nep-bec New Economics Papers
on Business Economics
Issue of 2021‒04‒26
eight papers chosen by
Vasileios Bougioukos
Bangor University

  1. Productivity Growth and Workers’ Job Transitions: Evidence from Censal Microdata By Elias Albagli; Mario Canales; Chad Syverson; Matias Tapia; Juan Wlasiuk
  2. Collusion in Supply Functions under Technology Licensing By Celen, Ihsan; Saglam, Ismail
  3. Repricing Avalanches By Makoto Nirei; José A. Scheinkman
  4. Does Common Ownership Influence the Financial Strategy of the French Pharmaceutical Firms? By Antonio Estache; Christophe Kieffer
  5. Risk-Taking and Monetary Policy Transmission: Evidence from Loans to SMEs and Large Firms By Cecilia R. Caglio; R. Matthew Darst; Ṣebnem Kalemli-Özcan
  6. Common Ownership of Competing Firms: Evidence from Australia By Andrew Leigh; Adam Triggs
  7. No Firm is an Island? How Industry Conditions Shape Firms' Aggregate Expectations By Andrade, Philippe; Coibion, Olivier; Gautier, Erwan; Gorodnichenko, Yuriy
  8. The Impact of Paid Family Leave on Employers: Evidence from New York By Ann P. Bartel; Maya Rossin-Slater; Christopher J. Ruhm; Meredith Slopen; Jane Waldfogel

  1. By: Elias Albagli; Mario Canales; Chad Syverson; Matias Tapia; Juan Wlasiuk
    Abstract: A large body of work has highlighted the importance of employment reallocation as a driver of aggregate productivity growth, but there is little direct evidence on the extent and nature of this process at the worker-firm level. We use an administrative matched employer-employee census for Chile to provide novel insights into the relationship between job transitions and productivity variation across firms. As many theories would predict, worker flows from lower- to higher-productivity firms are larger than those of the opposite sign. Empirically, however, this is only marginally so. Almost half of all transitions occur “down the firm productivity ladder.” This process is also highly heterogeneous along several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through nonemployment. They are also much more likely for young, high-skilled workers, whose job transitions comprise in an accounting sense the lion’s share of aggregate productivity change. Interestingly, workers with the highest job turnover rates contribute proportionally the least to aggregate productivity changes. Put together, this evidence implies that the productivity mechanics of job reallocation yields a net benefit, but this hides massive and heterogeneous gross flows underneath.
    JEL: D2 E23 J2 J6 L11
    Date: 2021–04
  2. By: Celen, Ihsan; Saglam, Ismail
    Abstract: We consider an infinitely-lived duopoly with asymmetric costs and study the incentives of the firms to collude or compete in supply functions under the possibility of technology licensing. Simulating the subgame-perfect Nash equilibria of alternative industry organizations, we show that licensing makes collusion harder; but it always has a positive effect on the welfares of consumers and the less efficient firm in the duopoly.
    Keywords: Duopoly; collusion; supply function equilibrium; licensing.
    JEL: D43 L13 O30
    Date: 2021–04–19
  3. By: Makoto Nirei; José A. Scheinkman
    Abstract: We present a menu-cost pricing model with a large but finite number n of firms. A firm’s nominal price increase lowers other firms’ relative prices, thereby inducing further nominal price increases. The distribution of these repricing avalanches converges as n→∞ to a mixture of Generalized Poisson Distributions (GPD), with an index of dispersion (variance/mean) that is a function of a single variable θ that is determined by the equilibrium of the continuous limit. The index of dispersion explodes as θ→1. We calibrate the model to the U.S. experience during 1988–2005 and obtain a θ surprisingly close to unity. Simulations show that a GPD fits well the distribution of avalanches but that, once we account for the dynamics, the multiplier effect derived from a firm adjusting prices by paying menu costs is even larger. We also show that the model can account for the positive relationship between inflation level and volatility that was observed in 1988–2005 in the U.S.
    JEL: E31
    Date: 2021–04
  4. By: Antonio Estache; Christophe Kieffer
    Abstract: This paper provides evidence on the growing degree of common ownership in the French pharmaceutical industry, on the associated anticompetitive risks and on the substantial differences across product markets within the industry. The assessment relies on the traditional Herfindahl-Hirschman Index, its modified version adopted by the common ownership literature and a new simpler alternative. These measures are then correlated with financial performance indicators collected at firm level. We find a positive and statistically significant relationship of concentration due to common ownership with the return on equity and the leverage level for some products.
    Keywords: Antitrust, Common Ownership, France, Index funds, Institutional Investors, Financial strategy, Market Power, Pharmaceuticals, Regulation, Shareholding
    Date: 2021–04
  5. By: Cecilia R. Caglio; R. Matthew Darst; Ṣebnem Kalemli-Özcan
    Abstract: Using confidential regulatory firm-bank-loan level data from the U.S., we document four new facts about the credit market. First, private SMEs typically utilize all available bank credit which comprises their entire balance sheet debt, compared to large listed firms who can switch between corporate bonds and drawing from credit lines. Second, SMEs borrow shorter maturity and pay higher interest rates relative to large publicly listed firms. Third, SMEs more frequently use future claims to their enterprise value as collateral rather than physical assets and real estate that can be liquidated upon default. Fourth, the relation between collateral and risk—where risk is measured by the loan spread—is positive for large listed firms but negative for SMEs. Motivated by these facts, we investigate the transmission of monetary policy and risk-taking behavior. We show that, when monetary policy is expansionary, banks do not lend differently to risky and non-risky firms, whether they are private SMEs or publicly listed firms. Instead, risk-taking is driven by credit demand since SMEs who lack collateral in terms of physical assets increase their leverage due to low interest rates, which increases their ability to payback the loan. Since SMEs cover 99 percent of all U.S. firms and over 50 percent of U.S. employment and output, our results have important implications for the aggregate boom-bust cycles in a low interest rate environment.
    JEL: E32 E44 E52 G20 O16
    Date: 2021–04
  6. By: Andrew Leigh; Adam Triggs
    Abstract: We provide the first estimates of the extent of common ownership of competing firms in Australia. Combining data on market shares and substantial shareholdings, we calculate the impact of common ownership on effective market concentration. Among firms where we can identify at least one owner, 31 percent share a substantial owner with a rival company. Analysing 443 industries, we identify 49 that exhibit common ownership, including commercial banking, explosives manufacturing, fuel retailing, insurance and iron ore mining. Across the Australian economy, common ownership increases effective market concentration by 21 percent. Our estimates imply that if listed firms seek to maximise the value of their investors’ portfolios, then they place the same value on $3.70 of their competitors’ profits as on $1 of their own profits. We discuss the limitations of the available data, and the potential implications of common ownership for competition in Australia.
    Keywords: horizontal shareholding, market concentration, Herfindahl-Hirschman Index, Modified Herfindahl-Hirschman Index, antitrust, competition
    JEL: L11 L12 D42 D43
    Date: 2021
  7. By: Andrade, Philippe; Coibion, Olivier; Gautier, Erwan; Gorodnichenko, Yuriy
    Date: 2020–06–01
  8. By: Ann P. Bartel; Maya Rossin-Slater; Christopher J. Ruhm; Meredith Slopen; Jane Waldfogel
    Abstract: We designed and fielded a survey of New York and Pennsylvania firms to study the impacts of New York's 2018 Paid Family Leave policy on employer outcomes. We match each NY firm to a comparable PA firm and use difference-in-difference models to analyze within-match-pair changes in outcomes. We find that PFL leads to an improvement in employers' rating of their ease of handling long employee absences, concentrated in the first policy year and among firms with 50-99 employees. We also find an increase in employee leave-taking in the second policy year, driven by smaller firms.
    JEL: I38 J21 J22 J23 J32 J38
    Date: 2021–04

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