nep-bec New Economics Papers
on Business Economics
Issue of 2005‒12‒01
sixteen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. China’s Banking Reform: Problems and Potential Solutions By Xiaosong Zeng; Charles Goodhart
  2. A quantitative theory of the gender gap in wages By Andres Erosa; Luisa Fuster; Diego Restuccia
  3. Trend breaks, long-run restrictions, and the contractionary effects of technology improvements By John G. Fernald
  4. I - Q Cycles By Patrick Francois; Huw Lloyd- Ellis
  5. The Effects of Wal-Mart on Local Labor Markets By David Neumark; Junfu Zhang; Stephen Ciccarella
  6. The Impact of Training on Productivity and Wages: Evidence from British Panel Data By Lorraine Dearden; Howard Reed; John Van Reenen
  7. Productivity Growth and the Role of ICT in the United Kingdom: An Industry View, 1970-2000 By Nicholas Oulton; Sylaja Srinivasan
  8. Catching a Wave: the Adoption of Voice and High Commitment Workplace Practices in Britain: 1984-1998 By Alex Bryson; Rafael Gomez; Tobias Kretschmer
  9. How Does Product Market Competition Shape Incentive Contracts? By Vicente Cuñat; Maria Guadalupe
  10. The Gender Gap in Early Career Wage Growth By Alan Manning; Joanna Swaffield
  11. Organisation de l’entreprise et complexité de l’environnement : une estimation sur données françaises By Salima Benhamou; Gilles Le Garrec
  12. Knowledge and Productivity in the World's Largest Manufacturing Corporations Level:Panel Data analysis on Compustat and Patent data By Lionel Nesta
  13. The Choice of the Agenda in Labor Negotiations: efficiency and behavioral considerations By Marie-Claire Villeval; Manfred Konigstein
  14. Business failure prediction: simple-intuitive models versus statistical models By H. OOGHE; C. SPAENJERS; P. VANDERMOERE
  15. Endogenous Managerial Contract By Marcello D'Amato; Riccardo Martina; Salvatore Piccolo
  16. Offshoring in a Knowledge Economy By Esteban Rossi-Hansberg; Pol Antras; Luis Garicano

  1. By: Xiaosong Zeng; Charles Goodhart
    Date: 2005–11
  2. By: Andres Erosa; Luisa Fuster; Diego Restuccia
    Abstract: Using panel data from the National Longitudinal Survey of Youth (NLSY), we document that gender differences in wages almost double during the first 20 years of labor market experience and that there are substantial gender differences in employment and hours of work during the life cycle. A large portion of gender differences in labor market attachment can be traced to the impact of children on the labor supply of women. We develop a quantitative life-cycle model of fertility, labor supply, and human capital accumulation decisions. We use this model to assess the role of fertility on gender differences in labor supply and wages over the life cycle. In our model, fertility lowers the lifetime intensity of market activity, reducing the incentives for human capital accumulation and wage growth over the life cycle of females relative to males. We calibrate the model to panel data of men and to fertility and child related labor market histories of women. We find that fertility accounts for most of the gender differences in labor supply and wages during the life cycle documented in the NLSY data.
    Keywords: Labor economics ; Wages
    Date: 2005
  3. By: John G. Fernald
    Abstract: Structural vector-autoregressions with long-run restrictions are extraordinarily sensitive to low-frequency correlations. This paper explores this sensitivity analytically and via simulations, focusing on the contentious issue of whether hours worked rise or fall when technology improves. Recent literature finds that when hours per person enter the VAR in levels, hours rise; when they enter in differences, hours fall. However, once we allow for (statistically and economically plausible) trend breaks in productivity, the treatment of hours is relatively unimportant: Hours fall sharply on impact following a technology improvement. The issue is the common high-low-high pattern of hours per capita and productivity growth since World War II. Such low-frequency correlation almost inevitably implies a positive estimated impulse response. The trend breaks control for this correlation. In addition, the specification with breaks can easily "explain" (or encompass) the positive estimated response when the breaks are omitted; in contrast, the no-breaks specification has more difficulty explaining the negative response when breaks are included. More generally, this example suggests a need for care in applying the long-run-restrictions approach.
    Date: 2005
  4. By: Patrick Francois (University of British Columbia); Huw Lloyd- Ellis (Queen's University)
    Abstract: We develop a model of 'intrinsic' business cycles, driven by the decentralized behaviour of entrepreneurs and firms making continuous, divisible improvements in their productivity. We show how equilibrium cycles, associated with strategic delays in implementation and endogenous innovation, arise even in the presence of reversible investment. We derive the implications for the cyclical evolution of both tangible (physical) and intangible (knowledge) capital. In particular, our framework is consistent with key aspects of the somewhat puzzling relationship between fixed capital formation and the stockmarket at business cycle frequencies.
    Keywords: Tobin's Q, fixed capital formation, intangible investment, cycles and growth
    JEL: E
    Date: 2005–11–22
  5. By: David Neumark; Junfu Zhang; Stephen Ciccarella
    Abstract: We estimate the effects of Wal-Mart stores on county-level employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding adverse effects of Wal-Mart stores. We address the endogeneity problem using a natural instrumental variable that arises from the geographic and time pattern of the opening of Wal-Mart stores, which slowly spread out from the first stores in Arkansas. In the retail sector, on average, Wal-Mart stores reduce employment by two to four percent. There is some evidence that payrolls per worker also decline, by about 3.5 percent, but this conclusion is less robust. Either way, though, retail earnings fall. Overall, there is some evidence that Wal-Mart stores increase total employment on the order of two percent, although not all of the evidence supports this conclusion. There is stronger evidence that total payrolls per person decline, by about five percent in the aggregate, implying that residents of local labor markets earn less following the opening of Wal-Mart stores. And in the South, where Wal-Mart stores are most prevalent and have been open the longest, the evidence indicates that Wal-Mart reduces retail employment, total employment, and total payrolls per person.
    JEL: J2 J3 R1
    Date: 2005–11
  6. By: Lorraine Dearden; Howard Reed; John Van Reenen
    Abstract: It is standard in the literature on training to use wages as a sufficient statistic for productivity. But there aremany reasons why wages and productivity may diverge. This paper is part of a smaller literature on the effectsof work-related training on direct measures of productivity. We construct a panel of British industries between1983 and 1996 containing training, productivity and wages. Using a variety of econometric estimationtechniques (including system GMM) we find that training is associated with significantly higher productivity.Raising the proportion of workers trained in an industry by one percentage point (say from the average of 10%to 11%) is associated with an increase in value added per worker of about 0.6% and an increase in wages ofabout 0.3%. Furthermore, we find that the magnitude of the impact of training on wages is only half as large asthe impact of training on productivity, implying that the existing literature has underestimated the importance oftraining. We also show evidence using complementary datasets (e.g. from individuals) that is suggestive ofexternalities of training and imperfect competition.
    Keywords: Productivity, training, wages, panel data
    JEL: J31 C23 D24
    Date: 2005–02
  7. By: Nicholas Oulton; Sylaja Srinivasan
    Abstract: We use a new industry-level dataset to quantify the role of ICT in explaining productivitygrowth in the UK, 1970-2000. The dataset is for 34 industries covering the whole economy(31 in the market sector). Using growth accounting, we find that ICT capital played anincreasingly important, and in the 1990s the dominant, role in accounting for labourproductivity growth in the market sector. Econometric evidence also supports an importantrole for ICT. We also find econometric evidence that a boom in complementary investment inthe 1990s could have led to a decline in the conventional measure of TFP growth.
    Keywords: productivity, TFP, ICT
    JEL: O47 O52 D24
    Date: 2005–03
  8. By: Alex Bryson; Rafael Gomez; Tobias Kretschmer
    Abstract: In this paper we treat workplace voice and systems of high-commitment human resourcemanagement (HCHRM) as technological innovations in order to account for the unevendiffusion patterns observed across establishments. Using British data, the paper finds thatvariables highlighted in the technological diffusion literature are significant predictors of voiceand HRM adoption decisions. Workplace size, size of multi-establishment network, ownershiptype, set-up date and network affects all play a significant role in high-commitment HRMadoption. We also find that union presence, per se, is not an inhibitor to the adoption of highcommitment HRM practices.
    Keywords: High-commitment work practices, voice, unions, technology diffusion,complementarities
    JEL: J51 M54 O33
    Date: 2005–02
  9. By: Vicente Cuñat; Maria Guadalupe
    Abstract: This paper studies the effect of product market competition on the explicitcompensation packages that firms offer to their CEOs, executives and workers. We use a largesample of both traded and non-traded UK firms and exploit a quasi-natural experimentassociated to an increase in competition. The sudden appreciation of the pound in 1996implied different changes in competition for sectors with different degrees of openness. Ourdifference in differences estimates show that a higher level of product market competitionincreases the performance pay sensitivity of compensation schemes, in particular forexecutives.
    Keywords: Performance-related pay, Product market competition
    JEL: J32 J33 M12 J41 J49
    Date: 2005–05
  10. By: Alan Manning; Joanna Swaffield
    Abstract: In the UK the gender pay gap on entry to the labour market is approximately zero but afterten years after labour market entry, there is a gender wage gap of almost 25 log points. Thispaper explores the reason for this gender gap in early-career wage growth, considering threemain hypotheses - human capital, job-shopping and 'psychological' theories. Human capitalfactors can explain about 12 log points, job-shopping about 1.5 log points and thepsychological theories about half a log point. But a substantial unexplained gap remains:women who have continuous full-time employment, have had no children and express nodesire to have them earn about 12 log points less than equivalent men after 10 years in thelabour market.
    Keywords: Gender Pay Gap, Wage Growth
    JEL: J24 J31 J7
    Date: 2005–07
  11. By: Salima Benhamou (PSE, Université Paris 1 et Université Paris-Dauphine); Gilles Le Garrec (Observatoire Français des Conjonctures Économiques)
    Date: 2005
  12. By: Lionel Nesta (Observatoire Français des Conjonctures Économiques)
    Abstract: This paper examines the relationship between the characteristics of firm knowledge in terms of capital, diversity and relatedness, and productivity. Panel data regression models suggest that unlike knowledge diversity, knowledge capital and knowledge relatedness explain a substantial share of the variance of firm productivity. Activities based on a related set of technological knowledge are more productive than those based on unrelated knowledge because the cost of co-ordinating productive activities decreases as the knowledge used in these activities is being integrated efficiently. The impact of knowledge relatedness on productivity in high-technology sectors is higher than in other sectors.
    Keywords: productivity; intangible assets; market value; panel data
    JEL: G12 O31 L65
    Date: 2005
  13. By: Marie-Claire Villeval (GATE CNRS); Manfred Konigstein
    Abstract: The labor economics literature has shown that the “efficient bargaining” model, in which wage and employment are negotiated simultaneously, is less frequently used on unionized markets than the less efficient “right-to-manage” model, in which wage is determined via bargaining and employment determined subsequently and unilaterally by the firm. This paper reports an experiment in which the choice of the bargaining agenda is endogenous within a noncooperative game. We find that participants show a preference for decision authority and choose single-issue bargaining in most cases even though efficiency is lower than in multi-issue bargaining. Furthermore, multi-issue bargaining induces unions to offer smaller payoff shares and leads to a higher conflict rate than in a single-issue bargaining.
    Keywords: Bargaining agenda, Efficient contracts, Right-to manage, Decision authority, Experiments
    JEL: C72 C78 C91 J51 J53
    Date: 2005–11
    Abstract: We give an overview of the shortcomings of the most frequently used statistical techniques in failure prediction modelling. The statistical procedures that underpin the selection of variables and the determination of coefficients often lead to ‘overfitting’. We also see that the ‘expected signs’ of variables are sometimes neglected and that an underlying theoretical framework mostly does not exist. Based on the current knowledge of failing firms, we construct a new type of failure prediction models, namely ‘simple-intuitive models’. In these models, eight variables are first logit-transformed and then equally weighted. These models are tested on two broad validation samples (1 year prior to failure and 3 years prior to failure) of Belgian companies. The performance results of the best simple-intuitive model are comparable to those of less transparent and more complex statistical models.
    Date: 2005–10
  15. By: Marcello D'Amato (Università di Salerno, CSEF and CEPR); Riccardo Martina (Università di Napoli Federico II and CSEF); Salvatore Piccolo (Università di Salerno, CSEF and Northwestern University,)
    Abstract: The relationship between managerial incentives and product market competition is studied in an imperfectly competitive industry where two managerial .rms, compete by setting quantities. Owners simultaneously choose between two contractual regimes: a cost-based and a profit-based one, while privately informed managers perform an cost-reducing activity and choose quantities. We characterize the incentive properties of alternative managerial remuneration schemes owners may use to control managers.behavior and we study the equilibrium relationship between owners’ and managers’ choices, efficiency and market competition. It is showed that a competing-contracts effect, at play under profit target, may induce firm owners not to select the constrained efficient allocation in the pre-specified set of contracts. Moreover, under profit-based schemes a pure agency effect, at play directly through information rents, drives a positive impact of competition on managerial effort. As a result an inverted-U shaped relationship between product market competition, managerial effort and agency costs obtains, thus leading to marginal costs convex with respect to a measure of competition.
    Keywords: generations competing contracts, cost-target, managerial firms, profit-target, product market competition, vertical hierarchies, X-inefficiency
    JEL: D82 L13 L22
    Date: 2005–11–01
  16. By: Esteban Rossi-Hansberg (Department of Economics Princeton University); Pol Antras; Luis Garicano
    Keywords: Outsourcing, Offshoring, firm size, matching, wage inequality
    JEL: F15 F16 D23
    Date: 2005

This nep-bec issue is ©2005 by Christian Calmes. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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