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on Business Economics |
| By: | Ferreira, M.; Haber, T.; Rörig, C. |
| Abstract: | Using a unique dataset covering the universe of Portuguese firms and their credit situation we show that financially constrained firms are found across the entire firm size distribution, account for a larger total asset share compared to standard heterogeneous firms models, and exhibit a higher cyclical sensitivity, conditional on size. In light of these findings we reassess the importance of the firm distribution in shaping aggregate outcomes in the canonical model of heterogeneous firms with financial frictions. We augment the productivity process with ex-ante heterogeneity of firms, allowing us to match the distribution of constrained firms conditional on size. This, together with the fact that constrained firms have a higher capital elasticity, leads to up to four times larger aggregate fluctuations and capital misallocation. |
| Keywords: | Firm size, business cycle, financial accelerator |
| JEL: | E62 E22 E23 |
| Date: | 2021–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2176&r= |
| By: | Philippe Aghion (Harvard University [Cambridge]); Céline Antonin (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po); Simon Bunel; Xavier Jaravel (LSE - London School of Economics and Political Science) |
| Abstract: | We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, wages, prices and profits. Causal effects are estimated with event studies and a shift-share IV design leveraging pre-determined supply linkages and productivity shocks across foreign suppliers of industrial equipment. At all levels of analysis —plant, firm, and industry —the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices, and higher sales. The estimated elasticity of employment to automation is 0.28, compared with elasticities of 0.78 for profits, -0.05 for prices, and 0.37 for sales. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation is positive and significant only in industries that face international competition. These estimates can be accounted for in a simple monopolistic competition model: firms that automate more increase their profits but pass through some of the productivity gains to consumers, inducing higher scale and higher employment. The results indicate that automation can increase labor demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalized world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition. |
| Keywords: | Automation,Employment,Plant-level,Firm-level,Labor market,Product market,Manufacturing |
| Date: | 2020–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03403062&r= |
| By: | Sheng Guo (Department of Economics, Florida International University); Qiang Kang (Department of Finance, Florida International University); Oscar A. Mitnik (Inter-American Development Bank) |
| Abstract: | We study the dynamics of two governance constructs, managerial influence over the board of directors and chief executive officer (CEO) compensation, in firms undergoing distress during 1992-2019. Data show a clear trend that governance improves over time, which confounds the inference about the effects of distress on governance. Controlling for the secular changes with a bias-corrected matching estimator, we find that distressed firms reduce managerial board appointments and CEO pay, intensify managerial incentive alignment, and increase CEO turnover. The bulk of CEO compensation changes in distressed firms derives from the performance-related part of compensation, consistent with the "shareholder value" view of CEO compensation. |
| Keywords: | Corporate distress, Managerial influence, CEO compensation, CEO turnover, Bias-corrected matching estimator |
| JEL: | G33 G34 J33 J44 M50 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:2123&r= |
| By: | Aleksandar Vasilev |
| Abstract: | We introduce a military sector and external security considerations into a real-business-cycle setup with a public sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). We investigate the quantitative importance of the presence of a military sector and external threat considerations for the cyclical fluctuations in Bulgaria. We find the quantitative effect of such aspects to be very small, and thus not important for business cycle stabilization, or public finance issues, as in Bulgaria the spending on military is relatively small relative to the size of the economy. |
| Keywords: | Business cycles, military spending, security considerations, external threats, Bulgaria |
| JEL: | E24 E32 |
| Date: | 2021–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2021_03&r= |
| By: | Schulte, Elisabeth; Friehe, Tim; Langlais, Eric |
| JEL: | K13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242339&r= |
| By: | Roya Taherifar (University of Waikato); Mark J. Holmes (University of Waikato); Gazi M. Hassan (University of Waikato) |
| Abstract: | It is argued that pay inequality between CEOs and employees impacts employee performance, although empirical studies are inconsistent about the directionality of the effect. This paper shows that seemingly contradictory predictions of sociological and economic perspectives about the impact of pay inequality are more complementary than contradictory. Using data from a sample of public companies over the period 2004-2019, we show that pay inequality attributed to individuals’ skills, company characteristics, and labour market is positively associated with employee performance. However, this positive impact on employee performance declines at high levels of pay disparity. In addition, pay inequality based on other unknown factors has a negative impact on employee performance. |
| Keywords: | CEO compensation;pay inequality;pay ratio;employee performance;productivity |
| JEL: | D24 G34 J31 M12 M52 |
| Date: | 2021–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:21/14&r= |
| By: | Vera, Celia (Zirve University); Rendon, Silvio (Independent Researcher) |
| Abstract: | Peru's national policy on productivity and competitiveness relies on the Global Competitiveness Index (GCI) by the World Economic Forum. We analyze the subjective component of GCI and show that, in the labor market area, this index has been largely constructed with opinion data coming from a particular group of the business sector. The opinion data is based on a survey of 98 business executives, which mainly represent firms with 100 or more employees and account for only 1% of total firms in Peru. Further, the questionnaire exhibits obvious flaws, and the underlying viewpoint that less employment protection promotes productive and formal work is not aligned with the evidence. Thus, we do not find that GCI provides a solid base for policy advice. |
| Keywords: | labor markets, competitiveness, subjective data |
| JEL: | J08 J32 O43 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp180&r= |
| By: | Chang-Tai Hsieh; Esteban Rossi-Hansberg |
| Abstract: | The U.S. has experienced an industrial revolution in services. Firms in service industries, those where output has to be supplied locally, increasingly operate in more markets. Employment, sales, and spending on fixed costs such as R&D and managerial employment have increased rapidly in these industries. These changes have favored top firms the most and have led to increasing national concentration in service industries. Top firms in service industries have grown entirely by expanding into new local markets that are predominantly small and mid-sized U.S. cities. Market concentration at the local level has decreased in all U.S. cities but by significantly more in cities thatwere initially small. These facts are consistent with the availability of a new menu of fixed-cost-intensive technologies in service sectors that enable adopters to produce at lower marginal costs in any markets. The entry of top service firms into new local markets has led to substantial unmeasured productivity growth, particularly in small markets. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:21-34&r= |