nep-bec New Economics Papers
on Business Economics
Issue of 2024‒06‒10
six papers chosen by
Vasileios Bougioukos, London South Bank University

  1. Does gender of firm ownership matter? Female entrepreneurs and the gender pay gap By Alexander S. Kritikos; Mika Maliranta; Veera Nippala; Satu Nurmi
  2. Environmental Regulation and Firms’ Extensive Margin Decisions By Li, Shuo; Wang, Min
  3. Dynamics of High-Growth Young Firms and the Role of Venture Capitalists By Yoshiki Ando
  4. Has Market Concentration in U.S. Manufacturing Increased? By Mary Amiti; Sebastian Heise
  5. U.S. Worker Mobility Across Establishments within Firms: Scope, Prevalence, and Effects on Worker Earnings By Jeronimo Carballo; Richard Mansfield; Charles Adam Pfander
  6. Gender board diversity across Europe throughout four decades By Hubert Drazkowski; Joanna Tyrowicz; Sebastian Zalas

  1. By: Alexander S. Kritikos (DIW Berlin, University of Potsdam, GLO Essen, IAB Nuremberg, CEPA); Mika Maliranta (University of Jyväskylä); Veera Nippala (University of Jyväskylä); Satu Nurmi (Statistics Finland)
    Abstract: We examine how the gender of business-owners is related to the wages paid to female relative to male employees working in their firms. Using Finnish register data and employing firm fixed effects, we find that the gender pay gap is – starting from a gender pay gap of 11 to 12 percent - two to three percentage-points lower for hourly wages in female-owned firms than in male-owned firms. Results are robust to how the wage is measured, as well as to various further robustness checks. More importantly, we find substantial differences between industries. While, for instance, in the manufacturing sector, the gender of the owner plays no role for the gender pay gap, in several service sector industries, like ICT or business services, no or a negligible gender pay gap can be found, but only when firms are led by female business owners. Businesses in male ownership maintain a gender pay gap of around 10 percent also in the latter industries. With increasing firm size, the influence of the gender of the owner, however, fades. In large firms, it seems that others – firm managers – determine wages and no differences in the pay gap are observed between male- and female-owned firms.
    Keywords: entrepreneurship, gender pay gap, discrimination, linked employer-employee data
    JEL: J16 J24 J31 J71 L26 M13
    Date: 2024–05
  2. By: Li, Shuo (Faculty of Business and Economics, The University of Hong Kong, Hong Kong, China); Wang, Min (China Center for Economic Research, National School of Development, Peking University, Beijing, China)
    Abstract: The paper provides a comprehensive investigation of the effects of environmental regulations on Chinese firms’ extensive margins. Using registration information of all firms in 35 industries from 1991 to 2010, we show that environmental regulations deter firm entry, increase firm exit and reduce the net entry of firms. Specifically, in response to such regulations, large, long-lived and private entrants are less likely to enter the market, and small and long-lived incumbents are more likely to exit. This concentrates the market and expands the state sector in pollution-intensive industries. Moreover, the entrants are more heavily regulated than incumbents. We also find evidence that, in response to environmental regulations, firms in regulated locations are more likely to create new firms in pollution-intensive industries in unregulated areas. However, these spatial spillover effects are negligible, posing little threat to the estimation of environmental regulatory impacts on firm entry in our setting and therefore alleviating the concern of pollution relocation.
    Keywords: Environmental Regulation; Firm Entry; Firm Exit; Equity Investment; Spatial Spillover; Inter-city Investment
    JEL: L51 O44 Q52 Q58 R38
    Date: 2022–10–12
  3. By: Yoshiki Ando (University of Pennsylvania)
    Abstract: The role that venture capital (VC) plays in helping promising startups achieve high growth is examined. Three facts are documented from administrative US Census data and proprietary VC datasets. First, VC-backed firms achieve substantial growth in employment and payroll compared to non-VC-backed firms. Second, VC-backed firms typically raise funding more than 10 times their revenue at age 0 and intensively invest in research and development. Third, venture capitalists acquire around 3.3% extra equity stakes relative to Angel investors. Based on the evidence, I develop a firm dynamics model with endogenous firm productivity and choice of financing from VC, Angel (non-VC-equity) investors, and banks. Venture capitalists provide equity-based funding and managerial advice, but they are in limited supply. The model shows the benefit of VC and Angel financing over bank financing for high-potential firms because of their large investment in innovation, which creates a debt repayment issue with bank financing when innovation is unsuccessful. VC-backed firms achieve substantial growth as a result of endogenous sorting, equity-based funding, and managerial advice. The calibrated model implies that venture capitalists’ advice accounts for around 24% of the growth of VC-backed firms. Finally, policy experiments predict that subsidies to innovation expenditures or equity investments enhance aggregate output and consumption in the steady state in contrast to bank loan subsidies.
    Keywords: Venture capital, firm dynamics, innovation, upfront investment, equity, debt, default, endogenous sorting
    JEL: D22 D25 E22 G24 G30 O32
    Date: 2024–05–01
  4. By: Mary Amiti; Sebastian Heise
    Abstract: The increasing dominance of large firms in the United States has raised concerns about pricing power in the product market. The worry is that large firms, facing fewer competitors, could increase their markups over marginal costs without fear of losing market share. In a recently published paper, we show that although sales of domestic firms have become more concentrated in the manufacturing sector, this development has been accompanied by the entry and growth of foreign firms. Import competition has lowered U.S. producers’ share of the U.S. market and put smaller, less efficient domestic firms out of business. Overall, market concentration in manufacturing was stable in recent decades, though import penetration has greatly altered the makeup of the U.S. manufacturing sector.
    Keywords: concentration; markups; import competition
    JEL: E2 F0
    Date: 2024–05–03
  5. By: Jeronimo Carballo; Richard Mansfield; Charles Adam Pfander
    Abstract: Multi-establishment firms account for around 60% of U.S. workers’ primary employers, providing ample opportunity for workers to change their work location without changing their employer. Using U.S. matched employer-employee data, this paper analyzes workers’ access to and use of such between-establishment job transitions, and estimates the effect on workers’ earnings growth of greater access, as measured by proximity of employment at other within-firm establishments. While establishment transitions are not perfectly observed, we estimate that within-firm establishment transitions account for 7.8% percent of all job transitions and 18.2% of transitions originating from the largest firms. Using variation in worker’s establishment locations within their firms’ establishment network, we show that having a greater share of the firm’s jobs in nearby establishments generates meaningful increases in workers’ earnings: a worker at the 90th percentile of earnings gains from more proximate within-firm job opportunities can expect to enjoy 2% higher average earnings over the following five years than a worker at the 10th percentile with the same baseline earnings.
    Date: 2024–05
  6. By: Hubert Drazkowski (Group for Research in Applied Economics (GRAPE)); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw; Institute of Labor Economics (IZA)); Sebastian Zalas (Group for Research in Applied Economics (GRAPE))
    Abstract: We present a Gender Board Diversity Dataset (GBDD), which provides a cross-country perspective on women in management and supervisory boards that spans between 1985 and 2020. The data covers 43 European countries and accounts for private companies in addition to the stock-listed ones. GBBD was created using firm-level Orbis data. Our measures are based on a sample of more than 28 million unique firms observed for nearly seven years on average and reporting data about nearly 59 million individuals on management and supervisory boards. We provide the measures at the level of industry, country and year (the firm-level data is proprietary). We provide three measures. The first is the share of women among all board members in a given industry, country, and year. The second one is the average of the shares of women across firms in a given industry, country and year. We also provide a new measure: the share of firms in a given industry, country and year which report no single woman on their board(s).
    Keywords: gender, board, diversity
    JEL: C81 J16 M12 M51 J24
    Date: 2023

This nep-bec issue is ©2024 by Vasileios Bougioukos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.