The diffusion of disruptive technologies

The development of novel technologies, the degree to which they affect jobs, and the speed with which they spread across regions, firms, and industries are key elements in the study of economic growth, economic inequality, entrepreneurship, and firm dynamics.

In a paper1 published in September 2021, Nicholas Bloom et. al. make use of the full text of millions of patents and job postings and hundreds of thousands of earnings conference calls over the past two decades to make progress on understanding this process. Their approach enables them to identify and document the diffusion of 29 disruptive technologies across firms and labor markets in the U.S.

Five stylized facts emerge from their data1.

  1. The locations where technologies are developed that later disrupt businesses are geographically highly concentrated, even more so than overall patenting.
  2. As the technologies mature and the number of new jobs related to them grows, they gradually spread across space.
  3. While initial hiring is concentrated in high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology.
  4. The geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades.
  5. These technology hubs are more likely to arise in areas with universities and high skilled labor pools.
Technology exposure in earnings calls and jobs postings: Percentage of firms (red line) which mention year by year technology-related keywords in earnings calls, and the percentage of job postings (grey circles) in Burning Glass which mention technology relatedkeywords (op. cit. Fig. 3)
Coefficient of Variation across locations by year since emergence: Normalized share of technology jobs for each of 29 technologies by year from 2007-2019 against the years since emergence of the technology (op. cit. Fig. 4)
Share of college educated by year since emergence: Share of technology job postings which require college-educated people (red circles, where the size of the circle represents the total number of technology job postings) against year since emergence for the technology (op. cit. Fig. 7)

My take:

  1. Geography (location) have played / still plays a fundamental role in the age of information and communications technologies (meaning, there is plenty of room ahead).
  2. The competitive advantage of geographies can be planned (it’s all about knowledge), and will be long lasting, but it is a very long term process, and therefore beyond current goverments vision and planning horizons in the vast majority of places (nation states).


(1) Bloom, Nicholas, Tarek Hassan, Aakash Kalyani, Josh Lerner, and Ahmed Tahoun. ‘The Diffusion of Disruptive Technologies’. CEP Discussion Paper. Centre for Economic Performance, LSE, 10 September 2021.

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