nep-bec New Economics Papers
on Business Economics
Issue of 2022‒09‒26
nine papers chosen by
Vasileios Bougioukos
London South Bank University

  1. The UK Gender Pay Gap: Does Firm Size Matter? By Jones, Melanie; Kaya, Ezgi
  2. Growth expectations and the dynamics of firm entry By Enisse Kharroubi
  3. Migration and firm-level productivity By Richard Fabling; David C Maré; Philip Stevens
  4. International Assortative Matching in the European Labor Market By Thomas Peeters; Jan C. van Ours
  5. A Snapshot on the Characteristics and Dynamics of Austrian Exporting Firms By Bernhard Dachs; Robert Stehrer; Maria Yoveska
  6. A Descriptive Method of Firm Size Transition Dynamics Using Markov Chain By Boyang You; Kerry Papps
  7. Dynamics of First-Time Patenting Firms By Nilsen, Øivind A.; Raknerud, Arvid
  8. Reallocation of Mutual Fund Managers and Capital Raising Ability By Yue Xu
  9. The wage effects of employers' associations: A case study of the private schools sector By Martins, Pedro S.

  1. By: Jones, Melanie; Kaya, Ezgi
    Abstract: Motivated by the introduction of the UK Gender Pay Gap Reporting legislation to large firms, defined as over 250 employees, we use linked employee-employer panel data from the Annual Survey of Hours and Earnings to explore pre-legislation variation in the gender pay gap by firm size. In doing so, we integrate two prominent but distinct empirical regularities in the labour economics literature, namely the gender pay gap and firm-size wage premium. We find evidence of both a larger raw and unexplained gender pay gap among large relative to smaller firms in the UK private sector even after controlling for unobserved worker heterogeneity, consistent with the legislation being effectively targeted. However, this conclusion changes after accounting for unobserved firm level heterogeneity and focusing on within-firm gender pay gaps. Large firms have smaller within-firm raw gender pay gaps and similar unexplained gender pay gaps when compared to smaller firms. We find that this conclusion is not specific to the current firm size threshold of 250 employees but holds more generally, including at proposed extensions of the legislation to smaller firms.
    Keywords: gender pay gap,firm-size wage premium,linked employee-employer panel data,pay transparency
    JEL: J31 J71 J78
    Date: 2022
  2. By: Enisse Kharroubi
    Abstract: How do aggregate conditions affect the dynamics of firm entry? Do recessions force more firms out, allowing for more firms to enter subsequently? Or does this process require other circumstances to thrive? I look into these questions using sectoral data on firm entry and exit for the main economies of the Euro Area over 2009-2019. My main finding is that expected, rather than current, GDP growth shapes the dynamics of firm entry. Specifically, I find that entry increases with past exits at the sector-level, but only when aggregate GDP growth is forecasted to be strong. Also, with strong growth forecasts, past entry developments weight less on the subsequent sectoral entry dynamics. Periods of low entry and high exit, can therefore be followed by strong entry subsequently, when the economy is expected to grow strongly. These findings are robust to the inclusion of several controls. This includes the quality of insolvency proceedings, firms' ability to obtain credit or the presence of barriers to entry. Finally, I show that expectations of private and public investment drive the impact of growth expectations on the dynamics of firm entry.
    Keywords: firm entry, exit, growth expectations, private and public investment
    JEL: D25 D84 E32 E62 H32 M13
    Date: 2022–08
  3. By: Richard Fabling (Productivity Commission); David C Maré (Motu Research); Philip Stevens (Productivity Commission)
    Abstract: We use linked employer-employee microdata for New Zealand to examine the relationship between firm-level productivity, wages and workforce composition. Jointly estimating production functions and firm-level wage bill equations, we compare migrant workers with NZ-born workers, through the lens of a derived "productivity-wage gap" that captures the difference in relative contribution to output and the wage bill. Whether we look at all industries using a common production function, or separately estimate results for the five largest sectors, we find that skilled and long-term migrants make contributions to output that exceed moderately-skilled NZ-born workers, with that higher contribution likely being due to a mix of skill differences and/or effort which is largely reflected in higher wages. Conversely, migrants that are not on skilled visas are associated with lower output and lower wages than moderately-skilled NZ-born, also consistent with a skills/effort narrative. The share of employment for long-term migrants has grown over time (from 2005 to 2019) and we show that their relative contribution to output appears to be increasing over the same period. Finally, we present tentative evidence that high-skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which is suggestive of complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms.
    Keywords: Migrant labour, firm productivity, worker sorting, wage determinants, quality-adjusted labour input
    JEL: D24 J15 J31
    Date: 2022–07
  4. By: Thomas Peeters (Erasmus University Rotterdam); Jan C. van Ours (Erasmus University Rotterdam)
    Abstract: We investigate whether national borders within Europe hinder the assortative matching of workers to firms in a high skilled labor market. We characterize worker productivity as the ability to contribute to physical output and define firm productivity as the capacity to transform physical output into revenues. We rank workers and firms according to their individual productivity estimates and study the ensuing rank correlation to gauge the degree of assortative matching within and across countries. We find strong evidence for positive assortative matching at the national level, and even more so at the international level. This suggests national borders do not prevent workers and firm from pursuing profitable complementarities in production.
    Keywords: Assortative matching, international worker mobility, football managers
    JEL: M51 J63 J24 Z22
    Date: 2022–09–01
  5. By: Bernhard Dachs; Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Maria Yoveska
    Abstract: In view of the importance of the export economy for Austria this study examines the role and characteristics of Austrian exporting firms compared with non-exporting firms. Specifically, it assesses how the share of exporting firms has developed in recent years, whether exports have become more important for firms over time and to what extent exporters have an advantage over other firms (export premium). The results show that about two third of the Austrian manufacturing firms are engaged in exporting activities and indicate that – in line with existing literature - exporting firms are larger, more productive, generate higher surpluses, invest more, and spend more on environmental protection than non-exporters. Further, the results highlight that only a small number of firms account for a large share of Austrian manufacturing exports. Finally, the results point towards a mutual positive relationship between export behaviour, productivity, and R&D expenditures.
    Keywords: export premium, firm-level analysis, productivity and exporting
    JEL: D22 F14
    Date: 2022–09
  6. By: Boyang You; Kerry Papps
    Abstract: Social employment, which is mostly carried by firms of different types, determines the prosperity and stability of a country. As time passing, the fluctuations of firm employment can reflect the process of creating or destroying jobs. Therefore, it is instructive to investigate the firm employment (size) dynamics. Drawing on the firm-level panel data extracted from the Chinese Industrial Enterprises Database 1998-2013, this paper proposes a Markov-chain-based descriptive approach to clearly demonstrate the firm size transfer dynamics between different size categories. With this method, any firm size transition path in a short time period can be intuitively demonstrated. Furthermore, by utilizing the properties of Markov transfer matrices, the definition of transition trend and the transition entropy are introduced and estimated. As a result, the tendency of firm size transfer between small, medium and large can be exactly revealed, and the uncertainty of size change can be quantified. Generally from the evidence of this paper, it can be inferred that small and medium manufacturing firms in China have greater job creation potentials compared to large firms over this time period.
    Date: 2022–08
  7. By: Nilsen, Øivind A. (Dept. of Economics, Norwegian School of Economics and Business Administration); Raknerud, Arvid (SSB)
    Abstract: This paper investigates firm dynamics in the period before, during, and after an event consisting of a first published patent application. The analysis is based on patent data from the Norwegian Industrial Property Office merged with data from several business registers covering a period of almost 20 years. We apply an event study design and use matching to control for confounding factors. The first patent application by a young firm is associated with significant growth in employment, output, assets and public research funding. Moreover, our results indicate that economic activity starts to increase at least three years ahead of the first patent application. However, we find no evidence of additional firm growth after patent approval for successful applicants. Our findings indicate that the existence of a properly functioning patenting system supports innovation activities, especially early in the life cycle of firms.
    Keywords: Patenting; Firm performance; Panel data; Event study design
    JEL: C33 D22 O34
    Date: 2022–08–30
  8. By: Yue Xu (Aarhus University, Department of Economics and Business Economics, and CREATES)
    Abstract: This paper establishes the fund manager’s capital raising ability as an important managerial skill that fund firms exploit to generate higher firm revenues. Fund firms reallocate fund managers with high capital raising ability to other funds with large outflows. Investors demand the capital raising ability of managers and reward it by investing more capital despite lower future alphas. A team with a larger experience difference between reallocated managers and existing managers attracts more capital inflows, suggesting that there is a synergy effect on the fund manager’s capital raising ability. JEL classification: G11, G14, G23 Key words: Mutual Fund, Manager, Fund Firm, Reallocation, Revenue
    Date: 2022–08–31
  9. By: Martins, Pedro S.
    Abstract: Does employers' association (EA) membership affect the wages paid by firms? Such effects could follow from several channels, including increased productivity, different management practices, or employer collusion promoted by EA affiliation. We test these hypotheses drawing on detailed matched employer-employee panel data, including timevarying EA affiliation and worker mobility across firms. We consider the case of private schools in Portugal, 2010-2020, and its EA, and develop a methodology to delimit the sector's scope. We find that, even when controlling extensively for worker characteristics, including worker fixed effects, EA firms pay significantly higher wages. However, when controlling for firm fixed effects, these wage differences are significantly reduced or disappear. Our evidence indicates that the EA wage premium can be largely explained by the selection of high-wage firms (but not high-wage workers) into EA membership.
    Keywords: Employers organisations,Worker mobility,Social dialogue
    JEL: J53 J62 L40
    Date: 2022

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