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on Business Economics |
| By: | Takashi Kamihigashi (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); John Stachurski (Research School of Economics, Australian National University, Australia) |
| Abstract: | In equilibrium models of firm dynamics, the stationary equilibrium distribution of firms summarizes the predictions of the model for a given set of primitives. Focusing on Hopenhayn's seminal model of firm dynamics with entry and exit (Econometrica, 60:5, 1992, p. 1127–1150), we provide an algorithm that generates exact draws from the stationary distribution in finite time for any specified exit threshold. The technique is able to rapidly generate large numbers of exact and independent draws. |
| Keywords: | Simulation, Stationary equilibrium, Firm dynamics |
| JEL: | C61 C63 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2012-26&r=bec |
| By: | Emmanuel de Veirman; Andrew Levin |
| Abstract: | We document how firm-specific volatility in sales, earnings and employment growth evolved year by year in Japan. Our volatility measure also indicates the evolution of firm turnover. We find that patterns in firm-specific volatility have changed when macroeconomic circumstances have. Firm turnover declined during the economic stagnation of 1991-1997. The deep downturn of fiscal years 1998-2002 coincided with a substantial increase in turnover in market, profit and employment shares. Firm volatility tended to decline during the recovery after 2002. We assess whether the rise in firm turnover and deep downturn in 1998-2002 indicate that after a period of stagnation, weak firms were finally allowed to shrink or fail. Our evidence suggests that the widening in the firm growth distribution at that time did not reflect weak firms shrinking relative to healthy firms, indicating that the two recessions in 1998-2002 were not “cleansing”. |
| Keywords: | Firm volatility; firm health; zombie lending; cleansing recessions |
| JEL: | C33 D22 E32 E44 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:351&r=bec |
| By: | Lilia Cavallari (Università degli Studi di Roma Tre) |
| Abstract: | This paper provides a DSGE model with firm entry. Simulations show that the model matches the synchronization of markups and entry observed in the data while at the same time reproducing empirically plausible moments for key macroeconomic variables. Sticky prices are essential for these results. |
| Keywords: | endogenous entry, firm dynamics, monopolistic competition, market power, markups |
| JEL: | E31 E32 E52 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rcr:wpaper:06_12&r=bec |
| By: | Andrea Pozzi (EIEF); Fabiano Schivardi (University of Cagliari, CEPR and EIEF) |
| Abstract: | We disentangle the contribution of unobserved heterogeneity in idiosyncratic demand and productivity to firm growth. We use a model of monopolistic competition with Cobb-Douglas production and a dataset of Italian manufacturing firms containing unique information on firm-level prices to reach three main conclusions. First, demand shocks are at least as important as productivity shocks for firm growth. Second, firms respond to shocks less than a frictionless model would predict, suggesting the existence of adjustment frictions. Finally, the degree of under-response is much larger for TFP shocks. This implies the existence of frictions with differential effects according to the nature of the shock, unlike the typical frictions studied by the literature on factor misallocation. We consider hurdles to firm reorganization as one such friction and show that they hamper firms’ responses to TFP shocks but not to demand shocks. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1211&r=bec |
| By: | Evdokia Dritsa (Department of Economics, Athens University of Economics and Business); Eleftherios Zacharias (Department of Economics, Athens University of Economics and Business) |
| Abstract: | We examine the price decisions in a vertically differentiated duopoly where the decision to buy a good depends not only upon the intrinsic utility from consuming it but also upon the social attributes (prestige, uniqueness etc.) associated with its consumption. These social attributes are especially important in vertically differentiated markets. We show that when these attributes are not very strong, if their intensity increases, the profits of both firms increase. However, when these attributes are very important, if their intensity increases, the profits of the firm that offers a lower quality variant increase whereas the profits of the firm that offers the higher quality variant decrease. Our results have implications on the amount of persuasive advertising firms should conduct in such markets. |
| Keywords: | Vertical differentiation; positional externalities, snob effect; bandwagon effect. |
| JEL: | L11 D11 D43 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1221&r=bec |
| By: | Roberto Alvarez; Claudio Bravo-Ortega; Lucas Navarro |
| Abstract: | A recent theoretical literature has given relevance to the study of the relationship between product mix changes and firm productivity. In this paper, taking advantage of a rich dataset for manufacturing plants in Chile during the period 1996-2000, we use matching techniques and a difference in difference approach to estimate the causal impact of product mix changes on productivity and other plant-specific outcomes. Our results suggest a positive and increasing impact of product mix changes on total factor productivity and labor productivity after two years the product mix changes are introduced. We also find positive effects on employment and sales. Nevertheless, this positive effect is mainly driven by firms that add and drop products at the same time. Our results are in line with recent theoretical developments on the study of productivity determinants on multiproduct firms and illustrate how products creation and destruction are a source of within-firm productivity growth. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp366&r=bec |
| By: | Jan de Kok |
| Abstract: | Various studies have indicated the presence of firm size wage gaps and firm age wage gaps in the remuneration of employees. This study shows that a firm size wage gap also exists in the population of Dutch Enterprises with 1 – 100 employees, but that there is no sign of a firm age wage gap. The firm size wage gap can be partially explained by the age and educational level of the employee, as well as by the educational level of the entrepreneur. The usage of performance-related pay also varies with firm size (and not with firm age). This firm size effect can be explained fully by employee tenure (rather than age and education). |
| Date: | 2012–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201210&r=bec |
| By: | Jean-Claude Cosset; Hyacinthe Y. Somé; Pascale Valery |
| Abstract: | We investigate the empirical relation between competition and corporate governance and the effect of country characteristics on this relation. We find that competition is associated with strong corporate governance, but only in less developed countries. We next examine the impact of corporate governance on firm value given the level of competition. We find that competition and corporate governance appear to be complements in explaining firm value in developing countries, while in developed countries they are substitutes. |
| Keywords: | Product market competition, Corporate governance, Economic and financial development, Investor protection |
| JEL: | G30 L00 O16 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1238&r=bec |
| By: | André van Stel; Andrew Burke; José Maria Millan; Concepcion Roman |
| Abstract: | Start-up size is a key strategic decision for entrepreneurs. Should entrepreneurs start up close to minimum efficient scale or should they take less risks and start-up on a smaller scale? Previously, this strategic decision appeared to be one of simply making a choice between a higher risk/reward larger start-up versus a lower risk/reward smaller scale start-up. However, recent research on the relationship between risk management and performance (Burke, 2009) indicates that in situations of greater uncertainty and where innovation is incremental, a lower risk small start-up size can enable greater reward through enhanced post start-up flexibility and agility. In this paper we provide the first statistical test of the efficacy of start-up size strategies. We focus on employer businesses that provide jobs. We find that employer businesses that originally adopted a small scale (own-account) start-up strategy have higher survival chances and entrepreneurial incomes than employer businesses that employed personnel immediately from start-up. We also find that prior entrepreneurial experience positively affects firm survival and entrepreneurial incomes. Given the high failure rates among start-ups and the associated difficulty for new enterprises to create sustainable jobs, the research results highlight how strategic choice in relation to firm start-up size and risk management can have an important bearing on new venture performance. |
| Date: | 2012–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201207&r=bec |
| By: | Joao Madeira (Department of Economics, University of Exeter) |
| Abstract: | In this paper I make use of Bayesian methods to estimate a firm-specific capital DSGE model with Calvo price and wage setting. This approach allows me to firmly conclude that firm-specific capital is highly relevant in improving the fit of New Keynesian models to the data as shown by a large increase in the value of the log marginal data density relative to the more conventional rental capital model. The introduction of firm-specific capital also has important implications for business cycle dynamics leading to increased persistence of aggregate variables and helps reduce the discrepancy between macro estimates of the NKPC and the observed frequent price adjustments in the micro data. |
| Keywords: | New Keynesian models, sticky prices, DSGE, business cycles, firm-specific capital, Bayesian estimation. |
| JEL: | E20 E22 E27 E30 E32 E37 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:1204&r=bec |
| By: | Elisabeth Nocker (University of Innsbruck); Harry P. Bowen (McColl School of Business, Queens University of Charlotte); Christian Stadler (Warwick Business School, The Warwick University) |
| Abstract: | This study extends the literature on relatedness and firm performance to consider customer side as well as technological side relatedness. Recent studies indicate the importance of each source of relatedness but yield ambiguous findings regarding their impacts on performance. Conjecturing this ambiguity reflects methodological limitations related to prior studies? use of survey data to develop measures of relatedness, we instead develop a secondary data method to measure technological and customer relatedness for a large sample of U.S. firms from 1984 to 2004. Estimating a model in which relatedness and firm performance are simultaneously determined, we find that, unlike prior studies, each source of relatedness has a positive direct effect on firm performance and a positive indirect effect that reflects complementarity between each source of relatedness. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:msb:wpaper:2012-03&r=bec |
| By: | Jan de Kok; Haibo Zhou; Chantal Hartog; Peter van der Zwan |
| Abstract: | Fast-growing firms are considered as the central drivers of job creation in the economy. There is an abundance of literature on the separate subjects of firm growth and firm survival. However, the relationship between survival and growth is neglected. Using the Dutch Longitudinal Enterprise Database 1993-1999, we investigate whether high employment growth rates in the recent past have a negative impact on firm survival. Our results do not find support for this relationship for the population of enterprises with a stable or growing employment development. Thus, we find no evidence that policies stimulating fast-growing firms may result in more firm deaths. |
| Date: | 2012–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201209&r=bec |
| By: | Owen Haaga (Urban Institute); Richard W. Johnson (Urban Institute) |
| Abstract: | Social Security claiming behavior matters because early claimants receive lower monthly benefits for the rest of their lives. Early claiming fell over the past decade, after increasing over the previous 10 years. However, high unemployment encourages early claiming by less-educated men. A 1 percentage point increase in the state unemployment rate is associated with a 0.4 percentage point increase in the monthly claiming probability by men who never attended college, implying that the Great Recession boosted their claiming rates by about 40 percent. In contrast, claiming behavior by women and well-educated men is not significantly correlated with the unemployment rate. JEL Classification: Key words: |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:rbn:wpaper:12-01&r=bec |
| By: | Tomasz Gerard Czekaj (Institute of Food and Resource Economics, University of Copenhagen); Arne Henningsen (Institute of Food and Resource Economics, University of Copenhagen) |
| Abstract: | We investigate and compare the suitability of parametric and non-parametric stochastic regression methods for analysing production technologies and the optimal firm size. Our theoretical analysis shows that the most commonly used functional forms in empirical production analysis, Cobb-Douglas and Translog, are unsuitable for analysing the optimal firm size. We show that the Translog functional form implies an implausible linear relationship between the (logarithmic) firm size and the elasticity of scale, where the slope is artificially related to the substitutability between the inputs. The practical applicability of the parametric and non-parametric regression methods is scrutinised and compared by an empirical example: we analyse the production technology and investigate the optimal size of Polish crop farms based on a firm-level balanced panel data set. A nonparametric specification test rejects both the Cobb-Douglas and the Translog functional form, while a recently developed nonparametric kernel regression method with a fully nonparametric panel data specification delivers plausible results. On average, the nonparametric regression results are similar to results that are obtained from the parametric estimates, although many individual results differ considerably. Moreover, the results from the parametric estimations even lead to incorrect conclusions regarding the technology and the optimal firm size. |
| Keywords: | production technology, nonparametric econometrics, panel data, Translog, firm size, Polish crop farms |
| JEL: | C14 C23 D24 Q12 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2012_12&r=bec |
| By: | Hayakawa, Kazunobu |
| Abstract: | The international export and investment activities of firms have been widely studied by scholars. In particular, prior studies have focused on two main hypotheses about firms engaged in international activities such as exporting and investing abroad; namely, self-selection of more productive firms into international activities and learning-by-doing international activities. This paper is the first study that explores these hypotheses in regard to firms’ use of free trade agreements (FTAs). We first estimate the propensity score for firms’ use of FTA schemes, and find that larger firms are more likely to participate. Then, by conducting matching analysis using the propensity scores, we find that the use of FTA schemes does not change employment in firms, but does result in more local inputs used and increased exports. |
| Keywords: | Asia, International trade, International economic integration, International agreements, FTA, Microdata, Propensity score matching |
| JEL: | F15 F53 O53 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper366&r=bec |
| By: | Maurer-Fazio, Margaret (Bates College) |
| Abstract: | We conduct a large‐scale field experiment to investigate how Chinese firms respond to job applications from ethnic minority and Han applicants for jobs posted on a large Chinese Internet job board. We denote ethnicity by means of names that are typically Han Chinese and distinctively Mongolian, Tibetan, and Uighur. We find significant differences in the callback rates by ethnicity and that these differences vary systematically across ethnic groups. Not all firms discriminate – approximately half treat all candidates equally. State-owned firms are significantly less likely than privately‐owned firms to discriminate against minorities by calling only candidates with Han names and much more likely to treat candidates equally. |
| Keywords: | Chinese firms, hiring, discrimination, ethnicity, internet job boards, resume audit study |
| JEL: | J71 J23 J15 O52 P25 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6903&r=bec |
| By: | Abiodun Egbetokun (Graduate College "Economics of Innovative Change", Friedrich Schiller University Jena); Ivan Savin (Graduate College "Economics of Innovative Change", Friedrich Schiller University Jena) |
| Abstract: | Cooperation can benefit and hurt firms at the same time. An important question then is: when is it better to cooperate. And how can an appropriate partner be selected? In this paper we present a model of inter-firm cooperation driven by cognitive distance, appropriability conditions and external knowledge. Absorptive capacity of firms develops as an outcome of the interaction between absorptive R&D and cognitive distance from voluntary and involuntary knowledge spillovers. Thus, we offer a revision of the original model by Cohen and Levinthal (1989) accounting for recent empirical findings and explicitly modeling absorptive capacity within the framework of interactive learning. We apply that to the analysis of firms' cooperation and R&D investment preferences. While the focus of this paper is limited to a static scenario, where the cognitive distance between cooperating firms is fixed and given exogenously, in Savin and Egbetokun (2012) we address the dynamic approach and provide more extensive simulation results. |
| Keywords: | inter-firm cooperation, absorptive capacity, cognitive distance, innovation, knowledge spillovers |
| JEL: | C63 D83 L14 O32 O33 |
| Date: | 2012–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-056&r=bec |
| By: | Nick Netzer; Florian Scheuer |
| Abstract: | We construct a fully specified extensive form game that captures competitive markets with adverse selection. In particular, it allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract offers have been observed. We show that a subgame perfect equilibrium always exists and that, in fact, when withdrawal is costless, the set of subgame perfect equilibrium outcomes may correspond to the entire set of feasible contracts. We then focus on robust equilibria that exist both when withdrawal costs are zero and when they are arbitrarily small but strictly positive. We show that the Miyazaki-Wilson contracts are the unique robust equilibrium outcome of our game. This outcome is always constrained efficient and involves cross-subsidization from low to high risk agents that is increasing in the share of low risks in the population under weak conditions on risk preferences. |
| JEL: | C73 D02 D82 D86 G22 H1 L1 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18471&r=bec |
| By: | Li, QC; Tether, BS; Mina, A |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:imp:wpaper:9793&r=bec |
| By: | Irani Arráiz (Multilateral Investment Fund, Inter-American Development Bank, Washington, USA); Marcela Melendez; Rodolfo Stucchi (Inter-American Development Bank, Washington, USA) |
| Abstract: | This paper studies the effect of government-backed partial credit guarantees on firms’ performance. These guarantees are automatically granted to firms without enough collateral in order to lift their credit constraints. We put together a panel, covering the period 1997-2007, that combines data from DANE's Annual Manufacturing Survey; DIAN's export and import information; and firm-level records from the National Guarantee Fund (NGF), the government agency in charge of implementing this policy. Using propensity score matching and difference-in-differences, we found that firms that gain access to credit backed by the NGF are able to grow in terms of both output and employment. However, we did not find any effect on productivity, wages, or investment. These results suggest that firms use the new funds as working capital to grow their businesses rather than for investment in new durable goods that increase their capital stock. |
| Keywords: | Partial credit guarantee, access to credit, firm growth, job creation, productivity |
| JEL: | H43 L25 O12 O54 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:ovewps:0212&r=bec |
| By: | Giuliano CONTI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Alessia LO TURCO (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Daniela MAGGIONI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali) |
| Abstract: | We provide evidence on the firm-level productivity effects of imports of intermediates. Exploiting a large panel of Italian manufacturing firms we are able to separately test the role of offshoring to high and low income countries. Contrary to our expectations, no significant impact is found out for purchases from developed countries, while firmefficiency seems to be positively affected by imported inputs from developing countries. Anyway, we prove that this result may be driven by the omission of another important firm internationalisation strategy, the export activity. Due to the strict linkage existing between export and import activity at firm level, we investigate whether the significant role of offshoring still stay after controlling for the firms' sales in foreign markets. Positive effects of offshoring disappear, while we confirm the existence of learning-by-exporting, already displayed in literature for Italy. |
| Keywords: | Exports, Imports, Productivity |
| JEL: | D22 F10 F14 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:381&r=bec |
| By: | Ruijgrok, Matthijs |
| Abstract: | A double auction game with an infinite number of buyers and sellers is introduced. All sellers posses one unit of a good, all buyers desire to buy one unit. Each seller and each buyer has a private valuation of the good. The distribution of the valuations define supply and demand functions. One unit of the good is auctioned. At successive, discrete time instances, a player is randomly selected to make a bid (buyer) or an ask (seller). When the maximum of the bids becomes larger than the minimum of the asks, a transaction occurs and the auction is closed. The players have to choose the value of their bid or ask before the auction starts and use this value when they are selected. Assuming that the supply and demand functions are known, expected profits as functions of the strategies are derived, as well as expected transaction prices. It is shown that for linear supply and demand functions, there exists at most one Bayesian Nash equilibrium. Competitive behaviour is not an equilibrium of the game. For linear supply and demand functions, the sum of the expected profit of the sellers and the buyers is the same for the Bayesian Nash equilibrium and the market where players behave competitively. Connections are made with the ZI-C traders model and the $k$-double auction. |
| Keywords: | Continuous double auction; supply and demand; Bayesian Nash equilibrium; ZI-C model; k-double auction |
| JEL: | D44 C72 |
| Date: | 2012–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42086&r=bec |
| By: | Marcella Nicolini (Department of Economics and Management, University of Pavia); Carlo Scarpa (Department of Economics, University of Brescia); Paola Valbonesi (Department of Economics, University of Padova) |
| Abstract: | Making use of an original dataset we empirically investigate the determinants of state aid to the car industry in the European Union. The EU regulatory system on state aids and the long history of government' grants to this industry make this an interesting case study. Our findings show that in the period 1992-2008 - controlling for a number of variables - subsidies to the car sector have shown a decreasing trend, mainly because of the reduction in the aid aimed at increasing the productive capacity of firms. We find a pattern of a dynamic strategic game among EU countries, whereby aiding a firm induces other member states to grant more subsidies; this seems to be mainly driven by rescue and resctruring aid. Overall, economic and political variables (industry's value added, country's income per capita, election year, government's political orientation) are found to significantly affect aid to the car industry. |
| Keywords: | car industry, state aid to business, EU competition policy |
| JEL: | L52 L62 H25 H50 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0001&r=bec |
| By: | Domenico Colucci (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze); Nicola Doni (Dipartimento di Scienze dell'Economia - Università degli Studi di Firenze); Vincenzo Valori (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze) |
| Abstract: | We study a model of procurement auctions in which information policies can be used to treat two heterogeneous suppliers asymmetrically. The buyer is shown to be better off revealing information about her preferences to the weak supplier only, when there is a sufficient cost difference between the weak and the strong. Conversely, when the two competitors have similar cost structures, for the buyer it is best to disclose her preferences publicly. |
| Keywords: | procurement, information revelation, discriminatory policy, asymmetric auctions |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:flo:wpaper:2012-06&r=bec |
| By: | Dominique Foray; Julio Raffo |
| Abstract: | This paper analyses business-driven innovation in education by looking at education-related patents. It first draws a picture of the challenges for innovation in the formal education sector, which suffers from a poor knowledge ecology: science is hardly linked to core teaching and administrative practices. It then turns to a common indicator of innovation: patents. In the case of education, patents typically cover educational tools. An analysis of education-related patents over the past 20 years shows a clear rise in the production of highly innovative educational technologies by businesses, typically building on advances in information and communication technology. While this increase in educational innovations may present new opportunities for the formal education sector, the emerging tool industry currently targets the nonformal education rather than the formal education system. We shortly discuss why business entrepreneurs may be less interested in the market of formal education.<BR>Cet article porte sur l’innovation entrepreneuriale dans le secteur de l’éducation, à partir d’une analyse des dépôts de brevets dans le secteur éducatif. Premièrement, il propose un tableau des défis de l’innovation dans le secteur de l’éducation formelle, dont l’écologie du savoir est faible : la science y est peu liée avec le coeur des pratiques pédagogiques et administratives. L’étude porte ensuite sur un indicateur courant de l’innovation : les brevets. Dans le cas de l’éducation, les brevets couvrent généralement des « outils » éducatifs. L’analyse des brevets éducatifs durant les vingt dernières années montre une claire croissance de la production de technologies éducatives hautement innovantes par des entreprises privées, qui s’appuient souvent sur les progrès des technologies d’information et de communication. Bien que cette croissance des innovations éducatives puisse donner de nouvelles opportunités au secteur formel de l’éducation, l’industrie émergente d’outils éducatifs cible actuellement les secteurs informels d’éducation. Nous discutons brièvement les raisons pour lesquelles les entrepreneurs privés semblent moins intéressés par le secteur de l’éducation formelle. |
| Date: | 2012–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:eduaab:84-en&r=bec |
| By: | André van Stel; José Maria Millan; Concepcion Roman |
| Abstract: | In order to mitigate the negative consequences of the current economic and financial crisis, it is of utmost importance that existing jobs remain intact as much as possible. In this respect, it is crucial that firms which employ personnel, survive. In this paper we investigate the role of the technological environment in determining the survival chances of employer entrepreneurs, defined as ownermanagers of firms which employ personnel. We estimate survival models to analyse durations as an employer entrepreneur, using micro panel data from EU-15 countries drawn from the European Community Household Panel (ECHP). As indicators for the technological environment we use a country’s R&D expenditures, a country’s employment share of high-tech and knowledge-intensive sectors, and a country’s number of patent applications to the European Patent Office. We find strong support for a positive relationship between these indicators of the technological environment in country j and year t and survival chances of employer entrepreneurs in that same country and year. Our analysis also suggests that a selection effect may be part of the explanation in the sense that in a more advanced technological environment, relatively more ‘high-quality’ individuals select into entrepreneurship. An implication of our novel finding is that innovation policy may contribute to survival of employer entrepreneurs, thereby safeguarding wage jobs in Europe, and achieving a lower waste of resources associated with firm exit. |
| Date: | 2012–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201208&r=bec |
| By: | Taglioni, Daria; Zavacka, Veronika |
| Abstract: | The failure of trade economists to anticipate the extreme drop in trade post Lehman Brothers bankruptcy suggests that the behavior of trade in exceptional circumstances may still be poorly understood. This paper explores whether uncertainty shocks have explanatory power for movements in trade. VAR estimations on United States data suggest that domestic uncertainty is a strong predictor of movements in imports, but has little effect on exports. Guided by these results, the paper estimates a bilateral model with focus on the impact of importer uncertainty on foreign suppliers. It finds that there is a strong negative relationship between uncertainty and trade and that this relationship is non-linear. Uncertainty matters most when its levels are exceptionally high. The paper does not find evidence of learning from past turmoils, suggesting that prior experience with major uncertainty shocks does not reduce the effect on trade. In line with the expectations, the negative effect of uncertainty shocks on trade is higher for trade relationships more intensive in durable goods. Surprisingly, however, the effect of durability is non-linear. Supply chain considerations or the possibility that the relationships with the highest durability lead to important compositional effects may have a bearing on the results. The results are robust to excluding the post Lehman shock, suggesting that the trade response during the 2008-2009 crisis has been similar to past uncertainty events. |
| Keywords: | Economic Theory&Research,Currencies and Exchange Rates,Debt Markets,Markets and Market Access,Emerging Markets |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6226&r=bec |