nep-bec New Economics Papers
on Business Economics
Issue of 2024‒05‒06
five papers chosen by
Vasileios Bougioukos, London South Bank University

  1. The Impact of Immigration on Firms and Workers: Insights from the H-1B Lottery By Parag Mahajan; Nicolas Morales; Kevin Shih; Mingyu Chen; Agostina Brinatti
  2. Revisiting Disability Employment and Firm Productivity in Japan By MATSUMOTO Kodai; OKUMURA Yota; NAKAMURA Kenta; MORIMOTO Atsushi; YUGAMI Kazufumi
  3. Evidence on the adoption of Artificial Intelligence: The role of skills shortage By Carioli, Paolo; Czarnitzki, Dirk; Fernández, Gastón P.
  4. Digital adoption during COVID-19: Cross-country evidence from microdata By Flavio Calvino; Chiara Criscuolo; Antonio Ughi
  5. Incentive Contracts and Peer Effects in the Workplace By Pau Milán; Nicolás Oviedo Dávila

  1. By: Parag Mahajan; Nicolas Morales; Kevin Shih; Mingyu Chen; Agostina Brinatti
    Abstract: We study how random variation in the availability of highly educated, foreign-born workers impacts firm performance and recruitment behavior. We combine two rich data sources: 1) administrative employer-employee matched data from the US Census Bureau; and 2) firm level information on the first large-scale H-1B visa lottery in 2007. Using an event-study approach, we find that lottery wins lead to increases in firm hiring of college-educated, immigrant labor along with increases in scale and survival. These effects are stronger for small, skill-intensive, and high-productivity firms that participate in the lottery. We do not find evidence for displacement of native-born, college-educated workers at the firm level, on net. However, this result masks dynamics among more specific subgroups of incumbents that we further elucidate.
    Keywords: Immigration, firm dynamics, productivity, H-1B visa, high-skilled migration
    JEL: F22 J61
    Date: 2024–04
  2. By: MATSUMOTO Kodai; OKUMURA Yota; NAKAMURA Kenta; MORIMOTO Atsushi; YUGAMI Kazufumi
    Abstract: We use high-quality panel data that matched administrative data on the employment of persons with disabilities with financial information on Japanese firms to examine the causal effects of the employment of persons with disabilities on firms' financial indicators and productivity, that is, not only the average effect across firms, but also the heterogeneity across various firm types. First, in most cases, we find that the employment of persons with disabilities does not have a statistically significant effect on firm performance. This result is consistent with the manufacturing literature and we show that these trends also hold true for non-manufacturing firms. Second, we do not find an extensive or intensive margin of employment for persons with disabilities, as the increased employment of persons with disabilities has no impact on firm performance, regardless of whether a firm employed persons with disabilities at the beginning of the period of analysis. Third, we observe the benefit of employing persons with disabilities among medium-sized firms with subsidiaries that specialize in this type of employment. Specifically, sales, operating income, and net income per regular employee increase as the employment of persons with disabilities increases.
    Date: 2024–04
  3. By: Carioli, Paolo; Czarnitzki, Dirk; Fernández, Gastón P.
    Abstract: Artificial Intelligence (AI) is considered to be the next general-purpose technology, with the potential of performing tasks commonly requiring human capabilities. While it is commonly feared that AI replaces labor and disrupts jobs, we instead investigate the potential of AI for overcoming increasingly alarming skills shortages in firms. We exploit unique German survey data from the Mannheim Innovation Panel on both the adoption of AI and the extent to which firms experience scarcity of skills. We measure skills shortage by the number of job vacancies that could not be filled as planned by firms, distinguishing among different types of skills. To account for the potential endogeneity of skills shortage, we also implement instrumental variable estimators. Overall, we find a positive and significant effect of skills shortage on AI adoption, the breadth of AI methods, and the breadth of areas of application of AI. In addition, we find evidence that scarcity of labor with academic education relates to firms exploring and adopting AI.
    Keywords: Artificial Intelligence, skills shortage, CIS data
    JEL: J63 M15 O14
    Date: 2024
  4. By: Flavio Calvino; Chiara Criscuolo; Antonio Ughi
    Abstract: The COVID-19 pandemic caused an unprecedented global economic downturn, affecting productivity, business dynamics, and digital technology adoption. Using a comprehensive commercial database from Spiceworks Ziff Davis, this study analyses the firm-level drivers of digitalisation during the pandemic across 20 European countries. The findings show that a considerable share of firms introduced new digital technologies during the COVID-19 crisis. Notably, firms that were larger, more digitalised, and more productive before the pandemic were more likely to introduce new digital technologies in 2020 and 2021. Additionally, firms with pre-existing complementary technologies had a higher likelihood of adopting digital applications that gained momentum during the pandemic (such as digital commerce, collaborative software, cloud, and analytics). These patterns may increase polarisation among the best-performing firms and the rest of the business population. Public policy can play a key role in fostering an inclusive digital transformation in the post-pandemic era.
    Keywords: COVID-19, Digitalisation, Productivity, Technology adoption
    JEL: O33 D22
    Date: 2024–04–24
  5. By: Pau Milán; Nicolás Oviedo Dávila
    Abstract: Risk-averse workers in a team exert effort to produce joint output. Workers’ incentives are connected via chains of productivity spillovers, represented by a network of peer-effects. We study the problem of a principal offering wage contracts that simultaneously incentivize and insure agents. We solve for the optimal linear contract for any network and show that optimal incentives are loaded more heavily on workers that are more central in a specific way. We conveniently link firm profits to network structure via the networks spectral properties. When firms can’t personalize contracts, better connected workers ex- tract rents. In this case, a group composition result follows: large within-group differences in centrality can decrease firm’s profits. Finally, we find that modular production has important implications for how peer structures distribute incentives.
    Keywords: moral hazard, Networks, Incentives, Organizations, contracts
    JEL: D11 D52 D53 G52
    Date: 2024–04

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