Macro Roundup

"...In September, the U.S. had 5 million fewer jobs than it had before the pandemic, Labor Department data show.... The Federal Reserve Banks of Kansas City and Dallas are among the groups tracking the growth in retirees. The share of the population in retirement from February 2020 to April this year was higher by 1.5 million people than it would have been if the 2019 retirement trend had continued, according to the Dallas Fed. The proportion of Americans 16 and older who weren’t in the workforce because of retirement reached a seasonally adjusted 19.6% in the third quarter this year compared with 18.5% in the pre-pandemic fourth quarter of 2019, according to data from the Federal Reserve Bank of Philadelphia....Among Americans in the prime working ages of 25 to 54, the labor-force participation rate—the proportion of those working or seeking work—rebounded to a seasonally adjusted 81.6% in September from 79.8% in April 2020, at the start of the pandemic. For Americans 55 and older, the rate was 38.6% in September, virtually unchanged from April a year ago, the data show. Even before the pandemic, overall labor-force participation in the U.S. was falling as the nation’s population aged. The rate hovered at about 63% before the pandemic, down from its peak of roughly 67% in the 2000s. The pickup in retirements during the pandemic highlighted the phenomenon, said Jed Kolko, chief economist at Indeed, a jobs website. “The size of the working-age population is growing more slowly than it used to,” he said....Research suggests that some early exits from the workforce in the pandemic were more pronounced among seniors with less education and lower incomes. A higher share of workers without a college degree retired before the traditional retirement age of 65 compared with those who had a college education, according to the Retirement Equity Lab. The lab’s analysis of census data found that retirement rates for those ages 55 to 64 without a college degree rose by 0.8 percentage point from 2019 to 2021, compared with a decline of 0.6 percentage point for similarly aged workers with a degree. Boston College’s Center for Retirement Research used census data to determine that job losses earlier in the pandemic were steeper among lower-income older workers compared with higher-earning ones. About 38% of workers aged 62 and older and in the lowest third of weekly earnings no longer held jobs in the fourth quarter of 2020, up from 28% in the second quarter of 2019, according to the analysis from Geoffrey Sanzenbacher, a research fellow at the center. Among similarly aged workers in the highest third of weekly earnings, 22% weren’t working during the fourth quarter of 2020 compared with 18% in the second quarter of 2019. Workers with less education and lower incomes are less likely to have robust retirement savings and are at higher risk of financial troubles from unplanned retirement, said Mr. Radpour of The New School...."

Amara Omeokwe, "Covid-19 Pushed Many Americans to Retire. The Economy Needs Them Back.,"Wall Street Journal, October 31, 2021, https://www.wsj.com/articles/covid-19-pushed-many-americans-to-retire-the-economy-needs-them-back-11635691340

Covid-19 Pushed Many Americans to Retire. The Economy Needs Them Back.

The Covid-19 pandemic has boosted retirements among baby boomers, further straining the tight labor supply and leaving a hole for employers to fill.

Older workers who could least afford to retire early—those with lower incomes and less education—have been more likely to leave the workforce during the pandemic, researchers have found. The question is whether their retreat is temporary or permanent. Some retired because of Covid-19 fears, and others after failing to find suitable work.

The rising value of stocks, homes and other assets also has prompted a group of more affluent boomers to also retire earlier than expected, economists said. Other researchers believe the rise in the number of retirees is because fewer of them are re-entering the workforce.

The shifting labor force is complicating the work of economic policy makers trying to determine which jobs lost in the pandemic will return and how many American workers will be available to fill them. So far, it isn’t clear if recent retirees will be lured back to work by better jobs and pay—or because they miss their working lives—and how many are gone for good.

In September, the U.S. had 5 million fewer jobs than it had before the pandemic, Labor Department data show. Yet employers have reported high rates of unfilled openings in such industries as leisure and hospitality, manufacturing and transportation, contributing to slowdowns in production and the delivery of services.

Hiring difficulties have also increased competition for workers and put upward pressure on wages. Across the economy, there were 10.4 million unfilled jobs at the end of August, according to the Labor Department, exceeding the roughly 8.4 million unemployed Americans looking for work.

Fed governor Randal Quarles said he didn’t expect workforce participation rates to return to pre-pandemic levels. “One reason is that a disproportionate number of older workers responded to the initial shock of the Covid event by retiring,” he said. A slower rebound in workforce participation could keep pressure on wages, potentially leading Fed officials to raise interest rates sooner than they had anticipated.

The Federal Reserve Banks of Kansas City and Dallas are among the groups tracking the growth in retirees. The share of the population in retirement from February 2020 to April this year was higher by 1.5 million people than it would have been if the 2019 retirement trend had continued, according to the Dallas Fed.

With the baby boomer generation reaching old age, economists acknowledge that some who retired in the pandemic would have likely done so over the next few years anyway. Many employers wish they had waited.

Veronica Primus, 69 years old, retired in June from her job as a literacy coach with the Richland School District in Columbia, S.C. “My principal said, ‘You can’t stay another year?,’” recalled Ms. Primus, who before the pandemic had planned to work two more years. “And I said, ‘No, I’m tired.’”

Ms. Primus said one reason she retired was that she believed educators would be under pressure to close student achievement gaps caused by the pandemic, and she didn’t want the stress.

She plans to expand her education consulting business to stay busy and supplement her retirement savings and Social Security benefits. After five decades working in education, she said she would first take a few months to “take a pause, take a breath.”

Help wanted

While many younger workers who left the labor force early in the pandemic have since rejoined, older workers haven’t returned in the same numbers, according to Labor Department data. Among Americans in the prime working ages of 25 to 54, the labor-force participation rate—the proportion of those working or seeking work—rebounded to a seasonally adjusted 81.6% in September from 79.8% in April 2020, at the start of the pandemic.

For Americans 55 and older, the rate was 38.6% in September, virtually unchanged from April a year ago, the data show.

Even before the pandemic, overall labor-force participation in the U.S. was falling as the nation’s population aged. The rate hovered at about 63% before the pandemic, down from its peak of roughly 67% in the 2000s.

The pickup in retirements during the pandemic highlighted the phenomenon, said Jed Kolko, chief economist at Indeed, a jobs website. “The size of the working-age population is growing more slowly than it used to,” he said.

Kevin O’Connor, 58, said working from home in the pandemic helped him realize that he didn’t want to go back to the frequent travel schedule normally required for his job at LogicMark, a medical-systems manufacturer. He retired in June, a couple of years before he had planned.

Mr. O’Connor, who lives in the Minneapolis metropolitan area, said he looked forward to seeing his grandchildren more often and maybe spending winters in a warmer city. He credited the performance of his savings portfolio with helping solidify his decision to retire early. For him, he said, “the economy didn’t come to a screeching halt.”

Stephanie Aaronson, director of the economic studies program at the Brookings Institution, said while retirement decisions typically stick, some seniors could return to work if they see improved working conditions. She cited the rise in labor-participation rates among older Americans late in the last economic expansion, when a tight labor market coaxed some back to work.

Bruce White, 63, was among those who wanted to keep working during the pandemic but couldn’t get hired. He said he submitted more than 100 applications after losing his job managing records at a hospitality company in Orlando, Fla., the result of the company’s pandemic cost-cutting.

“I was going to work until I was 66 or 67 or as long as I could work,” said Mr. White, of Stuart, Fla. “I wasn’t ready to start collecting Social Security.”

Mr. White, supported by retirement savings and Social Security, said money hasn’t been his main concern. Not working is what has taken a toll. Some days, he said, “I was in a funk, didn’t want to get up, didn’t want to do anything.” He believes his age makes him unattractive to employers.

Siavash Radpour, associate research director at the Retirement Equity Lab at The New School, a private university in New York, said some older workers face discrimination in hiring. They may be passed over even in industries with plenty of openings, such as food services, because employers consider the jobs physically demanding, he said. That means some older workers “don’t really have the option to come back to the labor force,” he said.

‘Further behind’

Research suggests that some early exits from the workforce in the pandemic were more pronounced among seniors with less education and lower incomes.

A higher share of workers without a college degree retired before the traditional retirement age of 65 compared with those who had a college education, according to the Retirement Equity Lab. The lab’s analysis of census data found that retirement rates for those ages 55 to 64 without a college degree rose by 0.8 percentage point from 2019 to 2021, compared with a decline of 0.6 percentage point for similarly aged workers with a degree.

Boston College’s Center for Retirement Research used census data to determine that job losses earlier in the pandemic were steeper among lower-income older workers compared with higher-earning ones.

Among similarly aged workers in the highest third of weekly earnings, 22% weren’t working during the fourth quarter of 2020 compared with 18% in the second quarter of 2019.

Workers with less education and lower incomes are less likely to have robust retirement savings and are at higher risk of financial troubles from unplanned retirement, said Mr. Radpour of The New School.

Walter Minard hadn’t planned to retire until the pandemic hit. He was going to work at least three more years, he said. But Covid-19 made his job inside a Pella, Iowa, equipment manufacturing plant feel too risky. Mr. Minard, 65, was an inventory coordinator at Vermeer Corp. He took stock of deliveries from truck drivers and couriers, he said, and his desk was in the middle of the plant floor.

Mr. Minard has diabetes, high blood pressure and other health conditions that put him at greater risk for serious illness from the coronavirus. “I felt like if I caught anything or whatever, it would probably kill me,” he said. He left his job in April 2020.

He is vaccinated but fears returning to the workplace. His health has worsened since retiring, he said, and he now requires kidney dialysis.

Mr. Minard considers himself retired but burdened with worry. Leaving his roughly $45,000 a year job—and its company-sponsored health insurance—yielded a financial crisis for his family, he said. Mr. Minard’s wife, who worked at a fast-food restaurant, also quit her job at the start of the pandemic over the fear of passing Covid-19 to her husband.

The family fell behind on mortgage payments by about $16,000, he said. Mr. Minard started collecting Social Security payments, but he said it hasn’t been enough to cover daily expenses, the house payment and medical costs.

Like many Americans, Mr. Minard had little in retirement savings. A survey from the Fed found that about half of U.S. households in 2019 didn’t have retirement accounts.

Mr. Minard gave up his house, he said, because he knew he couldn’t afford to keep it. He and his wife moved to a camper trailer, he said, and have begun the process of filing for bankruptcy. “We just kept getting further and further behind,” he said.

"....U.S. real total capex hit an all time high in the first quarter of 2021 - the only major GDP component to do so - driven by both hard capex, including machines and factories, and intangible capex, such as software. Core capital goods orders have been climbing fairly consistently for months, with nondefense capital goods orders recording gains in 13 of the last 15 months. Nonresidential fixed investment, often used as a proxy for business spending, increased 13% in the second quarter, led by growth in software and technology spending… Business profits particularly have tended to lead capex fairly consistently over time, and corporate capex has accordingly remained on an accelerating path given the strong rebound in corporate profitability....

https://www.bessemertrust.com/sites/default/files/2021-10/10_01_21_BT_QIP_US_UA.pdf

Holly MacDonald, “Go Big and Go Home,” Bessemer Trust, October 2021,

"...Most of the world’s developing countries have backed a demand for wealthy nations to channel at least $1.3 trillion in climate finance to them annually starting in 2030, the opening salvo in one of the most contentious negotiating topics at the COP26 climate summit. African nations and a group called the Like-Minded Developing Countries, which includes China, India and Indonesia, said in a document they submitted to the United Nations at the summit that half the money should go toward funding renewable energy in the developing world and half toward protecting these countries from the effects of global warming. Developed nations have long pledged to help pay for developing nations to respond to climate change. That promise was crucial to sealing the Paris accord in 2015, when the U.S., Europe and other wealthy countries agreed to provide $100 billion a year from 2020 through 2025...."

Matthew Dalton, "China, India and Other Developing Nations Seek $1.3 Trillion a Year in Climate Finance,"Wall Street Journal, November 4, 2021, https://www.wsj.com/articles/climate-finance-china-india-11636039142

China, India and Other Developing Nations Seek $1.3 Trillion a Year in Climate Finance

GLASGOW—Most of the world’s developing countries have backed a demand for wealthy nations to channel at least $1.3 trillion in climate finance to them annually starting in 2030, the opening salvo in one of the most contentious negotiating topics at the COP26 climate summit.

African nations and a group called the Like-Minded Developing Countries, which includes China, India and Indonesia, said in a document they submitted to the United Nations at the summit that half the money should go toward funding renewable energy in the developing world and half toward protecting these countries from the effects of global warming.

Developed nations have long pledged to help pay for developing nations to respond to climate change. That promise was crucial to sealing the Paris accord in 2015, when the U.S., Europe and other wealthy countries agreed to provide $100 billion a year from 2020 through 2025.

The $1.3 trillion target for mobilizing funds reflects the huge investments that will be needed after that to reach the climate targets of the Paris accord, the paper says.

“The post 2025 mobilization goal must reflect the ambition, progression and the collective agreement to stay well below 2 (degrees) Celsius and aspire to stay within the 1.5 degree Celsius temperature goal,” the paper says.

Developed nations didn’t hit that target in 2020, falling $20 billion short, and aren’t likely to meet it until 2023, climate negotiators said in a report in October. The shortfall has angered developing nations and complicated the talks in Glasgow.

Western officials say they aren’t ready to set a target for climate finance post-2025, given how difficult it has been for them to hit the $100 billion target. They will only begin the talks at COP26 on a goal for post-2025.

“We’re not feeling particularly capable now,” said one European official. “It’s really not the right time.”

Delegates from China, India and Africa didn’t immediately respond to requests for comment.

The European Union said on Thursday that there had been a good start to climate negotiations in Glasgow.

“It’s a bit early to say whether we are on track for a fully successful COP but the early signs seem reasonably good,” said Jacob Werksman, the EU’s lead negotiator.

One of the top priorities for the ongoing meeting is finalizing the rulebook behind the 2015 Paris Agreement. Outstanding issues include defining rules for international carbon trading, whether countries should update their carbon emission reduction plans more frequently than the current five-year cycle, and rules on the reporting of those goals.

Earlier this week some climate negotiators said they had made progress toward establishing a framework for international carbon trading, after Brazil said it was ready to make concessions, having blocked any agreement in the past.

Also on Thursday, two groups that include dozens of countries agreed to stop funding new coal-fired power plants and overseas oil and natural gas projects.

The two agreements fit into a pattern of deals inked by subsets of like-minded countries pursuing their own, limited emissions-reducing ambitions at COP26, which they hope can pressure other countries to act more aggressively.

“These announcements are raising the bar for everyone, including India and China,” said Lauri Myllyvirta, lead analyst at think tank Centre for Research on Energy and Clean Air. “It has a knock on effect,”

The two deals come as a broader U.N.-backed agreement on specific, binding emissions-reductions commitments evades delegates so far. Big polluters like China, India and Russia have pledged emissions cuts, but not to the levels that Western nations, like the U.S., the U.K. and members of the EU have insisted are necessary to limit global warming.

Ending coal financing has been a key focus of the U.K. government in its role as host of the climate talks. Signatories to the coal deal have agreed to phase out unabated coal power—meaning projects that don’t have technology to capture carbon dioxide emissions—in major economies that have signed on in the 2030s, and for the rest in the 2040s. The U.K. government estimates the deal could result in the closure of 40 gigawatts of coal power, equivalent to over half the U.K.’s electricity-generating capacity.

But Thursday’s deal falls significantly short of a global pledge. Leading coal consumers China, India and the U.S. aren’t part of the 40-member group that signed the pledge. Meanwhile, a separate promise by the U.S. and the U.K. to end public funding of oil and gas investments overseas included about 20 signatories.

In that deal, government-backed banks in the U.S., Canada and the U.K. said that they would stop financing unabated coal, oil and natural gas projects abroad by the end of next year. Priority will instead be given to clean energy projects, according to a statement issued by 20 countries and institutions. The group said they currently spend about $15 billion annually financing such fossil-fuel projects.

The largest funders of fossil-fuel development abroad, including South Korea, Japan and China, weren’t part of Thursday’s oil and gas agreement. Europe was split. Portugal and the European Investment Bank, a lending arm of the EU, signed up. Italy, Germany and the European Bank of Reconstruction and Development, a government funded development bank, did not.

On Wednesday, the private sector vowed to help the world transition to cleaner energy. Global banks, major investors and insurers, and financial regulators pledged to incorporate carbon emissions into their most fundamental decisions.

New Fed research looks at changes in rent across income groups from 1985-2019, "...We find that rent growth differentials across groups were fairly minor overall. Rent growth was slightly faster for households at the top of the income distribution from 1985 to 2001, but this differential disappeared in the second half of the sample. Cumulating over the entire period, rent increased by 81 percent at the top quintile, and by 72 percent at the bottom quintile....Cumulating over the entire period, the general price index rose by 136 percent for the top income quintile and by 143 percent for the bottom quintile. These differences are fairly minor relative to the widening in nominal income inequality during this period. Thus, on the whole, we find that accounting for differences in the price of housing services faced by households at different income levels does not change the conclusion that real income inequality expanded substantially over the past three decades....."

"...As shown by Figure 1, only 12 percent of households in the top income quintile in 2019 were renters. Because renting is so uncommon for this group, the rents that are observed may be a poor proxy for the price of housing services of owner-occupied homes in this group. Indeed, research has found that the ratio of rent to prices tends to be lower for high-value homes, signaling that these two types of units may not be comparable for high-income households (Garner and Verbrugge 2009, Heston and Nakamura 2009). That said, because the average growth rate of owners' equivalent rent was almost the same as the average growth rate of tenants' rent over our sample period, we maintain that changes in the rents paid by high-income households should provide a reasonable proxy for the changes in the price of housing services at the top of the income distribution, at least for the purpose of calculating long-run average growth rates in a CPI-type framework...."

Using evidence from Chile Ana Cusolito, Alvaro Garcia Marin and William Maloney find Chinese competition had a net negative impact on local innovation, though local frontier firms became more competitive, "...This column analyses the impact of increased import competition from China on innovation by Chilean firms. It finds a negative overall impact of competition on innovation indicators. Low-productivity firms in particular see declines across all innovation measures, while the most productive firms experience improvements in product innovation and product quality...We illustrate this in Figure 1, where we report the competition-innovation elasticity dividing the sample by leaders and laggards, and then by whether markups rose or declined with the increase in Chinese imports for four of the innovation variables. Research and development (R&D), process innovation, product innovation, and quality all fall for laggards, and the effect is exacerbated when markups are falling. Product innovation and quality rise for leaders, and more so if markups are increasing…Overall, we find a negative impact of competition on innovation across all measures. But we also find important heterogeneity....We illustrate this in Figure 1, where we report the competition-innovation elasticity dividing the sample by leaders and laggards, and then by whether markups rose or declined with the increase in Chinese imports for four of the innovation variables. Research and development (R&D), process innovation, product innovation, and quality all fall for laggards, and the effect is exacerbated when markups are falling. Product innovation and quality rise for leaders, and more so if markups are increasing. Thus, Aghion etal.’s(2005) view of the importance of proximity to the frontier, as well as the classical Schumpeterian view of the importance of rents, both receive support..."

Ana Cusolito, Alvaro Garcia Marin and William Maloney, "Proximity to the frontier, markups, and the response of innovation to foreign competition," Center For Economic And Policy Research, November 4, 2021, https://voxeu.org/article/proximity-frontier-markups-and-response-innovation-foreign-competition

Proximity to the frontier, markups, and the response of innovation to foreign competition

The widely accepted relationship between competition and growth sits somewhat uncomfortably with the inconclusive literature on the relationship between competition and innovation (for reviews, see Cohen 2010 or Gilbert 2006), and this is becoming increasingly relevant to the debate over trade openness and growth. Despite an extensive literature suggesting that trade liberalisation increases productivity, recent evidence from the US, Canada, and Europe generally finds negative or unclear impacts of rising import exposure on innovation (e.g. Autor et al. 2017, 2020, Bloom et al. 2016, Campbell and Mau 2021, Kueng et al. 2016).

There are conceptual reasons to think that, in practice, the effects could vary greatly with country context. Aghion et al. (2005) offer a synthesis of the view that competition is necessary to get entrepreneurs out of bed in the morning, and Schumpeter’s argument that higher rents are needed to increase innovation. They accept that firms that are far from the frontier may behave à la Schumpeter and retrench with greater competition, but they argue that firms that are closer to it may see innovation precisely as a way to escape from competition (Akcigit et al. 2018). They find supportive evidence for an inverted U-shaped relationship between industry-level innovation and competition in the UK (Hashmi and Van Biesebroeck 2016), although other evidence (e.g. Hashmi 2013, Gorodnichenko et al. 2010) has been more ambiguous. This raises the question of whether the net impact of competition on innovation might be more detrimental in emerging countries which have fewer globally competitive firms than developed economies.

To shed light on the debate, in a recent paper (Cusolito et al. 2021), we revisit this question exploiting the China shock to study the impact of increased competition on innovation in a prominent upper middle-income country, Chile, which is, perhaps, uniquely suited as a case for two important reasons. First, we are able to draw on a matched firm production-innovation panel dataset that contains information on input and product prices at the firm level and therefore allows us to generate measures of markups and efficiency (physical total factor productivity) that correspond more closely to the concepts of rents and technological leadership envisaged in the Schumpeterian literature. Second, the Chilean data permit us to study the effect of foreign competition not just on patenting, as has been the traditional focus, but on a broader range of plant performance and innovation outcomes than has been possible previously, including quality.

Chile offers a clean experiment to explore the effects mentioned above. It is the iconic ‘textbook’ well-run open economy with few micro distortions that, as elsewhere, saw levels of competition shocked by a major increase in import penetration from China. But, distinct from many trade liberalisation episodes, this shock was not accompanied by other sector-specific reforms. Hence, the effects we see are likely to be purely due to differential exposure to increased foreign competition across sectors.

Overall, we find a negative impact of competition on innovation across all measures. But we also find important heterogeneity along the lines of Aghion et al. (2005). We illustrate this in Figure 1, where we report the competition-innovation elasticity dividing the sample by leaders and laggards, and then by whether markups rose or declined with the increase in Chinese imports for four of the innovation variables. Research and development (R&D), process innovation, product innovation, and quality all fall for laggards, and the effect is exacerbated when markups are falling. Product innovation and quality rise for leaders, and more so if markups are increasing. Thus, Aghion et al.’s (2005) view of the importance of proximity to the frontier, as well as the classical Schumpeterian view of the importance of rents, both receive support.

What is striking in the Chilean case is that when leaders are defined similarly, there is no positive impact on innovation. Sequentially running our specification with different cut-offs across the physical total factor productivity distribution (TFPQ), we find positive effects only when leaders are defined as the top 10% of the distribution, which accounts for 25% of industrial value added. Intuitively, this is consistent with countries further from the frontier having few firms near the frontier. But it also means that the impact of competition on incumbent innovation will be lower than in advanced countries and, potentially, net negative, as appears to be the case in Chile.

Our findings return us to our original paradox - how to reconcile that plant productivity often appears to increase with trade liberalisation, even in developing countries, but innovation does not. We propose two possible explanations. The first one may arise from the fact that the revenue TFP (TFPR) measure commonly used in the literature to define leaders and laggards combines efficiency, quality, and rents. Thus, if greater trade exposure actually leads to higher margins, as shown by De Loecker and Goldberg (2014), then this will show up as increased ‘productivity’. Our ability to exploit product price data to work with a cleaner measure of proximity to the efficiency frontier, TFPQ, allows us to abstract from mark-ups. The second explanation may arise from the fact that it is possible that increased competition leads to one-off adjustments - shedding excess workers, for example - but does not lead to dynamic increases arising from innovation.

Clearly, a finding of limited incumbent rises in innovation and perhaps lesser confidence in previous findings of increased productivity with trade liberalisation does not dictate reducing competition. Competition works through other margins, such as the reallocation of resources from low-productivity plants to high-productivity plants and through the entry of more productive plants and the exit of less productive ones (Melitz and Redding 2021). For the same period covered in the present study, Cusolito and Maloney (2018) show that over 60% of the gains in TFPQ in Chile arose precisely from entry and exit. Liu (1993) finds that in the early phases of the Chilean reforms, much productivity growth precisely occurred along the extensive margin, which rings true given the extraordinary levels of protection and distortions being unwound at the time.

But the evidence does suggest that the positive impact of competition is likely to be greater, the larger the share of frontier-proximate firms. Hence, raising the capabilities of firms and their access to resources may be an important complement to pro-competition policies. This might include extending managerial consulting programs, strengthening local innovation systems, supporting standards compliance, fostering technology adoption, and ensuring access to longer term finance, among other firm-level initiatives.

References

Akcigit, U, S T Ates and G Impullitti (2018), “Innovation, trade policy, and globalization”, VoxEU.org, 02 July.

Aghion, P, A Bergeaud, M Lequien, M Melitz and T Zuber (2021), “Opposing firm-level responses to the China shock: horizontal competition versus vertical relationships?”, Unpublished manuscript, Harvard University.

Aghion, P, N Bloom, R Blundell, R Griffith and P Howitt (2005), “Competition and Innovation: An Inverted-U Relationship”, The Quarterly Journal of Economics 120(2): 701-728.

Aghion, P, R Blundell, R Griffith, P Howitt and S Prantl (2009), “The effects of entry on incumbent innovation and productivity”, The Review of Economics and Statistics 91(1): 20-32.

Autor, D, D Dorn, G H Hanson, G Pisano and P Shu (2017), “Competition from China reduced innovation in the US”, VoxEU.org, 20 March.

Autor, D, D Dorn, G H Hanson, G Pisano and P Shu (2020), “Foreign Competition and Domestic Innovation: Evidence from U.S. Patents”, American Economic Review: Insights 2(3): 357-374.

Bloom, N, M Draca and J Van Reenen (2016), “Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity”, Review of Economic Studies 83(1): 87-117.

Campbell, D and K Mau (2021), “On ‘Trade Induced Technical Change: The Impact of Chinese Imports on Innovation, IT and Productivity’”, The Review of Economic Studies, forthcoming.

Cohen, W M (2010), “Fifty years of empirical studies of innovative activity and performance”, Handbook of the Economics of Innovation 1: 129-213.

Cusolito, A P, A Garcia-Marin and W F Maloney (2021), “Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile”, Policy Research Working Paper Series 9757, The World Bank.

Cusolito, A P and W F Maloney (2018), Productivity revisited: Shifting paradigms in analysis and policy, Washington, DC: World Bank Publications.

De Loecker, J and P K Goldberg (2014), “Firm Performance in a Global Market”, The Annual Review of Economics 6: 201-227.

Gilbert, R (2006), “Looking for Mr. Schumpeter: Where are we in the competition-innovation debate?”, Innovation policy and the economy 6: 159-215.

Gorodnichenko, Y, J Svejnar and K Terrell (2010), “Globalization and innovation in emerging markets”, American Economic Journal: Macroeconomics 2(2): 194-226.

Hashmi, A R (2013), “Competition and Innovation: The Inverted-U Relationship Revisited”, The Review of Economics and Statistics 95(5): 1653-1668.

Hashmi, A R and J Van Biesebroeck (2016), “The Relationship between Market Structure and Innovation in Industry Equilibrium: A Case Study of the Global Automobile Industry”, The Review of Economics and Statistics 98(1): 192-208.

Kueng, L, N Li and M-J Yang (2016), “The Impact of Emerging Market Competition on Innovation and Business Strategy”, NBER Working Papers 22840.

Liu, L (1993), “Entry-Exit, Learning, and Productivity Change Evidence from Chile”, Journal of Development Economics 42(2): 217-242.

Melitz, M J and S J Redding (2021), “Trade and Innovation”, VoxEU.org, 28 July.