Job Market Paper
Abstract: What determines the levels of intellectual property rights (IPR) protection in a globalized economy? How does it impact developing and developed countries? To answer these questions, this paper develops a two-country endogenous growth model in which firms can innovate and imitate locally and globally, and governments choose IPR policies strategically. Beyond the traditional static cost and dynamic benefit from IPR protection, this framework spotlights three key dynamic burdens: limiting domestic imitation, restricting global imitation, and discouraging escape-competition innovation. From the empirical analysis on patent assignments and patent litigation data between the US and China, I find (i) the US domestic distribution of technologies is relatively stable, while China’s domestic distribution transformed from the 1990s to the early 2000s and has stabilized since 2005; (ii) the global distribution of technology has transformed from a US-dominant position to become more even; (iii) both local and global imitation are positively correlated with technology gaps. The quantitative analysis suggests three main findings. First, strengthening IPR enforcement leads to an inverted-U-shaped long-run growth rate. Second, governments’ horizon matters. Strong short-run benefits of imitation cause both governments to pick weaker IPR policies when they consider transitional welfare. Lastly, the Nash equilibrium suggests that both countries should enforce lower IPR protections. The over-protection results in significant welfare losses of 6.4% and 7.2% for the US and China, respectively.
Work in Progress
International Technology Transfers: Adoption or Imitation (with Byung Uk (Charlie) An)
Abstract: There are two major channels for international technology transfers: imitation, which refers to an unauthorized replication of existing technologies without compensating the innovators; and adoption, which means legal acquisition of technologies through licensing agreements. These two distinct channels of international technology transfer not only coexist but also interact with each other, shaping the growth and development of countries. This project constructs a unified endogenous growth model to theoretically explain the mechanisms and assess the impacts of technology adoption and imitation. This framework disentangles the economic forces at play and offers a nuanced understanding of how these dynamic decisions of firms and countries' policies shape their growth trajectories. Next, on the empirical side, the researchers utilize two proprietary datasets on global patent litigations and patent licensing agreements at the patent- and firm-levels to offer a set of new facts to the field. By taking such direct measures with a granular approach, this research can enrich the understanding of technology transfer patterns across a broad set of developed and developing countries, a critical aspect in today’s highly globalized economy. Lastly, employing a quantitatively-oriented approach, the research will enable realistic assessment of various hypothetical policies, which provides guidance on the optimal industrial innovation subsidies and international agreements of IP protection.
Scale and Service Upgrading: A Unified Model of Structural Transformation (with Chong K. Yip)
Abstract: It is well known that industrialization is the sole momentum of modern economic growth. Scale in industrial production is an important factor for understanding the companion phenomenon of structural transformation from agriculture to manufacturing and it gives rise to an upward-sloping relation of the value-added ratio of manufacturing to service (M-S ratio). Recent cross-country evidence has shown that tertiarization becomes the next main force to promote growth. In this paper, we document stylized facts about tertiarization: (i) both producer services (PS) and consumer services (CS) have expanded since the 1950s; (ii) PS is rising faster relative to CS over the past 60 years; (iii) PS tends to have a higher scale of production compared to CS. Motivated by these facts, we develop a unified model of structural transformation to understand the role of tertiarization in promoting growth. Firms adopting cost-saving modern service technologies that use both goods and producer services as intermediate inputs when the scale is sufficiently large. The model predicts that the manufacturing share declines with the rise of modern services and generates the well-documented hump-shaped M-S ratio along economic development. Moreover, the trend of shrinking the manufacturing sector would sustain (bounce back) if bias to home production vanishes (persists) as complexity increases.
Innovation Synergies: Acquisitions and Economic Growth (with Hayley Wabiszewski)
Abstract: By investigating merger and acquisition records of US companies and tracking the transfers of patents and subsequent inventions, this paper aims to study the dynamic patent portfolio choices of firms through the lens of innovation synergy, and its implications for aggregate growth and welfare.
Gender Wage Gap, Job Polarization and Capital Accumulation: A Neo-classical View through Biased Technological Changes (with Terry T. Cheung)
Abstract: We study the female labor participation and gender pay gap in the United States along the structural transformation across sectors and occupations. We find that relatively male-dominated middle-skill jobs are more capital-intensive, and the decline in middle-skill jobs due to capital deepening leads to an increase in female labor participation and female-driven job polarization. With the core logic of non-balanced sectoral growth due to differential capital usage, we built a model with endogenous gender-specific labor participation and capital accumulation, which replicates the female-driven job polarization. This project aims to provide a better understanding on the determinants of female labor participation and make policy recommendations.
Human Capital, Democracy Knowledge, Regime Transitions
Prior to PhD
Marketization, Balanced-Budget Taxation and Economic (In)Stability (with Jianpo Xue and Chong K. Yip)