nep-bec New Economics Papers
on Business Economics
Issue of 2020‒06‒08
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19 By Samuel Muehlemann; Harald Pfeifer; Bernhard Wittek
  2. The Inverted-U Relationship Between Credit Access and Productivity Growth By Philippe Aghion; Antonin Bergeaud; Gilbert Cette; Rémy Lecat; Hélène Maghin
  3. Workforce Composition, Productivity and Pay: The Role of Firms in Wage Inequality By Criscuolo, Chiara; Hijzen, Alexander; Schwellnus, Cyrille; Chen, Wen-Hao; Fabling, Richard; Fialho, Priscilla; Grabska, Katarzyna; Kambayashi, Ryo; Leidecker, Timo; Nordström Skans, Oskar; Riom, Capucine; Roth, Duncan; Stadler, Balazs; Upward, Richard; Zwysen, Wouter
  4. Coverage and representativeness of Orbis data By Matej Bajgar; Giuseppe Berlingieri; Sara Calligaris; Chiara Criscuolo; Jonathan Timmis
  5. What Corporate Social Responsibility Motivations are better for The Environment? By Villena, Mauricio
  6. From Finance to Fascism By Doerr, Sebastian; Gissler, Stefan; Peydró, José-Luis; Voth, Hans-Joachim
  7. The Optimal Assortativity of Teams Inside the Firm By Ashwin Kambhampati; Carlos Segura-Rodriguez
  8. Firm productivity dynamics and distribution: Evidence for Chile using micro data from administrative tax records By Elías Albagli; Mario Canales; Claudia de la Huerta; Matías Tapia; Juan Marcos Wlasiuk
  9. Women scaling the corporate ladder: Progress steady but slow globally By Soyoung Han; Marcus Noland

  1. By: Samuel Muehlemann; Harald Pfeifer; Bernhard Wittek
    Abstract: A firm's expectation about the future business climate is an important determinant of the decision to train apprentices, because German firms typically train apprentices to either fill future skilled worker positions, or as a substitute for other types of labor. The current coronavirus crisis will have a strong and negative impact on the German economy according to the current estimates of the business climate in Germany (ifo Business Climate Index). To the extent that the training decision of a firm depends on its perception of the business climate, we expect a downward shift in the firm's demand for apprentices and consequently also a decrease in the equilibrium number of apprenticeship contracts. To assess the impact of changes in business climate expectations, we analyze German data on the apprenticeship market at the state-level and at the occupation-level within states from 2007 to 2019. We apply first-differences regressions to account for unobserved heterogeneity across states and occupations, allowing us to identify the association between changes in the ifo Business Climate Index and subsequent changes in the demand for apprentices, the number of new apprenticeship contracts, unfilled vacancies and unsuccessful applicants. We find that the favorable business climate in Germany in recent years led to a substantial increase in the number of unfilled vacancies. Thus, the apprenticeship market prior to the current crisis can be characterized by excess demand for apprentices (although there are matching problems in some states, with both a high share of unfilled vacancies and a high share of unsuccessful applicants). Taking into account the most recent business climate data up to May 2020, we estimate that the coronavirus-related decrease in firms' expectations about the business climate can be associated with a predicted 9.1% decrease in firm demand for apprentices and a 6.8% decrease in the number of new apprenticeship positions in Germany in 2020 (34,700 apprenticeship contracts; 95% confidence interval: +/- 8,800).
    Keywords: Apprenticeship market, Covid-19, coronavirus, business cycle
    JEL: J23 J24 M53
    Date: 2020–06
  2. By: Philippe Aghion (Harvard University [Cambridge]); Antonin Bergeaud (PSE - Paris School of Economics); Gilbert Cette (Centre de recherche de la Banque de France - Banque de France, 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); Rémy Lecat (Centre de recherche de la Banque de France - Banque de France); Hélène Maghin
    Abstract: We identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate; on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation‐based growth with credit constraints, where the above two counteracting effects generate an inverted‐U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm‐level dataset. We first show evidence of an inverted‐U relationship between credit constraints and productivity growth when we aggregate our data at the sectoral level. We then move to firm‐level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experience lower exit rates, particularly the least productive firms among them. To support these findings, we exploit the 2012 Eurosystem's Additional Credit Claims programme as a quasi‐experiment that generated an exogenous extra supply of credits for a subset of incumbent firms.
    Keywords: credit constraint,firms,growth,interest rate,productivity
    Date: 2019–01
  3. By: Criscuolo, Chiara (OECD); Hijzen, Alexander (OECD); Schwellnus, Cyrille (OECD); Chen, Wen-Hao (OECD); Fabling, Richard (Independent Researcher); Fialho, Priscilla (OECD); Grabska, Katarzyna (Maastricht University); Kambayashi, Ryo (Hitotsubashi University); Leidecker, Timo (OECD); Nordström Skans, Oskar (Uppsala University); Riom, Capucine (London School of Economics); Roth, Duncan (Institute for Employment Research (IAB), Nuremberg); Stadler, Balazs (OECD); Upward, Richard (University of Nottingham); Zwysen, Wouter (ISER, University of Essex)
    Abstract: In many OECD countries, low productivity growth has coincided with rising inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This paper uses a new harmonised cross-country linked employer-employee dataset for 14 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, changes in the dispersion of average wages between firms explain about half of the changes in overall wage inequality. Two thirds of these changes in between-firm wage inequality are accounted for by changes in productivity-related premia that firms pay their workers above common market wages. The remaining third can be attributed to changes in workforce composition, including the sorting of high-skilled workers into high-paying firms. Over all, these results suggest that firms play an important role in explaining wage inequality as wages are driven to a significant extent by firm performance rather than being exclusively determined by workers' earnings characteristics.
    Keywords: firm wage premium, wage inequality, productivity
    JEL: D2 J31 J38
    Date: 2020–05
  4. By: Matej Bajgar (OECD); Giuseppe Berlingieri (OECD); Sara Calligaris (OECD); Chiara Criscuolo (OECD); Jonathan Timmis (OECD)
    Abstract: This paper describes the coverage and representativeness of Orbis, a commercial database of firm-level records across many countries. Such databases can provide key insights into global economic trends and shed light on how policies affect firms within and across countries. As a benchmark, the paper uses industry-level data from the OECD STAN dataset as well as micro-aggregated data from the OECD MultiProd and DynEmp projects, which draw on official microdata representative of the entire firm population. Results indicate that Orbis is more suitable for studies that: i) take a global perspective rather than make comparisons across countries; ii) analyse top performers and multinationals rather than underperforming firms; and iii) focus on mean performance or changes within firms rather than the entire firm distribution or entry and exit.
    Keywords: cross-country analysis, distributed microdata analysis, firm-level data
    JEL: D22 O47 Y1
    Date: 2020–05–28
  5. By: Villena, Mauricio
    Abstract: Is it always the case that an environmental friendly CSR firm will be preferred to a consumer caring CSR-firm in terms of the environmental damage generated in the market?. Will always an environmental friendly CSR firm be preferred to a firm which concerns only with profit maximization?. We explore these questions by analizyng a duopoly market setting in which a CSR firm interacts with a profit maximizing firm. Unlike previous literature, we consider different motivations for the CSR firm: (i) the CSR firm acts as a consumer-friendly firm, cares for not only its profits but also consumer surplus, as a proxy of its concern for its "stakeholders" or consumers; (ii) the CSR firm main objective is a combination of its own profit and the environment, caring for the environmental damage produced by the market in which it interacts; and (iii) the CSR firm is both consumer and environmental friendly. As benchmark we also consider the case in which both firms in the duopoly only concern about material profits, evaluating for all cases the environmental damage generated in their market interaction.
    Keywords: Corporate social responsibility, consumer-friendly firm, environment-friendly firm, Mixed Duopoly, Emission Taxation
    JEL: H23 L13 L31 Q50
    Date: 2019–11–01
  6. By: Doerr, Sebastian; Gissler, Stefan; Peydró, José-Luis; Voth, Hans-Joachim
    Abstract: Do financial crises radicalize voters? We study Germany’s banking crisis of 1931, when two major banks collapsed and voting for radical parties soared. We collect new data on bank branches and firm-bank connections of 5,610 firms. Incomes plummeted in cities affected by the bank failures; connected firms curtailed payrolls. Nazi votes surged in locations exposed to Danatbank, led by a Jewish manager – but not in those suffering from the other bank’s failure. Unobservables or pre-trends do not explain the results. Danatbank’s collapse boosted Nazi support, especially in cities with deep-seated anti-Semitism, suggesting a synergy between cultural and economic channels.
    Keywords: financial crises,political extremism,populism,anti-Semitism,Great Depression
    JEL: E44 G01 G21 N20 P16
    Date: 2020
  7. By: Ashwin Kambhampati (University of Pennsylvania); Carlos Segura-Rodriguez (Central Bank of Costa Rica)
    Abstract: How does a profit-maximizing manager form teams and compensate workers in the presence of both adverse selection and moral hazard? Under complete information, it is well known that any complementarity in characteristics implies that positive assortative matching is productively efficent. But, under asymmetric information, we uncover the problem of disassortative incentives: incentive costs may increase in assortativity. Profit maximization thus prescribes either random or negative assortative matching, both productively inefficient, when complementarities are weak and eort costs are high enough. When this is the case, the manager may instead prefer to delegate matching, allowing workers to sort themselves into teams. Our results shed light on recent empirical work documenting patterns of non-assortative matching inside of firms.Length: 49 pages
    Keywords: Asymmetric Information, Assortative Matching, Delegation, Teams
    JEL: C78 D86 L23
    Date: 2020–05–17
  8. By: Elías Albagli; Mario Canales; Claudia de la Huerta; Matías Tapia; Juan Marcos Wlasiuk
    Abstract: Using administrative tax records for all formal Chilean firms, we compute and characterize the evolution and distribution of total factor productivity at the firm level. With data on labor, capital, and value-added, we compute TFPR measures for individual firms between 2006 and 2015, allowing for differences in factor intensities across economic sectors. Our results show that factor reallocation plays a relevant role in explaining the evolution of aggregate TFP in Chile over the last decade. Firms with higher TFPR hire more workers, have stronger capital growth, and have a larger probability of survival. However, the extent of reallocation does not prevent a large, persistent dispersion in TFPR among firms. The magnitude of this dispersion suggests that further reallocation could bring up first-order gains in aggregate productivity and output. Our results also suggest that misallocation comes mainly from distortions on the firms´ overall scale, rather than from distortions on the relative use of capital and labor.
    Date: 2019–05
  9. By: Soyoung Han (Peterson Institute for International Economics); Marcus Noland (Peterson Institute for International Economics)
    Abstract: Despite steady progress, women remain grossly underrepresented in corporate leadership worldwide. The share of women executive officers and board members increased between 1997 and 2017, but progress was not uniform. Partly in response to gender quotas, the shares of female board members have risen rapidly in some countries while lagging elsewhere. This Policy Brief reports results derived from the financial records of about 62,000 publicly listed firms in 58 economies over 1997–2017, which together account for more than 92 percent of global GDP. The authors conclude that if, as emerging evidence in the literature indicates, gender diversity contributes to superior firm performance, then progress in this area could help boost productivity globally. Policymakers and corporate leaders should consider supportive public and private policies, including more gender-neutral tracking in education, firm protocols that encourage gender balance in hiring and promotion, enforceable antidiscrimination laws, public support for readily available and affordable high-quality childcare and maternity and paternity leave, and quotas.
    Date: 2020–05

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