Demand-pull (DP) and technology-push (TP) are drivers of technological change. For policy-makers, it is important to understand how both interact and differ by impact. Using a two-layer network of input-output (market) and patent citations (innovation) links among 307 6-digit US manufacturing industries in 1977-2012, I study two mechanisms of TP and DP: (1) TP and DP are between-layer spillovers when demand shocks in the market pull innovation and innovation pushes growth in the market. (2) Within the same layer, DP arises from downstream links when output users trigger upstream growth, while TP effects spill over from up- to downstream industries. The results support between- and within-layer TP: innovation spillovers from upstream industries drive market growth and innovation. There is also support for within-market TP: positive upstream supply shocks may stimulate market growth, but this effect is heterogeneous across industries. DP is not supported, but the results show that DP forces are associated with a factor bias in favor of labor, while TP comes with a labor demand shift towards non-production work. The results enable a nuanced view on the drivers of technological change and its impact on labor, capital, and productivity. This may inform policy-makers on how to steer the technological evolution.
Hötte, K. (2022) 'Demand-pull and technology-push: What drives the direction of technological change?--An empirical network-based approach'. arXiv preprint arXiv:2104.04813