nep-bec New Economics Papers
on Business Economics
Issue of 2021‒07‒12
thirteen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Productivity and human capital: The Italian case By Camilla Andretta; Irene Brunetti; Anna Rosso
  2. The role of jobs in explaining UK wage inequality By Luke Heath Milsom; Shihang Hou
  3. Large Firms and the Cyclicality of US Labour Productivity By Joshua Brault; Hashmat Khan
  4. The return on human (STEM) capital in Belgium By Gert Bijnens; Emmanuel Dhyne
  5. Small and smaller: How the economic outlook of small firms relates to size By Chris D'Souza; James Fudurich; Farrukh Suvankulov
  6. Monetary Policy and Welfare with Heterogeneous Firms and Endogenous Entry By Dudley Cooke; Tatiana Damjanovic
  7. Contracting institutions and firm integration around the world By Eppinger, Peter S.; Kukharskyy, Bohdan
  8. Firm and product survival analysis: Evidence from South African tax administrative and products data By Syden Mishi; Weliswa Matekenya; Leward Jeke; Ronney M. Ncwadi; Roseline T. Karambakuwa
  9. Price Competition Online: Branded Websites, Marketplace Selling and Price Competition By Oksana Loginova
  10. Private equity and bank capital requirements: Evidence from European firms By Marina-Eliza Spaliara; Serafeim Tsoukas; Paul Lavery
  11. Profitability, Productivity and Growth By Marek Ignaszak; Petr Sedlácek
  12. Technological Change and Domestic Outsourcing By Antonin Bergeaud; Clément Malgouyres; Clément Mazet-Sonilhac; Sara Signorelli
  13. Working from home during COVID-19 and beyond: Survey evidence from employers By Erdsiek, Daniel

  1. By: Camilla Andretta; Irene Brunetti; Anna Rosso
    Abstract: This paper investigates whether and how worker composition, ownership and management affect the productivity of firms. To this aim, we use a dataset obtained by integrating the micro-data drawn from Rilevazione su Imprese e Lavoro (RIL), a survey conducted by Inapp in 2010 and 2015 on a representative sample of Italian limited liability and partnership firms, with the AIDA archive containing comprehensive information on the balance sheets of almost all the Italian corporations. We apply different regression models and the findings reveal that a higher share of skilled workers within firms and more experienced managers are associated with higher productivity levels. In addition, firms run by managers with higher education are more likely to introduce innovation. Finally, family ownership and the coincidence of management with ownership are negatively related with firm productivity.
    Keywords: firm, Human capital, productivity
    JEL: J24 D24
    Date: 2021–07–08
  2. By: Luke Heath Milsom; Shihang Hou
    Abstract: Previous work that seeks to decompose wage variance into worker and firm components often ends in a puzzle: sorting between firms and workers explains a large fraction of the log wage variance but firm differences are only a small component.
    Date: 2021–06–15
  3. By: Joshua Brault (Department of Economics, Carleton University); Hashmat Khan (Department of Economics, Carleton University)
    Abstract: We present novel stylized facts on the declining cyclicality of labour productivity for large firms. Changes in their output-labour productivity correlations are close to those observed in the aggregate data, unlike small firms. We find support for the hypothesis that this change is driven by increased labour market flexibility. In response to a 1% increase in real sales large firms’ hire an additional 75 workers in the pre-1985 period, compared to an additional 90 workers in the post-1985 period. Our findings are of direct relevance to the growing literature on the role of large firms in driving US business cycles.
    Keywords: Large Firms, Labour Productivity, Business Cycles
    JEL: D22 E24 E32
    Date: 2021–03–13
  4. By: Gert Bijnens; Emmanuel Dhyne
    Abstract: Whilst overall productivity growth is stalling, firms at the frontier are still able to capture the benefits of the newest technologies and business practices. This paper uses linked employer-employee data covering all Belgian firms over a period of almost 20 years and investigates the differences in human capital between highly productive firms and less productive firms. We find a clear positive correlation between the share of high-skilled and STEM workers in a firm's workforce and its productivity. We obtain elasticities of 0.20 to 0.70 for a firm's productivity as a function of the share of high-skilled workers. For STEM (science, technology, engineering, mathematics) workers, of all skill levels, we find elasticities of 0.20 to 0.45. More importantly, the elasticity of STEM workers is increasing over time, whereas the elasticity of high-skilled workers is decreasing. This is possibly linked with the increasing number of tertiary education graduates and at the same time increased difficulties in filling STEM-related vacancies. Specifically, for high-skilled STEM workers in the manufacturing sector, the productivity gain can be as much as 4 times higher than the gain from hiring additional high-skilled non-STEM workers. To ensure that government efforts to increase the adoption of the latest technologies and business practices within firms lead to sustainable productivity gains, such actions should be accompanied by measures to increase the supply and mobility of human (STEM) capital. Without a proper supply of skills, firms will not be able to reap the full benefits of the digital revolution.
    Keywords: education, human capital, linked employer-employee data, productivity, Skills
    JEL: E24 I26 J24
    Date: 2021–07–08
  5. By: Chris D'Souza; James Fudurich; Farrukh Suvankulov
    Abstract: Firms with fewer than 100 workers employ about 65 percent of the total labour force in Canada. An online survey experiment was conducted with firms of this size in Canada in 2018–19. We compare the responses of small and micro firms to explore how their characteristics and economic outlooks relate to their size.
    Keywords: Business fluctuations and cycles; Firm dynamics
    JEL: C8 C83 D2 D22 E3 E32
    Date: 2021–07
  6. By: Dudley Cooke (University of Exeter); Tatiana Damjanovic (Durham University Business School)
    Abstract: This paper studies the welfare consequences of monetary policy in a stickywage New Keynesian model with heterogenous firms and endogenous entry. Cross-sectional dispersion in price-markups and labor shares is generated by a translog demand structure and aggregate fluctuations in these variables are driven by firm entry and selection. We show that when the distribution of firm-level productivity is Pareto, selection is such that the aggregate price-markup and labor share are fixed. If firm entry is static, the divine coincidence appears, and wage stability is optimal. If firm entry is dynamic, or selection is weakened, optimal stabilization policy accounts for the size distribution of firms. We calculate the welfare loss of ignoring firm entry and selection to be 0.1 − 0.3 percent of steady state consumption.
    Keywords: Firm Entry, Heterogenous Firms, Optimal Monetary Policy, Translog Preferences
    JEL: E32 E52 L11
    Date: 2021–02
  7. By: Eppinger, Peter S.; Kukharskyy, Bohdan
    Abstract: Firm integration is fundamentally shaped by contractual frictions. But do better contracting institutions, reducing these frictions, induce firms to be more or less deeply integrated? To address this question, this paper exploits unique micro data on ownership shares across more than 200,000 firm pairs worldwide, including domestic and cross-border ownership links. We uncover a new stylized fact: Firms choose higher ownership shares in subsidiaries located in countries with better contracting institutions. We develop a Property-Rights Theory of the multinational firm featuring partial ownership that rationalizes this pattern and guides our econometric analysis. The estimations demonstrate that better contracting institutions favor deeper integration, in particular in relationship-specific industries.
    Keywords: firm integration,contracting institutions,multinational firms,Property-Rights Theory,ownership shares
    JEL: F21 F23 D02 D23 L14 L23
    Date: 2021
  8. By: Syden Mishi; Weliswa Matekenya; Leward Jeke; Ronney M. Ncwadi; Roseline T. Karambakuwa
    Abstract: Enterprise development, especially expansion into export markets, is essential to create employment and unlock growth potential in many economies, including in sub-Saharan Africa. However, both firm and product survival (mainly in the export market) is not sufficiently documented to inform business development and export growth strategies.
    Keywords: Enterprises, Survival analysis, Firm performance, Exports, Employment, Special Economic Zones
    Date: 2021
  9. By: Oksana Loginova (Department of Economics, University of Missouri)
    Abstract: I consider a market for differentiated products with an online marketplace (the platform) and two types of firms. Marketplace firms sell through the platform. Branded firms sell to consumers directly and, if they choose so, through the platform. When a branded firm joins the platform, the firm expands its reach beyond its branded website/physical store(s) to consumers who visit the platform for all their purchases. The drawback is that the firm has to pay a referral fee for all sales on the platform, some of which are from its loyal consumers who would otherwise have purchased from the firm directly. I investigate the role of the firm composition in determining the equilibrium outcome. Interestingly, a higher fraction of branded firms translates into more firms on the platform and intense price competition. In the midst of the COVID-19 pandemic consumers who used to shop at physical stores turn to the platform. I show that if they do (do not) look into other products, more (fewer) branded firms will join the platform in equilibrium.
    Keywords: pricing, competition, online marketplace, platform, brands
    JEL: C72 D43 L11 L13 M31
    Date: 2021
  10. By: Marina-Eliza Spaliara; Serafeim Tsoukas; Paul Lavery
    Abstract: Using firm-level data from 16 euro-area countries over 2008-2014, we investigate how the growth and investment of bank-affiliated private equity-backed companies evolve after the European Banking Authority (EBA) increases capital requirements for their parent banks. We find that portfolio companies connected to affected banks reduce their investment, asset growth, and employment growth following the capital exercise. We further show that the effect is stronger for companies likely to face financial constraints. Finally, the findings indicate that the negative effect of the capital exercise is muted when the private equity sponsor is more experienced.
    Keywords: Private equity buyouts; bank capital requirements; financial constraints; company performance
    JEL: G32 G34
    Date: 2021–06
  11. By: Marek Ignaszak; Petr Sedlácek
    Abstract: Recent empirical evidence suggests that firm selection and growth are largely demand-driven. We incorporate this feature into a model of endogenous growth in which heterogeneous firms innovate and survive based on profitability, rather than productivity alone. We show analytically that firm-level demand variation impacts aggregate growth by changing firms’ incentives to innovate. Estimating our model on U.S. Census firm data, we quantify that 20% of aggregate growth is demand-driven and that the macroeconomic impact of growth policies is fundamentally different compared to a model driven by productivity variation alone. We find empirical support for our model mechanism in firm-level data.
    Date: 2021–05–28
  12. By: Antonin Bergeaud (Banque de France - Banque de France - Banque de France); Clément Malgouyres (IPP - Institut des politiques publiques, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - 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); Clément Mazet-Sonilhac (Banque de France - Banque de France - Banque de France, Institut d'Études Politiques [IEP] - Paris); Sara Signorelli (UvA - University of Amsterdam [Amsterdam])
    Abstract: Domestic outsourcing has grown substantially in developed countries over the past two decades. This paper addresses the question of the technological drivers of this phenomenon by studying the impact of the staggered diffusion of broadband internet in France during the 2000s. Our results confirm that broadband technology increases firm productivity and the relative demand for high-skill workers. Further, we show that broadband internet led firms to outsource some non-core occupations to service contractors, both in the low and high-skill segments. In both cases, we find that employment related to these occupations became increasingly concentrated in firms specializing in these activities, and was less likely to be performed in-house within firms specialized in other activities. As a result, after the arrival of broadband internet, establishments become increasingly homogeneous in their occupational composition. Finally, we provide suggestive evidence that high-skill workers experience salary gains from being outsourced, while low-skill workers lose out.
    Keywords: Broadband,Firm organization,Labor market,Outsourcing
    Date: 2021–06
  13. By: Erdsiek, Daniel
    Abstract: Based on survey responses from more than 1,700 managers in Germany, this study elicits employers' perceptions of working from home during COVID-19 and their long-term expectations for the time after the pandemic. Based on employers' forecasts of the share of employees working from home post-COVID, the within-firm intensity of the expected shift is quantified. Many firms expect a persistent shift towards working from home induced by the COVID-19 pandemic. Larger firms and firms with pre-COVID use of working from home are most likely to expect a persistent and intensive shift. As the empirical results indicate, underlying mechanisms for the expected shift might include learning effects facilitating an improved perception of working from home, investments in physical and human capital, a general push in firms' digital progress, and the fact that most firms do not observe a reduction in productivity due to working from home during COVID-19.
    Keywords: COVID-19,working from home,digitalisation,firm-level,managers,survey
    JEL: D22 D23 L22 O33 M54
    Date: 2021

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