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Do pro-innovation policies cause skill biased technological change for beneficiary firms as well as firms in the same network?

King's College London - LONDON - 2022

Recent studies show that technology adoption and innovation by firms can lead to labour up-skilling and may exacerbate wage polarisation in industrialised countries. Investments in Research and Development is ony way for firms to adopt new technologies, which are incenticized by pro-technology policies. The resulting changes in the structure of production will likely impact factor use of both adopting firms and firms connected to them through spillovers. For this reason, the social return on R&D spending is often deemed to be higher than their private return. This paper models and estimates how French policies for research and innovation (CII and CIR) shape the organisation of production and quantifies how innovation spillovers affect networks of firms.