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on Business Economics |
| By: | Büttner, Thomas; Jacobebbinghaus, Peter; Ludsteck, Johannes |
| Abstract: | The occupational skill structure depends on the business cycle if employers respond to shortages of applicants during upturns by lowering their hiring standards. The notion and relevance of hiring standards adjustment was advanced by Reder and investigated formally in a search-theoretic framework by Mortensen. Devereux implements empirical tests for these theories and finds affirmative evidence for the U.S. labour market. We replicate his analysis using German employment register data. Regarding the occupational skill composition we obtain somewhat lower but qualitatively similar responses to the business cycle despite of well known institutional differences between the U.S. and German labour market. The responsiveness of occupational composition wages to the business cycle is considerably lower in Germany. |
| Keywords: | Hiring standards,business cycle adjustment,occupational upgrading,wage structure,wage setting,overqualification |
| JEL: | J62 J31 J41 C24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:200934&r=bec |
| By: | Georgellis, Yannis; Lange, Thomas |
| Abstract: | Based on data from the European Values Study (EVS), we compare the determinants of job satisfaction and the impact of union membership in Eastern and Western European labor markets. Correcting our regressions for union endogeneity and controlling for individual characteristics, values and beliefs, and important aspects of a job, we find a positive association between unionization and job satisfaction. This is contrary to the dominant view of the impact of unionization on job satisfaction suggesting that there is a strong, negative relationship between the two variables. We also uncover distinct attitudinal differences between Eastern and Western European employees, highlighting persistent influences of former communist labor relations. |
| Keywords: | Unions; job satisfaction; EVS |
| JEL: | M54 J5 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17020&r=bec |
| By: | Timothy Dunne; Shawn Klimek; Mark Roberts; Daniel Yi Xu |
| Abstract: | Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by expectations of future profits which, in turn, depend on the nature of competition within the market. In this paper we estimate a dynamic, structural model of entry and exit in an oligopolistic industry and use it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. We find that entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all important determinants of long run firm values and market structure. As the number of firms in the market increases, the value of continuing in the market and the value of entering the market both decline, the probability of exit rises, and the probability of entry declines. The magnitude of these effects differ substantially across markets due to differences in exogenous cost and demand factors and across the dentist and chiropractor industries. Simulations using the estimated model for the dentist industry show that pressure from both potential entrants and incumbent firms discipline long-run profits. We calculate that a seven percent reduction in the mean sunk entry cost would reduce a monopolist's long-run profits by the same amount as if the firm operated in a duopoly. |
| Keywords: | entry, exit, market structure, competition, service industry |
| JEL: | L11 L13 L84 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-23&r=bec |
| By: | Anaïs Hamelin (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and LaRGE, Institut d’Etudes Politiques, Université de Strasbourg, France.) |
| Abstract: | This paper uses a very large sample of French SMEs to study growth of family owned firms. Firms range from total-family to minority control. The estimated relationship accounts for firm characteristics of size and, age, sector, and financial solvency. The results show that firms with greater family control are prone to exhibit lower rates of sales growth than feasible, given financial performance. Because firm growth is limited not by financing constraints but by family-related attitudes, increasing firm growth requires policies that shape incentives in small family businesses. |
| Keywords: | Small Business, Family control, Growth, Sustainable growth, Capital budgeting. |
| JEL: | G31 G32 M13 M21 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:09-032&r=bec |
| By: | Gottschalk, Sandra; Müller, Kathrin; Niefert, Michaela |
| Abstract: | This paper analyzes empirically the determinants of new born firms' initial size. As survival prospects of young firms tend to be linked to a firm's start-up size, a better understanding of the factors influencing start-up size is crucial. Most of the rare literature on initial firm size focuses on industry characteristics. We contribute to the understanding of the determinants of initial firm size by analyzing firm specific factors such as founders' human capital composition and entry strategies. We find that in addition to industry effects start-up size is considerably influenced by the human capital of firm founders. We distinguish between generic and specific human capital. Generic human capital refers to the general knowledge acquired through formal education and professional experience and usually coincides with a higher personal wealth. Specific human capital comprises competences that can be directly applied to the entrepreneurial job. For generic human capital we find that having a university degree has a positive influence on start-up size. The same applies for general working experience proxied by the founder's age. For the specific human capital components we find that successful entrepreneurial experience and managerial experience gained in dependent employment support a higher start-up size. Altogether, specific human capital tends to have a larger impact on initial size than generic human capital. Entry strategies are expected to have a crucial influence on start-up size, because objectives of market entry largely determine the resources a firm requires. We distinguish between different types of entry strategies. On the one hand, we look at entry strategies based on innovation. We measure innovation by a variable which indicates if a firm carries out continuous R&D. On the other hand, entry is classified according to the main motive of the founders for firm formation. We conclude that different motives are accompanied by diverse entry strategies. The four main groups of entry strategies are independency entrepreneurship, opportunity entrepreneurship, spin-out entrepreneurship and necessity entrepreneurship. The results indicate that firms conducting R&D continuously start larger than others when measuring initial employment in full-time equivalents. We do not observe a significant effect on start-up size measured in head counts. This suggests that R&D tasks are mostly carried out by fulltime employees and to a lesser extent by persons working part-time for the firm. Further, firms with entry strategies based on the exploitation of new market opportunities as well as spin-out entrepreneurship exhibit a higher initial size while start-ups established from necessity appear to start at a smaller scale. |
| Keywords: | firm start-up size,human capital,firm foundation |
| JEL: | L11 L26 J24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09030&r=bec |
| By: | Andrew Bernard; Stephen Redding; Peter Schott |
| Abstract: | This paper develops a general equilibrium model of international trade that features selection across firms, products and countries. Firms’ export decisions depend on a combination of firm “productivity” and firm-product-country “consumer tastes”, both of which are stochastic and unknown prior to the payment of a sunk cost of entry. Higher-productivity firms export a wider range of products to a larger set of countries than lower-productivity firms. Trade liberalization induces endogenous reallocations of resources that foster productivity growth both within and across firms. Empirically, we find key implications of the model to be consistent with U.S. trade data. |
| Keywords: | heterogeneous firms, endogenous product scope, love of variety, core competency |
| JEL: | F12 F13 L11 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-21&r=bec |
| By: | Seymen, Atilim; Kappler, Marcus |
| Abstract: | The study analyses the business cycles of the G7 countries in a structural vector autoregression(SVAR) framework comprising output, nominal interest rate and inflation. Common and country-specific supply, demand and nominal shocks of each G7 country are identified, and the corresponding shock propagation channels are computed. We establish the statistical properties of the cyclical fluctuations and investigate the role of each structural common and country-specific shock in the cyclical fluctuations of the variables of interest as well as the business cycle co-movement in the G7 group of countries. |
| Keywords: | International Business Cycles,Common and Country-Specific Structural Shocks,Structural Vector Autoregression Models |
| JEL: | C32 E32 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09015&r=bec |
| By: | John Hutchinson (European Central Bank); Jozef Konings (Economics Department, K.U. Leuven); Patrick Paul Walsh (SPIRe and The Geary Institute University College Dublin) |
| Abstract: | We show that the stylized facts of the Firm Size Distribution (FSD) by age cohorts, as shown in Cabral and Mata (2003), bind within 4-digit manufacturing industries in the UK and Belgium. As in Klepper and Thompson (2006) and Sutton (1998), we explore whether time to build a portfolio of products is a mechanism that relates age to firm size. While inter industry diversification, to some extent, accounts for the role of age, we find that the presence of economies of scope has a separate impact on firm size when controlling for age, amongst other factors. Using the techniques in Cabral and Mata's we show that the FSD by degrees of product diversification shifts to the right, but more so in older age groups. This shows a role for inter-industry diversification over and above an age effect. |
| JEL: | L10 L11 L16 |
| Date: | 2009–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:200926&r=bec |
| By: | Nicola Cetorelli |
| Abstract: | Empirical studies show that competition in the credit markets has important effects on the entry and growth of firms in nonfinancial industries. This paper explores the hypothesis that the availability of credit at the time of a firm’s founding has a profound effect on that firm’s nature. I conjecture that in times when financial capital is difficult to obtain, firms will need to be built as relatively solid organizations. However, in an environment of easily available financial capital, firms can be constituted with an intrinsically weaker structure. To test this conjecture, I use confidential data from the U.S. Census Bureau on the entire universe of business establishments in existence over a thirty-year period; I follow the life cycles of those same establishments through a period of regulatory reform during which U.S. states were allowed to remove barriers to entry in the banking industry, a development that resulted in significantly improved credit competition. The evidence confirms my conjecture. Firms constituted in post-reform years are intrinsically frailer than those founded in a more financially constrained environment, while firms of pre-reform vintage do not seem to adapt their nature to an easier credit environment. Credit market competition does lead to more entry and growth of firms, but also to complex dynamics experienced by the population of business organizations. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-07&r=bec |
| By: | Marcus Neureiter; Peter Nunnenkamp |
| Abstract: | We use data on motives of international outsourcing and location choices from a recent survey of European companies to assess the labour market repercussions at home. Employing Tobit models we differentiate between job losses as well as job creation for high and low skilled employees at the sector level in ten European home countries. Our findings are in conflict with public concerns about adverse employment effects resulting primarily from cost-oriented sourcing in low wage locations. The quantitative impact on job losses remains modest in the case of cost-saving motives. The simple divide between low and high wage locations hides substantial heterogeneity within both groups. We also find that job losses are typically compensated partly by new job creation, particularly for high skilled workers |
| Keywords: | outsourcing, outward FDI, motives, location choice, job loss, job creation, (un)skilled labour |
| JEL: | F23 J21 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1541&r=bec |
| By: | Wiji Arulampalam (University of Warwick and Oxford University Centre for Business Taxation); Michael P Devereux (Oxford University Centre for Business Taxation); Giorgia Maffini (University of Warwick and Oxford University Centre for Business Taxation) |
| Abstract: | We examine how far taxes on corporate income are directly shifted onto the workforce. We use data on 55,082 companies located in nine European countries over the period 1996–2003. We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that the long run elasticity of the wage bill with respect to taxation is -0.093. Evaluated at the median, this implies that an exogenous rise of $1 in tax would reduce the wage bill by 75 cents. We find only weak evidence of a difference for multinational companies. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:0917&r=bec |
| By: | Roland Winkler; Hans-Werner Wohltmann |
| Abstract: | This paper analyzes the impacts of news shocks on macroeconomic volatility. Whereas anticipation amplifies volatility in any purely forward-looking model, such as the baseline New Keynesian model, the results are ambiguous when including a backward-looking component. In addition to these theoretical findings, we use the estimated model of Smets and Wouters (2003) to provide numerical evidence that news shocks increase the volatility of key macroeconomic variables in the euro area when compared to unanticipated shocks. |
| Keywords: | Anticipated Shocks, Business Cycles, Volatility |
| JEL: | E32 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1542&r=bec |
| By: | Blank, Sven; Buch, Claudia M.; Neugebauer, Katja |
| Abstract: | Size matters in banking. In this paper, we explore whether shocks originating at large banks affect the probability of distress of smaller banks and thus the stability of the banking system. Our analysis proceeds in two steps. In a first step, we follow Gabaix (2008a) and construct a measure of idiosyncratic shocks at large banks, the so-called Banking Granular Residual. This measure documents the importance of size effects for the German banking system. In a second step, we incorporate this measure of idiosyncratic shocks at large banks into an integrated stress-testing model for the German banking system following De Graeve et al. (2007). We find that positive shocks at large banks reduce the probability of distress of small banks. |
| Keywords: | Banking sector distress,size effects,shock propagation,Granular Residual |
| JEL: | E44 E52 E32 G21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:200904&r=bec |