|
on Business Economics |
| By: | Tania Babina; Wenting Ma; Christian Moser; Paige Ouimet; Rebecca Zarutskie |
| Abstract: | Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms. |
| Keywords: | Young-Firm Pay Premium, Selection, Worker and Firm Heterogeneity, Firm Dynamics, Startups |
| JEL: | J30 J31 D22 E24 M13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:19-23&r=all |
| By: | KATO Takao; KODAMA Naomi |
| Abstract: | We apply the Propensity Score Matching (PSM) with difference-in-differences methodology to unique data on STC from Japan, a country known for its extensive use of STC, and find the first rigorous evidence on the positive consequence of STC for firm performance measured by ROA and profit margin. Consistent with the observed positive consequences of STC for firm profitability, we further find that STC leads to sales growth without raising labor costs. We then assess the validity of four possible explanations for the positive consequence of STC on firm performance. Compared to the conventional explanations (preserving firm-specific human capital and avoiding the negative morale effect of layoffs), our additional evidence lends more credence to a behavioral explanation--worksharing which STC promotes can introduce what the psychological literature calls "shared adversity" which facilitates supportive interactions among workers in the firm and strengthens commitment of workers to the firm, and thereby enhances goal alignment between workers and the firm as well as between coworkers, resulting in enhanced firm performance. |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19056&r=all |
| By: | Johannes Boehm; Jan Sonntag |
| Abstract: | This paper studies the prevalence of vertical market foreclosure using a novel dataset on U.S. and international buyer-seller relationships, and across a large range of industries. We find that relationships are more likely to break when suppliers vertically integrate with one of the buyers' competitors than when they vertically integrate with an unrelated firm. This relationship holds for both domestic and cross-border mergers, and for domestic and international relationships. It also holds when instrumenting mergers using exogenous downward pressure on the supplier's stock prices, suggesting that reverse causality is unlikely to explain the result. In contrast, the relationship vanishes when using rumoured or announced but not completed integration events. Firms experience a substantial drop in sales when one of their suppliers integrates with one of their competitors. This sales drop is mitigated if the firm has alternative suppliers in place. |
| Keywords: | mergers and acquisitions, market foreclosure, vertical integration, production networks |
| JEL: | L14 L42 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1641&r=all |
| By: | Myeongwan Kim |
| Abstract: | A key economic issue in Canada is the declining Business Enterprise Research and Development in manufacturing since the early 2000s. Accompanying this, the total factor productivity (TFP) growth in manufacturing slowed after 2000. However, there has not been a definitive explanation for these trends. To deepen our understanding of this phenomenon, we focus on the increasing Chinese import share in the total domestic absorption in Canadian manufacturing since the early 2000s, which appears to be driven by positive supply shocks within Chinese manufacturing. Based on a firm-level database covering all incorporated firms in Canadian manufacturing, we find that rising Chinese import competition led to declines in R&D expenditure and TFP growth within firms but reallocated employment towards more productive firms and induced less productive firms to exit. The negative within-effects were pronounced for firms that were initially smaller, less profitable, and less productive. These firms also experienced declines in their profit margins due to rising Chinese import competition while larger and better-performing firms did not. Our estimates imply that rising Chinese import competition can explain about 7 per cent of the total decline of $1.36 billion (2007 CAD) in R&D expenditure in Canadian manufacturing between 2005 and 2010. Although it led to declines in TFP within firms, the positive reallocation effects more than offset the negative within-effect. Had there been no increase in Chinese import competition between 2005 and 2010, TFP in Canadian manufacturing would have declined by 1.26 per cent per year instead of the actual 1.09 per cent per year over this period. |
| Keywords: | China Shock, Canada, Imports, Productivity, Innovation |
| JEL: | O32 O51 O53 L60 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:1711&r=all |
| By: | Akhundjanov, Sherzod B.; Pozo, Veronica F.; Thomas, Briana |
| Keywords: | Food Consumption/Nutrition/Food Safety |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290930&r=all |
| By: | MORIKAWA Masayuki |
| Abstract: | Using original survey data linked with the financial statements of Japanese listed firms, this study presents an ex post evaluation of firms' ex ante subjective uncertainty. Ex ante forecast uncertainty in terms of sales and employment growth is derived from firms' subjective confidence interval around their point forecasts. Ex post forecast error is calculated as the deviation of the realized figures from the point forecasts. The results indicate that ex ante subjective uncertainty has a positive association with realized absolute forecast error. The subjective confidence interval for a firm's own business forecast, in comparison with that for macroeconomic variables, is reliable as a measure of uncertainty. These findings indicate that the subjective probability distribution of business outlook captured by firm surveys contains valuable information for measuring economic uncertainty at the micro-level. |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19055&r=all |
| By: | Makoto Nirei (Professor, Department of Economics, University of Tokyo (E-mail: nirei@e.u-tokyo.ac.jp)); José A. Scheinkman (Professor, Columbia University, Princeton University and NBER (E-mail: js3317@columbia.edu)) |
| Abstract: | We present a state-dependent pricing model that generates inflation fluctuations from idiosyncratic shocks to the cost of price changes of individual firms. A firm's nominal price increase, lowers other firms' relative prices, thereby inducing further nominal price increases. This snow-ball effect of repricing causes fluctuations to the aggregate price level without exogenous aggregate shocks. The fluctuations caused by this mechanism are more volatile when the density of firms at the repricing threshold is high, and the density at the threshold is high when the trend inflation level is high. Thus, the model implies that higher trend inflation produces larger volatility of short- term inflation rates. Analytical and numerical analyses show that the model can account for the positive relationship between inflation level and volatility that has been observed empirically. |
| Keywords: | Trend inflation, Inflation volatility, State-dependent pricing, Aggregate fluctuations, Self-organized criticality, Power law |
| JEL: | E31 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:19-e-11&r=all |