Skill transferability and the stability of transition pathways- A learning-based explanation for patterns of diffusion

Abstract

Technological know-how is necessary to make effectively use of new machinery and capital goods. Firms and employees accumulate technology-specific knowledge when working with specific machinery. Radical innovation differs by technology type and pre-existing knowledge may be imperfectly transferable across types. In this paper, I address the implications of cross-technology transferability of skills for firm-level technology adoption and its consequences for the direction of macroeconomic technological change. I propose a microeconomically founded model of technological learning that is based on empirical and theoretical insights of the innovation literature. In a simulation study using the macroeconomic ABM Eurace@unibi-eco and applied to the context of green technology diffusion, it is shown that a high transferability of knowledge has ambiguous effects. It accelerates the diffusion process initially, but comes of the cost of technological stability and specialization in the long run. For firms, it is easy to adopt, but also easy to switch back to the conventional technology type. It is shown how different types of policies can be used to stabilize a technological transition pathway. The findings are summarized in a general taxonomic framework to characterize technologies. It represents a bottom-up approach to the study of technology transitions.

Capability accumulation and product innovation: an agent-based perspective

“…The absence of a household or government sector, a labour market, the simplistic price formation process and simplistic assumptions limit its applicability to real-world cases. Also, the lack of a labour market prevents the consideration of a number of essential elements of capability accumulation processes, such as learning-by-doing, individual learning, or the matching of firms to workers with the adequate specific skill set (see, e.g., Hötte 2021). Nevertheless, the model does suggest that when it comes to the design of innovation policies, tools that take into account the structure of technological spaces -such as the product space of Hidalgo et al (2007) -are of particular value since the relatedness between products seems to be crucial, and neglecting it might lead to inaccurate assessments.…”

“…In the consumption good sector, Ciarli et al (2018) also feature (as one of few macro ABM) some kind of product innovation: when consumption good firms invest into R&D, they might come up with higher quality goods, which can then be sold to consumers at higher prices. 4 A different kind of capability accumulation is discussed in Hötte (2021): in her model, employees learn to use certain capital goods and become more productive over time ('learning-by-doing'). They can then take the tacit knowledge that was gathered in this way with them to other firms when they change their employer, thereby also adding a spillover dimension to the model.…”

“…Since R&D investment is indeed one of the major determinants of innovation and capability accumulation, this is not a bad thing per se. Yet, Ciarli et al (2018), Dawid et al (2019), Hötte (2021), Dosi et al (2019b), Caiani et al (2019), Rengs et al (2020) Spillovers among firms Dosi et al (2019b), Caiani et al (2019), Rengs et al (2020) Worker's experience Dawid et al (2019), Hötte (2021) it is important to keep in mind that such a treatment leaves aside the consideration of product innovation in the consumption good sector -which certainly is most relevant for the developmental implications of innovation processes (Hausmann et al 2007;Hidalgo et al 2007). In alternative modelling frameworks, such as endogenous growth theory, the so-called expanding variety models that stand in the tradition of Grossman and Helpman (1991a) and Grossman and Helpman (1991b) do feature some kind of product innovation, yet even here, the focus is on product varieties rather than new products.…”

Distributional effects of technological regime changes: hysteresis, concentration and inequality dynamics

“…Closely related is Hepp (2021), in which a similar setup is used to investigate the effect of an acceleration in technological change on firm-level determinants of the largest emerging firms. Other previous publications relying on the Eurace@Unibi model focus not only on policy analysis in different areas such as regional cohesion 2018b), banking regulations (van der Hoog and Dawid 2019), fiscal stabilization (Harting 2021), de-unionisation (Dawid et al 2021), optimal containment policies during the COVID-19 crisis (Basurto et al 2020), but also on the diffusion of competing technologies in the context of climate change (Hötte 2021) or the role of social net-works for inequality dynamics (Dawid and Gemkow 2014). Issues related to inequality dynamics and labour market polarization as well as its interplay with technological change have been studied also in the framework of several other agent-based macroeconomic frameworks.…”

Distributional Effects of Technological Regime Changes: Hysteresis, Concentration and Inequality Dynamics

“…Closely related is Hepp (2021), in which a similar setup is used to investigate the effect of an acceleration in technological change on firm-level determinants of the largest emerging firms. Other previous publications relying on the Eurace@Unibi model focus on policy analysis in different areas such as regional cohesion (Dawid et al, , 2018b, banking regulations (van der Hoog and , fiscal stabilization (Harting, 2019), de-unionisation (Dawid et al, 2021), optimal containment policies during the Covid-19 crisis (Basurto et al, 2020), but also on the diffusion of competing technologies in the context of climate change (Hötte, 2021) or the role of social networks for inequality dynamics (Dawid and Gemkow, 2014). Issues related to inequality dynamics and labour market polarization as well as its interplay with technological change have been studied also in the framework of several other agent-based macroeconomic frameworks, see e.g.…”