nep-bec New Economics Papers
on Business Economics
Issue of 2022‒09‒12
nine papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Firm Dynamics Under Decentralized Food Safety Regulation By Lin, Wen
  2. Small Firm Growth and the VAT Threshold : Evidence for the UK By Liu, Li; Lockwood, Ben; Tam. Eddy
  3. Firm-Level Political Risk and Dividend Payout By Oskar Kowalewski; Muhammad Farooq Ahmad; Saqib Aziz; Rwan El-Khatib
  4. The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany By Schmieder, Johannes F.; Wachter, Till von; Heining, Jörg
  5. A systematic literature review on the disruptions of artificial intelligence within the business world: in terms of the evolution of competences By Shengxing Yang
  6. Labor Misallocation Across Firms and Regions By Sebastian Heise; Tommaso Porzio
  7. From Macro to Micro: Large Exporters Coping with Common Shocks By Jean-Charles, Carluccio, Juan Bricongne; Lionel Gérard Fontagné; Guillaume Gaulier; Sebastian Stumpner
  8. Product licensing in a Stackelberg industry By Antelo, Manel; Bru, Lluís
  9. Firms and Unemployment Insurance Take-Up By Marta Lachowska; Isaac Sorkin; Stephen A. Woodbury

  1. By: Lin, Wen
    Keywords: International Development, Institutional and Behavioral Economics, Food Consumption/Nutrition/Food Safety
    Date: 2022–08
  2. By: Liu, Li (International Monetary Fund); Lockwood, Ben (University of Warwick); Tam. Eddy (King's College london)
    Abstract: This paper studies the effect of the VAT threshold on firm growth in the UK, using exogenous variation over time in the threshold, combined with turnover bin fixed effects, for identification. We find robust evidence that annual growth in turnover slows by about 1 percentage point when firm turnover gets close to the threshold, and weaker evidence of higher growth when the threshold is passed. Growth in firm costs shows a similar pattern, indicating that the response to the threshold is likely to be a real response rather than an evasion response. Firms that habitually register even when their turnover is below the VAT threshold (voluntary registered firms) have growth that is unaffected by the threshold, whereas firms that select into the Flat-Rate Scheme have a less pronounced slowdown response than other firms. Similar patterns of turnover and cost growth around the threshold are also observed for non-incorporated businesses. Finally, simulation results clarify the relative contribution of "noncrossers" ( firms who eventually register for VAT) and "non-crossers" (those who permanently stay below the threshold) in explaining our empirical findings. JEL Classification: H22 ; H25 ; H26
    Keywords: VAT ; size-based threshold ; firm growth
    Date: 2022
  3. By: Oskar Kowalewski (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Économie Management, F-59000 Lille, France); Muhammad Farooq Ahmad (SKEMA Business School – Université Côte d'Azur, Avenue Willy Brandt, Euralille, Lille, 59777 France); Saqib Aziz (Rennes School of Business, 2 Rue Robert d'Arbrissel Cedex, Rennes, 35065 France); Rwan El-Khatib (College of Business, Zayed University, United Arab Emirates)
    Abstract: We use a novel measure of firm-level political risk based on a textual search technique on firms’ quarterly earnings conference transcripts to explain dividend payouts in publicly listed U.S. firms. We find a positive and significant effect of firm-level political risk on dividend payouts, particularly in uncertainties related to economics, institutions, technology, trade, and security. The effect is more pronounced in firms with better corporate governance, less analyst follow-up, and higher growth opportunities. These results support the signaling role of dividends rather than the role of agency theory in explaining dividend payouts when firms are associated with higher levels of political risk. We also find the effect to be prominent after controlling for an aggregate measure of economic policy uncertainty and in poor and recessionary economic conditions. We address endogeneity concerns and selection bias by running placebo tests and performing propensity score matching technique.
    Keywords: : Dividends; Firm-Level Political Risk; Agency Theory; Signaling Theory; Economic Policy Uncertainty
    JEL: G30 G35 G38
    Date: 2022–08
  4. By: Schmieder, Johannes F. (Boston University ; NBER ; CEPR ; IZA); Wachter, Till von (University of California, Los Angeles ; NBER ; CEPR ; IZA); Heining, Jörg (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "We document the sources behind the costs of job loss over the business cycle using administrative data from Germany. Losses in annual earnings after displacement are large, persistent, and highly cyclical, nearly doubling in size during downturns. A large part of the long-term earnings losses and their cyclicality is driven by declines in wages. Key to these long-lasting wage declines and their cyclicality are changes in employer characteristics, as displaced workers switch to lower-paying firms. Changes in characteristics of workers or displacing firms explain little of the cyclicality, though nonemployment durations correlated with losses in employer effects play a role." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J23 J24 J6
    Date: 2022–08–09
  5. By: Shengxing Yang (Université Paris-Saclay)
    Abstract: The advancement of artificial intelligence has brought both opportunities and challenges to the business world, and its potentially disruptive impact has attracted the research interest of management scholars. This exploratory research applied a systematic literature review approach to explore the nexus between AI and competences to help both firms and individuals better address the disruptions from AI. After reviewing relevant publications from the Business Source Complete database for the past decade (2011-2021), we selected 65 articl debates and issues on AI and perspectives linked with competences. Furthermore, we synthesize two frameworks (RBV framework for firm-level; Key and STEM competences for individual-level) and an overview to gain a holistic understanding of the nexus between AI and competences. We found relatively little empirical evidence in the literature, the implementation of AI was still in its preliminary stages, and the frameworks we aggregated industry and yield richer insights.
    Keywords: Artificial Intelligence,Competences,Firm,Individual,Systematic literature review
    Date: 2022–06–07
  6. By: Sebastian Heise; Tommaso Porzio
    Abstract: We develop a frictional labor market model with multiple regions and heterogeneous firms to study how frictions impeding labor mobility across space affect the joint allocation of labor across firms and regions. Bringing the model to matched employer-employee data from Germany, we find that spatial frictions generate large misallocation of labor across firms within regions. By shielding firms from competition for workers from other regions, spatial frictions allow low productivity firms to expand, reducing aggregate productivity. Overall, we show that taking into account the characteristics of the local labor market is important to quantify the aggregate losses from spatial frictions.
    JEL: J6 O1 R1
    Date: 2022–07
  7. By: Jean-Charles, Carluccio, Juan Bricongne; Lionel Gérard Fontagné; Guillaume Gaulier; Sebastian Stumpner
    Abstract: Since Gabaix (2011), the role of changes in the performance of some very large firms in shaping aggregate outcomes has been intensively studied in the economic literature. Changes in the performance of a few large firms can arise due to idiosyncratic shocks or idiosyncratic reactions to common shocks. This paper provides direct evidence for the second channel using data on the universe of French firm-level exports and imports over 1993-2020. Granularity matters for the micro-dynamics of aggregate French exports over the long run : the granular residual explains 42% of the variance in aggregate export growth during the period. Moreover, it co-moves with the macro shocks : the largest firms do better than average in good times and worse in bad times. Studying firm-level performance during the Great Financial Crisis and the Pandemic reveals that top exporters contributed to the export collapses disproportionably more than their pre-crisis share of exports, even within finely defined markets. We investigate the reasons for such over-reaction of the top exporters using the Pandemic as a natural experiment. We find that a higher elasticity to demand shocks explains the larger reaction of top exporters to the Pandemic, with GVC exposure having weak explanatory power. Our findings have macro implications, as they help understand the macro reaction to foreign shocks, and micro implications, since they can inform micro models of exports.
    Keywords: granularity, exports, Covid crisis
    JEL: F14
    Date: 2022
  8. By: Antelo, Manel; Bru, Lluís
    Abstract: We study in a Stackelberg industry the licensing of a product that embodies an innovation (a quality-improving product). The innovation may be owned by the firm that acts as the leader or follower in the marketplace. If the innovation owner is the market leader, licensing takes place and consists of a revenue royalty with no fixed payment, but is not socially desirable, because it yields a more collusive industry. However, if the innovation owner is the market follower, licensing does not hold, even though it would be welfare enhancing and thus socially desirable. Thus, stimulating licensing by subsidizing a follower firm owning a product innovation would benefit both consumers and society as a whole.
    Keywords: Vertical differentiation, licensing, per-unit and ad-valorem royalties, market leader and follower, welfare
    JEL: D43 D45
    Date: 2022–01
  9. By: Marta Lachowska (W.E. Upjohn Institute for Employment Research); Isaac Sorkin (Stanford University and NBER); Stephen A. Woodbury (Michigan State University and W.E. Upjohn Institute for Employment Research)
    Abstract: We use administrative data to quantify the firm role in unemployment insurance (UI) take-up. First, there are firm effects in both claiming and appeals, and, consistent with deterrence effects, these are negatively correlated. Second, low-wage workers are less likely to claim and more likely to have their claims appealed than median-wage workers, and firm effects explain a large share of these income gradients. Third, high-claiming and low-appealing firms are desirable firms: they are higher-paying and have lower separation rates. Finally, the dominant source of targeting error in the UI system is that eligible workers do not apply. Our findings emphasize a novel dimension of the role of firms in the labor market, and have implications for the financing of UI.
    Keywords: Unemployment insurance, take-up rates, UI claims, appeals, firm effects
    JEL: H25 J63 J65 L20
    Date: 2022–07

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