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on Business Economics |
| By: | Thomas J.Flavin (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Abhinav Goyal (Cork University Business School, University College Cork, Cork, Ireland); Thomas O'Connor (Department of Economics Finance and Accounting, National University of Ireland, Maynooth) |
| Abstract: | We analyze the role of firm-level corporate governance in determining the precommitment payout policy of emerging market firms and investigate if there is a precommitment lifecycle effect. Unlike previous studies for the U.S. firms, we only find evidence of precommitment among relatively well-governed firms, who combine good governance with large dividend payouts to shareholders and large debt-related repayments to creditors. We also document a strong precommitment lifecycle effect. Firms in the growth and mature stages of their lifecycle tend to use both debt and dividends to precommit to investors, with an increasing proportion of dividends in total payout measures. Our results are robust to an array of control variables, alternate payout proxies, firm-level corporate governance and addresses any potential endogeneity concerns in the sample. |
| Keywords: | : Precommitment payout, corporate governance, lifecycle effects, emerging market. |
| JEL: | G32 G35 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n297-20.pdf&r=all |
| By: | Vladimir Smirnyagin |
| Abstract: | This paper studies firm dynamics over the business cycle. I present evidence from the United Kingdom that more rapidly growing firms are born in expansions than in recessions. Using administrative records from Census data, I find that this observation also holds for the last four recessions in the United States. I also present suggestive evidence that financial frictions play an important role in determining the types of firms that are born at different stages of the business cycle. I then develop a general equilibrium model in which firms choose their managers’ span of control at birth. Firms that choose larger spans of control grow faster and eventually get to be larger, and in this sense have a larger target size. Financial frictions in the form of collateral constraints slow the rate at which firms reach their target size. It takes firms longer to get up to scale when collateral constraints tighten; therefore, businesses with the largest target size are affected disproportionately more. Thus, fewer entrepreneurs find it profitable to choose larger projects when financial conditions deteriorate. Using Bayesian methods, I estimate the model using micro and aggregate data from the United Kingdom. I find that financial shocks account for over 80% of fluctuations in the formation of businesses with a large target size, and TFP and labor wedge shocks account for the remaining 20%. An independently estimated version of the model with no choice over the span of control needs larger aggregate shocks in order to account for the same data series, suggesting that the intensive margin of business formation is important at business cycle frequencies. The model with the choice over the span of control generates an empirically relevant and non-targeted collapse in the right tail of the cumulative growth distribution among firms started in recessions, while the model without such a choice does not. The paper also discusses implications for micro-targeted government stimulus policies. |
| Keywords: | Business cycles, firm dynamics |
| JEL: | E23 E32 H25 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-09&r=all |
| By: | Danial Lashkari; Arthur Bauer; Jocelyn Boussard |
| Abstract: | This paper investigates the role of IT in shaping recent trends in market concentration, factor income shares, and market competition. Relying on a novel dataset on hardware and software investments in the universe of French firms, we document a robust within-industry correlation between firm size and the intensity of IT demand. To explain this fact, we argue that the relative marginal product of IT inputs may rise with firm scale, since IT specifically helps firms deal with organizational limits to scale. We propose a general equilibrium model of industry dynamics that features firm-level production functions compatible with this mechanism. We estimate the production function and find evidence for the nonhomotheticity of IT demand and for an elasticity of substitution between IT and other inputs that falls below unity. Under the estimated model parameters, the cross-sectional predictions of the model match the observed relationship of firm size with IT intensity (positive) and labor share (negative). In addition, as a response to the fall in the relative price of IT inputs in post-1990 France, the model can explain about half of both the observed rise in market concentration and the observed market reallocation toward low-labor-share-firms. |
| Keywords: | : Information Technology, Labor Share, Competition, Production Function, Nonhomotheticity. |
| JEL: | E10 E23 E25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:737&r=all |
| By: | Saroj Bhattarai; Konstantin Kucheryavyy |
| Abstract: | We present a unified dynamic framework to study the interconnections between international trade and business cycle models. We prove an aggregate equivalence between a competitive, representative firm model that has aggregate production externalities and dynamic trade models that feature monopolistic competition, endogenous entry, and heterogeneous firms. The production externalities in the representative firm model have to be introduced in the intermediate and final good sectors so that the model is isomorphic to dynamic trade models that embody love-of-variety and selection effects. In a quantitative exercise with multiple shocks, we show that to improve the fit of the dynamic trade models with the data, the most important ingredient is negative capital externality in the intermediate good sector. This presents a puzzle for the literature as standard dynamic trade models provide micro-foundations for positive capital externality. |
| Keywords: | international business cycles, dynamic trade models, heterogeneous firms, production externalities, monopolistic competition, export costs, entry costs |
| JEL: | F12 F41 F44 F32 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8130&r=all |
| By: | Nicolas Berman (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Vincent Rebeyrol (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Vincent Vicard (Centre de recherche de la Banque de France - Banque de France) |
| Abstract: | This paper provides direct evidence that learning about demand is an important driver of firms' dynamics. We present a model of Bayesian learning in which firms are uncertain about idiosyncratic demand in each market and update their beliefs as noisy information arrives. Firms update their beliefs to a given demand shock more, the younger they are. We test and empirically confirm this prediction, using the structure of the model, together with exporter-level data, to identify demand shocks and the firms' beliefs about future demand. Consistent with theory, we also find the learning process to be weakened in more uncertain environments. |
| Keywords: | exports,demand,firm growth,belief updating,uncertainty |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02111159&r=all |
| By: | Amamou, Raschid; Gereben, Áron; Wolski, Marcin |
| Abstract: | We look at the impact of intermediated funding provided by the European Investment Bank (EIB) on the performance of small and medium-sized enterprises (SMEs) in the 28 member countries of the European Union between 2008 and 2014. We use a combination of propensity score matching and difference-in-differences to evaluate the impact of EIB lending on corporate performance using firm-level data. We find that EIB lending had a positive effect on employment, firm size, investment and innovation capacity, and it also increased firms' leverage. We also find that the positive impact of EIB funding is higher in the countries of Central and East Europe and also in South Europe, while somewhat smaller, yet still significant, in West and North Europe. All in all, our results indicate that EIB-supported funding made a significant and positive difference to the economic and financial performance of the beneficiary SMEs. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:202004&r=all |
| By: | Philippe Aghion; Antonin Bergeaud; Timo Boppart; Peter J. Klenow; Huiyu Li |
| Abstract: | Growth has fallen in the U.S., while firm concentration and profits have risen. Meanwhile, labor’s share of national income is down, mostly due to the rising market share of low labor share firms. We propose a theory for these trends in which the driving force is falling firmlevel costs of spanning multiple markets, perhaps due to accelerating IT advances. In response, the most efficient firms (with higher markups) spread into new markets, thereby generating a temporary burst of growth. Because their efficiency is difficult to imitate, less efficient firms find markets more difficult to enter profitably and therefore innovate less. Eventually, due to greater competition from efficient firms, within-firm markups actually fall. Despite the increase in the aggregate markup and rents, firm incentives to innovate decline—lowering the long run growth rate. |
| Keywords: | : Labor Income Share, Concentration, Growth, Markups. |
| JEL: | O31 O47 O51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:740&r=all |
| By: | Martins, Pedro S. |
| Abstract: | As work changes, firm-provided training may become more relevant for good economic and social outcomes. However, so far there is little or no causal evidence about the effects of training on firms. This paper studies a large training grants programme in Portugal, contrasting successful firms that received the grants and unsuccessful firms that did not. Combining several rich data sets, we compare a large number of potential outcomes of these firms, while following them over long periods of time before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports. These effects tend to be of at least 5% and, in some cases, 10% or more. |
| Keywords: | Training subsidies,Productivity,Counterfactual evaluation |
| JEL: | J24 H43 M53 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:488&r=all |
| By: | Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria) |
| Abstract: | This article focuses on the relationship between external research and development (R&D) and firm innovation output. Using a sample of Italian manufacturing firms in the period of 2007-2009, the role played by external R&D is evaluated, investigating differences between family and non-family firms. Results show that the R&D acquired from external sources has a positive impact, especially on family firms, suggesting that family companies have a greater capacity to translate external R&D into tangible economic benefits. This result is consistent with those obtained when we consider the combination of internal and external R&D, as well as the family involvement in governance and management. |
| Keywords: | Family firms, R&D investment, Innovative sales, Italian manufacturing industry |
| JEL: | O32 G34 C24 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:202002&r=all |
| By: | John Haltiwanger; James R. Spletzer |
| Abstract: | We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-08&r=all |
| By: | Clément Carbonnier (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique, LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques [Sciences Po] - Sciences Po - Sciences Po, Centre de recherche de la Banque de France - Banque de France); Clément Malgouyres (IPP - Institut des politiques publiques - PSE - Paris School of Economics, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Loriane Py (Centre de recherche de la Banque de France - Banque de France, IPP - Institut des politiques publiques - PSE - Paris School of Economics); Camille Urvoy (LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques [Sciences Po] - Sciences Po - Sciences Po) |
| Abstract: | Do workers gain from lower business taxes, and why? We estimate how a large French corporate income tax credit is passed on to wages and explore the firm- and employee-level underlying mechanisms. The amount of tax credit firms get depends on their payroll share of workers paid less than a wage threshold. Exposure to the policy thus varies both across workers depending on their wage and across firms depending on their wage structure. Using exhaustive employer-employee data, we find that half of the surplus generated by the reform falls onto workers. Wage gains load on incumbents in high-skill occupations. The wage earnings of low-skill workers -- nearly all individually eligible -- do not change. This heterogeneous wage incidence is unlikely to be driven by scale effects or skill complementarities. We find that the groups of workers benefiting from wage gains are also more likely to continue working for the same firm. Further, we show that firms do not change their wage-setting behavior in response to the individual eligibility status of workers as there is no bunching in the distribution of entrants' wages. Overall, our results suggest that the wage incidence of firm taxation operates collectively through rent-sharing and benefits workers most costly to replace. |
| Keywords: | business taxation,tax incentives,wage incidence,rent sharing |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02495652&r=all |
| By: | Clément Carbonnier (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique, LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques [Sciences Po] - Sciences Po - Sciences Po, Centre de recherche de la Banque de France - Banque de France); Clément Malgouyres (IPP - Institut des politiques publiques - PSE - Paris School of Economics, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Loriane Py (Centre de recherche de la Banque de France - Banque de France, IPP - Institut des politiques publiques - PSE - Paris School of Economics); Camille Urvoy (LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques [Sciences Po] - Sciences Po - Sciences Po) |
| Abstract: | Do workers gain from lower business taxes, and why? We estimate how a large French corporate income tax credit is passed on to wages and explore the firm- and employee-level underlying mechanisms. The amount of tax credit firms get depends on their payroll share of workers paid less than a wage threshold. Exposure to the policy thus varies both across workers depending on their wage and across firms depending on their wage structure. Using exhaustive employer-employee data, we find that half of the surplus generated by the reform falls onto workers. Wage gains load on incumbents in high-skill occupations. The wage earnings of low-skill workers -- nearly all individually eligible -- do not change. This heterogeneous wage incidence is unlikely to be driven by scale effects or skill complementarities. We find that the groups of workers benefiting from wage gains are also more likely to continue working for the same firm. Further, we show that firms do not change their wage-setting behavior in response to the individual eligibility status of workers as there is no bunching in the distribution of entrants' wages. Overall, our results suggest that the wage incidence of firm taxation operates collectively through rent-sharing and benefits workers most costly to replace. |
| Keywords: | business taxation,tax incentives,wage incidence,rent sharing |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-02495652&r=all |
| By: | Luca Riccetti (Department of Economics and Law, Università degli Studi di Macerata, Italy); Alberto Russo (Department of Management, Università Politecnica delle Marche, Ancona, Italy and Department of Economics, Universitat Jaume I, Castellón, Spain); Mauro Gallegati (Department of Management, Università Politecnica delle Marche, Acona, Italy) |
| Abstract: | We present an agent-based model to study firm-bank credit market interactions in different phases of the business cycle. The business cycle is exogenously set and it can give rise to various scenarios. Compared to other models in this literature strand, we improve the mechanism according to which the dividends are distributed, including the possibility of stock repurchase by firms. In addition, we locate firms and banks over a space and firms may ask credit to many banks, resulting in a complex spatial network. The model reproduces a long list of stylized facts and their dynamic evolution as described by the cross-correlations among model variables. The model allows us to test the effectiveness of rules designed by the current financial regulation, such as the Basel 3 countercyclical capital buffer. We find that its effectiveness of this rule changes in different business cycle environments and this should be considered by policy makers. |
| Keywords: | Agent-based modeling, credit network, business cycle, financial regulation, macroprudential policy |
| JEL: | C63 E32 E52 G01 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2020/16&r=all |
| By: | Schiffbauer,Marc Tobias; Sampi Bravo,James Robert Ezequiel |
| Abstract: | This paper uses a unique data set that captures the elimination of subnational regulatory barriers to firm entry and competition across 1,800 municipalities and matches it with establishment census panel data to estimate the impact on establishment productivity and markups. The elimination of local barriers that were inconsistent with national legislation was the result of legal reforms that strengthened the mandate of Peru's competition authority. Legislative changes in 2013/14 empowered the competition authority to enforce the elimination of illegal, sector-specific subnational regulatory barriers to firm entry and competition, conditional on the existence of a precedence. The changes provide a unique quasi-experimental setting to identify the impact of enforcing competition within the controlled institutional environment of a single country. The paper finds that the elimination of subnational barriers to entry boosted the (revenue) productivity of establishments operating in reform municipalities and sectors relative to establishments in nonreform municipalities/sectors. But it did not raise the establishments'markups, which, if anything, declined, suggesting that physical productivity improved. The paper provides a wide range of evidence supporting a causal interpretation of this finding. The results suggest that strengthening the mandate of institutions enforcing competition is critical to raise productivity. |
| Keywords: | Transport Services,International Trade and Trade Rules,Employment and Unemployment,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Competition Policy,Competitiveness and Competition Policy |
| Date: | 2019–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8714&r=all |
| By: | Faia, Ester; Mayer, Maximilian; Pezone, Vincenzo |
| Abstract: | This paper presents causal evidence of the effects of boardroom networks on firm value. We exploit exogenous variation in network centrality arising from a ban on interlocking directorates of Italian financial and insurance companies. We leverage this shock to show that firms that become more central in the network as a result of the shock experience positive abnormal returns around the announcement date. We find that information dissemination plays a central role: results are driven by firms that have higher idiosyncratic volatility, low analyst coverage, and more uncertainty surrounding their earnings forecasts. We also find that firms benefit more from boardroom centrality when they are more central in the input-output network, as this reinforces information complementarities, or when they are less central in the cross-ownership network, as well as when they suffer from low profitability and low growth opportunities. Network centrality also results in higher compensation for board directors. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:269&r=all |
| By: | Ottaviano, Gianmarco I. P.; Peri, Giovanni; Wright, Greg C. |
| Abstract: | This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export costs. The first effect can be understood as the re-assignment of offshore tasks to immigrant workers. The second can be seen as a cost cutting effect due to immigration, and the third as a trade-cost reducing effect. To test the empirical significance and size of these effects, we exploit differences in immigrant inflows across U.K. labor markets and a new firm-level dataset on U.K. service firms. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. They also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks, and they increase country-specific exports, consistent with a reduction in bilateral communication and trade costs. |
| Keywords: | immigration; service trade |
| JEL: | F10 F16 F22 F23 |
| Date: | 2018–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87333&r=all |
| By: | Giuseppe Nicoletti; Indre Bambalaite; Christina von Rueden |
| Abstract: | This paper assesses the possible dynamic effects of occupational entry regulations (OER) on productivity. It combines firm-level productivity data with a new cross-country policy indicator measuring the stringency of OER by the presence of administrative burdens, qualifications requirements, and mobility restrictions, for five professional and ten personal services. The evidence suggests that bold reforms easing OER, especially those concerning qualification requirements, could help increase the contribution of personal and professional services to aggregate productivity growth via two channels: the acceleration of their catch up to best global practices (within-firm channel), where firms in regulated sectors could gain up to 2.5 percentage points of productivity on average; and a higher contribution of labour reallocation to firms’ employment growth (between-firm channel), which could increase by up to 10 percent for the most productive firms. |
| Keywords: | catch-up, occupational licensing, productivity, reallocation, regulations |
| JEL: | J44 O43 L5 O57 L16 C21 |
| Date: | 2020–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1605-en&r=all |
| By: | Kulenović, Mirza; Veselinović, Liljan |
| Abstract: | The main focus of this paper is to present the TQM practices of 593 companies in Bosnia and Herzegovina. In addition, our results confirm that there are statistically significant differences in TQM practices between firms in a highly competitive and less competitive environment, as well as between firms with and without ISO certificates. TQM practices do not differ between companies that belong to different groups that we constructed based on their age, location, export-orientation and the firm size. We contribute to the existing body of knowledge by identifying organizational contextual factors that might matter in designing more complex structural models. |
| Keywords: | Total quality management,Contextual factors,Bosnia and Herzegovina |
| JEL: | L15 M11 L25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esconf:214885&r=all |
| By: | Arellano-Bover, Jaime (Yale University) |
| Abstract: | I study the long-term effects of landing a first job at a large firm versus a small one using Spanish social security data. Size could be a relevant employer attribute for inexperienced workers since large firms are associated with greater training, higher wages, and enhanced productivity. The key empirical challenge is selection into first jobs – for instance, more able people may land jobs at large firms. I address this challenge developing an instrumental-variables approach that, while keeping business-cycle conditions fixed, leverages variation in the composition of labor demand that labor-market entrants face. I find that initially matching with a larger firm substantially improves long-term outcomes such as lifetime income, and that these benefits persist through subsequent jobs. Additional results point to mechanisms related to search frictions and better skill-development at large firms. Together, these findings shed light on how heterogeneous firms persistently impact young workers' trajectories. |
| Keywords: | first job, employer size, firm heterogeneity, young workers, lifetime income, on-the-job skills |
| JEL: | E24 J23 J24 J31 J62 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12969&r=all |
| By: | Sabrina T. Howell; J. David Brown |
| Abstract: | This paper examines how employee earnings at small firms respond to a cash flow shock in the form of a government R&D grant. We use ranking data on applicant firms, which we link to IRS W2 earnings and other U.S. Census Bureau datasets. In a regression discontinuity design, we find that the grant increases average earnings with a rent-sharing elasticity of 0.07 (0.21) at the employee (firm) level. The beneficiaries are incumbent employees who were present at the firm before the award. Among incumbent employees, the effect increases with worker tenure. The grant also leads to higher employment and revenue, but productivity growth cannot fully explain the immediate effect on earnings. Instead, the data and a grantee survey are consistent with a backloaded wage contract channel, in which employees of financially constrained firms initially accept relatively low wages and are paid more when cash is available. |
| JEL: | G32 G35 J31 J41 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-06&r=all |
| By: | Ana P. Fernandes; Heiwai Tang |
| Abstract: | We study how firms respond to import competition by increasing the speed of trade. We use data on all Portuguese textile and clothing exporters’ monthly transactions and exploit the exogenous increase in competition following the removal of Multi-Fibre Arrangement (MFA) quotas on Chinese exports. The removal of quotas is associated with an increase in the price and frequency of export transactions and with a reduction in average distance of firms’ exports. We rationalize our findings with a heterogeneous-firm model of exporting where firms decide which markets to serve as well as the frequency of transactions and the quality of exported products in each market. In response to low-wage competition, the more productive firms increase exports of high-quality products to nearby markets, while the less productive firms drop out from distant and low-income markets. These changes in export patterns imply that advanced economies become more specialized in “fast-fashion” —exporting higher quality products to closer markets at higher frequency. |
| Keywords: | export frequency, fast fashion, just-in-time trade, low-wage country competition, heterogeneous firms, quality upgrading |
| JEL: | F10 F20 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8125&r=all |