultural Diversity, Cities and Innovation: firm Effects or City Effects?

Growing cultural diversity is seen as important for innovation. Research has focused on two potential mechanisms: a firm effect, with diversity at the firm level improving knowledge sourcing or ideas generation, and a ci...Read more...

CEP discussion paper

Innovation, Reallocation and Growth

We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A key feature is the selection between high- and low-type firms, which differ in terms of their innovat...Read more...

CEP discussion paper

Patents and Cumulative Innovation: Causal Evidence from the Courts

Cumulative innovation is central to economic growth. Do patent rights facilitate or impede follow-on innovation? We study the causal effect of removing patent rights by court invalidation on subsequent research related t...Read more...

SERC/Urban and Spatial Programme Discussion Paper

My Precious! The Location and Diffusion of Scientific Research: Evidence from the Synchrotron Diamond Light Source

We analyze the impact of the establishment of a GBP 380 million basic scientific research facility in the UK on the geographical distribution of related research. We investigate whether the siting of the Diamond Light So...Read more...

CEP discussion paper

Fast-Tracking 'Green' Patent Applications: An Empirical Analysis

This paper presents the first empirical analysis of programmes to fast-track ‘green’ patent applications in place in seven Intellectual Property offices around the world. We find that only a small share of green patent a...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Top Team Demographics, Innovation and Business Performance: Findings from English Firms and Cities 2008-9

High levels of net migration to the UK have contributed to growing cultural diversity, and researchers are turning their attention to the long-term effects of diversity on productivity. Yet little is known about these is...Read more...

CEP discussion paper

What are the Channels for Technology Sourcing? Panel Data Evidence from German Companies

Innovation processes within corporations increasingly tap into international technology sources, yet little is known about the relative contribution of different types of innovation channels. We investigate the effective...Read more...

CEP discussion paper

A Trapped Factors Model of Innovation

When will reducing trade barriers against a low wage country cause innovation to increase in high wage regions like the US or EU? We develop a model where factors of production have costs of adjustment and so are partial...Read more...

CEP discussion paper

Survive Another Day: Using Changes in the Composition of Investments to Measure the Cost of Credit Constraints

We introduce a novel empirical strategy to measure credit shocks. Theoretically, we show that credit shocks reduce the value of long term investments relative to short term ones. Under the (conservative) assumption that ...Read more...

Journal article

The Quarterly Journal of Economics:

Does management matter? Evidence from India

A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear particularly large. To investiga...Read more...

CEP report

Investing for Prosperity: Skills, Infrastructure and Innovation

What institutions and policies are needed to sustain UK economic growth in the dynamic world economy of the twentyfirst century? After years of inadequate investment in skills, infrastructure and innovation, there are lo...Read more...

CEP discussion paper

Carbon taxes, path dependency and directed technical change: evidence from the auto industry

Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g. electric an...Read more...

CentrePiece article

In brief: Two cheers for Anglo-Saxon financial markets?

We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nes...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Does Skilled Migration Foster Innovative Performance? Evidence from British Local Areas

What is the effect of an increase in the stock of human capital on the innovative performance of a local economy? This paper tests the hypothesis of a causal link between an increase in the average stock of human capital...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Bright Side of Social Capital: How 'Bridging' Makes Italian Provinces More Innovative

Social capital has remained relatively underexplored in innovation literature. Existing studies have failed to reach a consensus on its impact on local innovative performance: some empirical analyses emphasize a positive...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata

Ethnic inventors play important roles in US innovation systems, especially in high-tech regions like Silicon Valley. Do ‘ethnicity-innovation’ channels exist elsewhere? This paper investigates, using a new panel of UK pa...Read more...

CEP discussion paper

Trading and Enforcing Patent Rights

We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply th...Read more...

SERC/Urban and Spatial Programme Discussion Paper

R&D, Innovation and Exporting

This study considers the determinants of whether a firm exports, undertakes R&D and/or innovates, and, in particular, the contemporaneous links between these variables using three waves of the UK Community Innovation Sur...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms

London is one of the world’s major cities, and one of its most diverse. London’s cultural diversity is widely seen as a social asset, but there is little hard evidence on its importance for the city’s businesses. Theory ...Read more...

CEP discussion paper

Does Management Matter? Evidence from India

A long-standing question in social science is to what extent differences in management cause differences in firm performance. To investigate this we ran a management field experiment on large Indian textile firms. We pro...Read more...

CEP discussion paper

The long-term effect of digital innovation on bank performance: an empirical study of SWIFT adoption in financial services

We examine the impact on bank performance of the adoption of SWIFT, a network-based technological infrastructure for worldwide interbank telecommunication. We construct a new longitudinal dataset of 6,848 banks in 29 cou...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Stars and Comets: An Exploration of the Patent Universe

The analysis of patent and citation data has become a popular source of evidence on localized knowledge spillovers and innovation. Nevertheless, an aspect has been overlooked: the patent distribution across inventors is ...Read more...

CEP discussion paper

How Does Innovation Affect Worker Well-being?

We explore the effects of management innovations on worker well-being using private sector linked employer-employee data for Britain. We find management innovations are associated with lower worker well-being and lower j...Read more...

CEP discussion paper

Innovation and institutional ownership

We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nes...Read more...

CEP discussion paper

Motivation and Sorting in Open Source Software Innovation

This paper studies the role of intrinsic motivation, reputation, and reciprocity in driving open source software innovation. Unlike previous literature based on survey data, we exploit the observed pattern of contributio...Read more...

CEP report

Interoperability and Market Foreclosure In the European Microsoft Case

In this paper we discuss some of the most important economic issues raised in European Commission vs. Microsoft (2004) concerning the market for work group servers. In our view, the most important economic issues relate ...Read more...

CEP discussion paper

Innovation in Business Groups

Using novel data on European firms, this paper examines the effect of business group affiliation on innovation. We find that business groups foster the scale and novelty of corporate innovation. Group affiliation is part...Read more...

CEP discussion paper

Digital Goods and the New Economy

Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and...Read more...

CEP discussion paper

Matching Demand and Supply in a Weightless Economy: Market-Driven Creativity With and Without IPRs

Many cultural products have the same nonrival nature as scientific knowledge. They therefore face identical difficulties in creation and dissemination. One traditional view says market failure is endemic: societies toler...Read more...

CEP discussion paper

Measuring the Cost Effectiveness of an R&D Tax Credit for the UK

This paper investigates the economic impact of the government's proposed new UK R&D tax credit. We measure the benefit of the credit by the effect on value added in the short and long?run. This is simulated from existin...Read more...

CEP discussion paper

Technological Innovation and Performance in the United Kingdom

Over the period since 1970, Britain has improved its relative productivity performance, but there remains a significant gap in market sector productivity between Britain and both Continental Europe and the United States....Read more...

CEP discussion paper

Nursery Cities: Urban Diversity, Process Innovation and the Life-Cycle of Products

A simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes. We build around this a dynamic general equilibrium model, and derive conditions under which d...Read more...