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on Business Economics |
| By: | José María Barrero; Nicholas Bloom; Kathryn Bonney; Cory Breaux; Catherine Buffington; Steven J. Davis; Lucia Foster; Brian McKenzie; Keith Savage; Cristina Tello-Trillo |
| Abstract: | Timely business-level measures of work from home (WFH) are scarce for the U.S. economy. We review prior survey-based efforts to quantify the incidence and character of WFH and describe new questions that we developed and fielded for the Business Trends and Outlook Survey (BTOS). Drawing on more than 150, 000 firm-level responses to the BTOS, we obtain four main findings. First, nearly a third of businesses have employees who work from home, with tremendous variation across sectors. The share of businesses with WFH employees is nearly ten times larger in the Information sector than in Accommodation and Food Services. Second, employees work from home about 1 day per week, on average, and businesses expect similar WFH levels in five years. Third, feasibility aside, businesses’ largest concern with WFH relates to productivity. Seven percent of businesses find that onsite work is more productive, while two percent find that WFH is more productive. Fourth, there is a low level of tracking and monitoring of WFH activities, with 70% of firms reporting they do not track employee days in the office and 75% reporting they do not monitor employees when they work from home. These lessons serve as a starting point for enhancing WFH-related content in the American Community Survey and other household surveys. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-36 |
| By: | Kyle Herkenhoff; Josh Lerner; Gordon M. Phillips; Francisca Rebelo; Benjamin Sampson |
| Abstract: | We measure the real effects of private equity buyouts on worker outcomes by building a new database that links transactions to matched employer-employee data in the United States. To guide our empirical analysis, we derive testable implications from three theories in which private equity managers alter worker outcomes: (1) exertion of monopsony power in concentrated markets, (2) breach of implicit contracts with targeted groups of workers, including managers and top earners, and (3) efficient reallocation of workers across plants. We do not find any evidence that private equity-backed firms vary wages and employment based on local labor market power proxies. Wage losses are also very similar for managers and top earners. Instead, we find strong evidence that private equity managers downsize less productive plants relative to productive plants while simultaneously reallocating high-wage workers to more productive plants. We conclude that post-buyout employment and wage dynamics are consistent with professional investors providing incentives to increase productivity and monitor the companies in which they invest. |
| Keywords: | Private equity, employment, wages, monopsony, market power, productivity |
| JEL: | G20 G34 L1 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-37 |
| By: | Yoshiki Ando; Emin Dinlersoz; Jeremy Greenwood; Ruben Piazzesi |
| Abstract: | How do advanced technology adoption and venture capital (VC) funding impact employment and growth? An analysis of data from the US Census Bureau suggests that while both advanced technology use and VC funding matter on their own for firm outcomes, their joint presence is most strongly correlated with higher employment levels. VC presence is linked with a high increase in employment, though primarily among a limited subset of firms. In contrast, technology adoption is associated with a smaller rise in employment, yet it influences a considerably larger number of firms. A model of startups is created, focusing on decisions to use advanced technology and seek VC funding. The model is compared with firm-level data on employment, advanced technology use, and VC investment. Several thought experiments are conducted using the model. Some experiments assess the importance of advanced technology and VC in the economy. Others examine the reallocation effects across firms with different technology choices and funding sources in response to shifts in taxes and subsidies. |
| JEL: | E13 G24 O30 O40 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33993 |
| By: | Camille Hebert; Emmanuel Yimfor; Heather Tookes |
| Abstract: | What is the role of gender in the serial founding of VC-backed startups? Despite robust evidence linking serial entrepreneurship to startup success, women comprise 13.3% of VC-backed founders but only 4% of those founding three or more startups. Using a novel design comparing men and women cofounders of the same startup, we estimate substantial gender gaps in subsequent funding outcomes on average and following failure or success of the current startup. We find these at both the extensive and intensive margins. For example, following failure, women are 22.5% less likely to found another VC-backed startup compared to their cofounders who are men. Among those who do found another VC-backed firm, women raise 53.3% less capital following failure of the current venture and 24.6% less capital following success. These gaps contribute to the well-documented gender gap in VC funding. Lower interest of women in founding new firms can only partially explain our findings. We find no evidence of gender differences in founder quality or of statistical updating by investors. Instead, consistent with unequal treatment of women, we find that women serial founders are penalized with smaller VC deals following failures of their prior startups but they are not rewarded with larger deal sizes following past successes. By contrast, men are rewarded for their prior experiences as founders, regardless of whether their startups were failures or successes. In line with theories of stereotyping and confirmation bias, we also find striking negative spillovers from unrelated women-founded failures within investors’ portfolios (and no positive spillovers from their successes). |
| JEL: | G0 G24 G30 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33943 |
| By: | Hanming Fang; Ming Li; Guangli Lu |
| Abstract: | We decode China’s industrial policies from 2000 to 2022 by employing large language models (LLMs) to extract and analyze rich information from a comprehensive dataset of 3 million documents issued by central, provincial, and municipal governments. Through careful prompt engineering, multistage extraction and refinement, and rigorous verification, we use LLMs to classify the industrial policy documents and extract structured information on policy objectives, targeted industries, policy tones (supportive or regulatory/suppressive), policy tools, implementation mechanisms, and intergovernmental relationships, etc. Combining these newly constructed industrial policy data with micro-level firm data, we document four sets of facts about China's industrial policy that explore the following questions: What are the economic and political foundations of the targeted industries? What policy tools are deployed? How do policy tools vary across different levels of government and regions, as well as over the phases of an industry's development? What are the impacts of these policies on firm behavior, including entry, production, and productivity growth? We also explore the political economy of industrial policy, focusing on top-down transmission mechanisms, policy persistence, and policy diffusion across regions. Finally, we document spatial inefficiencies and industry-wide overcapacity as potential downsides of industrial policies. |
| JEL: | C55 L52 O25 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33814 |
| By: | Tim de Silva; Eugene Larsen-Hallock; Adam Rej; David Thesmar |
| Abstract: | This paper studies expectations formation when the underlying process has fat tails. Using a large sample of firm sales growth expectations, we document three facts: (i) the relationship between forecast revisions and future forecast errors is strongly non-linear, (ii) the distribution of sales growth has fat tails, and (iii) extreme values of sales growth tend to mean-revert. We formally show that these three facts are consistent with a model in which the underlying process is non-Gaussian, but forecasters fail to recognize this fully. We estimate this model and show it quantitatively explains our three facts. Finally, we show the model is consistent with evidence from an online forecasting experiment where the underlying process is non-Gaussian and the non-linearity in the momentum of stock returns. |
| JEL: | D84 D91 G41 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33808 |
| By: | Roberta De Luca (Bank of Italy); Rosalia Greco (Bank of Italy and Bocconi Baffi Center.); Giovanni Immordino (University of Naples Federico II and CSEF; University of Naples Federico II, CSEF, Mofir and Cefes) |
| Abstract: | We examine how government-mandated Covid-19 business closures impacted on the ownership structure of Italian private companies and investigate the mechanisms whereby the mafia infiltrates the legal economy during crises. Using a novel dataset tracking monthly shareholder changes, we show that an increase in the days of closure reduced the number of firms undergoing ownership changes, although significantly less so in provinces with strong mafia presence. This is especially true in the sectors that are historically prone to mafia infiltration and those more severely affected by the Covid-19 liquidity crisis, and in micro-firms, which tend to be more financially vulnerable. |
| Keywords: | Mafia Infiltration, Covid-19, Firm ownership |
| JEL: | D22 G32 K42 |
| Date: | 2025–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:750 |
| By: | Nils H. Lehr (International Monetary Fund); Pascual Restrepo (Yale University) |
| Abstract: | Leading AI firms claim to prioritize social welfare. How should firms with a social mandate price and deploy AI? We derive pricing formulas that depart from profit maximization by incorporating incentives to enhance welfare and reduce labor disruptions. Using US data, we evaluate several scenarios. A welfarist firm that values both profit and welfare should price closer to marginal cost, as efficiency gains outweigh distributional concerns. A conservative firm focused on labormarket stability should price above the profit-maximizing level in the short run, especially when its AI may displace low-income workers. Overall, socially minded firms face a trade-off between expanding access to AI and the resulting loss in profits and labor market risks. |
| Date: | 2025–05–20 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2445 |
| By: | Sam Jones; Felix Schilling; Finn Tarp |
| Abstract: | We link a new database of politically exposed persons with the complete register of firms established in Mozambique since Independence. Focusing on the network of connections between firm owners, we use a generalized event study analysis to show that holders of political office achieve significant gains in the number of companies owned and their structural power (centrality) within the business-owner network. These gains are concentrated in joint-stock firms active in provision of business services, and our results persist when we aggregate the data to the family-level. |
| Keywords: | Firm ownership, Benefits, Political connections, Rent-seeking, Mozambique |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-47 |
| By: | Hisaki KONO; Hoang-Minh LE; Manabu NOSE; Yasuyuki SAWADA |
| Abstract: | This paper examines the local economic impacts of industrial zones (IZs) in Vietnam, focusing on how their sectoral orientation within production networks shapes effectiveness. Using panel data on registered firms and a newly compiled dataset on IZ locations and sectoral compositions, we estimate the dynamic effects of IZ establishment on firm entry and employment through staggered difference-in-differences and synthetic control methods. We find that IZs lead to sustained increases in both firm and worker density over a 6–10 year horizon, indicating substantial local economic gains. These effects are particularly pronounced in zones oriented toward downstream industries—those that create demand for upstream suppliers—while upstream orientation does not predict stronger outcomes. We further show that backward production linkages mediate these gains, suggesting that demand-side constraints, rather than input frictions, may be more binding in developing country contexts. The results highlight not only the overall effectiveness of IZs but also the importance of aligning industrial policy design with the structure of production networks to maximize spatial development benefits. |
| Keywords: | Industrial zones, production linkage |
| JEL: | O12 O14 R11 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-25-005 |
| By: | Dylan Hogg; Hossein Jebeli |
| Abstract: | Assessing insolvency dynamics is essential for evaluating the financial health of non-financial corporations and mitigating macroeconomic and financial stability risks. This study leverages a newly created Statistics Canada dataset linking insolvency records with firm-level financial data to develop a robust framework for monitoring insolvency risk. We employ two complementary approaches: a univariate threshold method that establishes critical financial ratio benchmarks and a multivariate econometric model that accounts for interactions among financial indicators. These methods produce debt-at-risk measures that enhance risk assessment by combining simplicity with analytical depth. Finally, we apply these metrics to timely firm-level data, enabling continual monitoring of financial vulnerabilities. |
| Keywords: | Credit and credit aggregates; Econometric and statistical methods; Financial stability; Firm dynamics |
| JEL: | G33 L20 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocadp:25-010 |
| By: | James Driver |
| Abstract: | I analyze whether a change in patent systems differentially affects firm-level innovation investments at patent-valuing firms of different sizes. Using legally required, economically representative, U.S. Census Bureau microdata, I separate firms into groups based on a firm’s response to a question asking it to rank the degree of patent importance to its business and firm-size. I then measure how firms’ innovation inputs/outputs respond to the America Invents Act (AIA). Results show the AIA reduced innovation investments at smaller, patent-valuing firms while increasing innovation investments at larger, patent-valuing firms, highlighting differential firm-size effects of patent policy and policy’s importance to investments. |
| Keywords: | Investments, innovation, patents, firm size |
| JEL: | L25 O3 O51 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-31 |
| By: | Wenhao Li; Ye Li |
| Abstract: | A salient trend in crisis intervention has emerged in recent decades: Government and central banks offered funding directly to nonfinancial firms, bypassing banks and other credit intermediaries. We analyze the long-term consequences of such policies by focusing on firm quality dynamics. In a laissez-faire economy, firms with high productivity are more likely to survive crises than those with low productivity. The government funding support saves more firms but cannot be customized based on firm productivity, dampening the cleansing effect of crises. The policy distortion is self-perpetuating: A downward bias in firm quality distribution necessitates interventions of greater scale in future crises. Our mechanism is quantitatively important: we show that if policy makers ignore such distortionary effects on firm quality dynamics, the resultant credit intervention would almost double the optimal amount. |
| JEL: | E50 E60 G01 G18 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33796 |
| By: | Bortolan, Leonardo; Dey, Atreya; Taschini, Luca |
| Abstract: | We establish the financial materiality of temperature variability by demonstrating its impact on US firms and investors. A long-short strategy that sorts firms based on exposure earns a market-adjusted alpha of 39 basis points per month. This variability metric is related to aggregate decreases in firm profitability, with asymmetric effects across industries. These outcomes are driven by reductions in consumer demand and labor productivity coupled with changes in media and investor attention. The geographically scalable statistical framework provides a reference for assessing the quantitative effects of climate-related physical risks, offering a metric for improving the disclosure of material climate risks. |
| Keywords: | corporate climate reporting; climate attention; temperature variability; stock returns; firm performance |
| JEL: | C21 C23 G12 G32 Q54 |
| Date: | 2024–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128521 |
| By: | Edoardo Di Porto (CSEF, INPS, Università di Napoli Federico II, UCFS, Uppsala University); Marco Pagano (University of Naples Federico II, CSEF and EIEF.); Vincenzo Pezone (Tilburg University); Raffaele Saggio (University of British Columbia and NBER); Raffaele Saggio; Fabiano Schivardi (LUISS, EIEF and CEPR) |
| Abstract: | We investigate compensation policies in family and non-family firms using a novel employer-employee matched dataset comprising nearly the universe of Italian incorporated firms and ownership information. Family firms pay significantly lower wages and offer slower and less rewarding careers. Differences in worker sorting account for half of the wage gap while productivity differences and compensating differentials explain little of the residual gap. The wage distribution in family firms is more compressed, with infrequent promotions. We rationalize this evidence with a model where family owners seek to maintain control, creating a Òglass ceilingÓ that limits their employeesÕ career progression. |
| Keywords: | family firms, corporate control, wage, career, workers, human capital, productivity, management. |
| JEL: | D22 D23 D24 G32 G34 J24 J31 J32 J62 M12 M51 M52 M54 |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:736 |
| By: | Tarsia, Romano |
| Abstract: | This paper provides novel firm-level estimates of the economic damages caused by temperature shocks to European firms. I rely on a panel data analysis to show wide heterogeneities in the impact of temperature shocks, which depend on firm characteristics. This paper reveals the importance of micro-level data to reduce the uncertainty in climate damages estimates, as the average relationship between temperature and economic outcomes masks firms’ different susceptibilities to weather shocks. These create both winners and losers, harming less productive and smaller firms, particularly those in warmer regions, while benefiting more productive ones. This paper highlights the distributional effects of climate change, and offers insights for targeted adaptation policies. |
| Keywords: | weather; climate change; firms; climate damages; economic performance |
| JEL: | D24 O13 O14 O52 Q51 Q54 R11 |
| Date: | 2024–11–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128533 |
| By: | Elona Dushku (Bank of Albania) |
| Abstract: | Small and medium-sized enterprises (SMEs) are vital to Albania’s economy but face significant financing challenges amid monetary tightening. Utilizing firm-level data from 2022–2023, this study documents that the abrupt interest rate increases in 2022 prompted a rise in alternative financing use, particularly among younger and smaller firms, alongside greater reliance on internal funds as an immediate coping mechanism. In contrast, the more gradual tightening in 2023 led to a broad-based decline in both alternative and internal financing, indicative of constrained liquidity and persistent financial pressures across firms. Notably, heterogeneity in internal financing adjustments was limited, with younger firms showing no statistically significant difference from older firms, except for those experiencing tighter bank credit conditions, who further curtailed internal funding. These findings underscore the varied responses of SMEs to phased monetary tightening and emphasize the need for targeted policy measures to support firm resilience over time. |
| Keywords: | SMEs; Access to Finance; Monetary Tightening; Firm Characteristics |
| JEL: | E52 G21 G32 L25 |
| Date: | 2025–07–04 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp09-2025 |
| By: | Kalantzis, Fotios; Revoltella, Debora; Gatti, Matteo |
| Abstract: | Leveraging data from the European Investment Survey (EIBIS) spanning 2019-2022, encompassing the pandemic crisis and the 2022 energy price shocks, our study investigates how uncertainty influence firms' climate action investment decisions in Europe at a time of one of the largest energy shocks in recent history. Our results offer insights into firms' investment behaviors across various dimensions including country, sector, and firm size. We find that increasing energy prices drove European firms to invest in both energy efficiency and climate action investments to maintain competitiveness, albeit with a more pronounced effect on the former. By contrast, uncertainty deters firms from investing in climate action and reaching their potential, making them prioritize short-term challenges over long-term climate concerns. Additionally, we observe that firm characteristics, notably energy intensity, play a significant role in shaping investment decisions, with firms operating in energyintensive sectors demonstrating a greater likelihood to invest in climate action regardless of uncertainty levels. Our results reveal the challenges and trade-offs that firms face when investing in climate action under uncertainty and high energy prices and emphasize the need for consistent and supportive policies to foster a green transition. |
| Keywords: | European Investment Bank Investment Survey, Uncertainty, Energy efficiency, Corporate investments, Energy costs, Climate Action |
| JEL: | D22 P28 Q5 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eibwps:319634 |
| By: | Miriam Koomen; Laurence Wicht |
| Abstract: | We present new empirical evidence on the role of granularity in the current account (CA), using a unique and comprehensive firm-level dataset for Switzerland. We show that idiosyncratic shocks to large firms account for almost two thirds of the fluctuations in the headline CA and are the primary source of CA volatility. The granular effect is present across goods, services, and income components and persists over both short- and medium-term horizons. In addition to their direct impact, idiosyncratic shocks propagate through inter-firm linkages via input-output relationships and cross-product connections associated with multinational enterprise activity. Our findings challenge standard macroeconomic models that emphasize aggregate fundamentals, highlighting the importance of firm-level heterogeneity in explaining external imbalances and their fluctuations. |
| Keywords: | Current account, Firm-level shocks, Granular fluctuations, Large firms |
| JEL: | F32 F23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:snb:snbwpa:2025-08 |
| By: | Kalantzis, Fotios; Kesidou, Effie; Ri, Anastasia; Roper, Stephen |
| Abstract: | This paper investigates how firms navigate the dual challenges of digitalisation and climate change. Our comprehensive approach considers climate change strategies, distinguishing adaptation-only, mitigation-only and 'dual' adaptation and mitigation strategies. Drawing on theoretical insights from the literature on digital affordances, we argue that digitalisation enables firms to recognise better the opportunities and risks associated with climate change. These affordances significantly influence strategic decisions regarding adaptation, mitigation, or a combination of both, ultimately impacting the intensity of their implementation efforts. To empirically examine these dynamics, we analyse data from the 2022 and 2023 European Investment Bank Investment Survey waves. Our sample includes over 24, 000 firms, spanning small and medium-sized enterprises (SMEs) and large businesses across 27 EU Member States and the USA. Our results reveal that firms with higher digitalisation are more likely to adopt a 'dual' strategy that combines mitigation and adaptation efforts rather than pursuing a single climate strategy or no climate response. Furthermore, we find a positive relationship between digitalisation and climate action intensity across mitigation and adaptation measures. Importantly, these patterns hold consistently across different sectors and firm sizes. Overall, our study sheds light on the critical role of digital technologies in shaping firms' climate responses, emphasising the need for organisations to leverage their technological strengths to address environmental challenges effectively. |
| Keywords: | Business, Strategic management, Digitalization, Climate change, Climate protection, Environmental management, EU countries, USA |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eibwps:319607 |
| By: | Nobuya FUKUGAWA |
| Abstract: | This study investigates the impact of Technology Extension Services (TES) on the productivity of small and medium-sized enterprises (SMEs) in Japan, using an Endogenous Switching Regression model and firm-level panel data covering both the pre-pandemic (2016–2019) and pandemic (2020–2023) periods. Focusing on Kohsetsushi , Japan’s extensive network of public support institutes for SMEs, the analysis finds that TES adoption significantly improves firm productivity across both periods, highlighting its role as a locally embedded innovation intermediary. Firms with higher levels of intangible capital benefited more, with complementary effects particularly pronounced during the pandemic—suggesting that absorptive capacity became critical under crisis conditions. Selection estimates reveal that more productive firms were more likely to adopt TES, although some equally capable firms opted out—consistent with comparative advantage shaping self-selection patterns. Geographic proximity to service providers constrained TES access in stable periods but became less critical during the pandemic due to the expansion of digital service delivery. These findings underscore how firm capabilities, external shocks, and spatial access jointly influence the effectiveness of public technology support programs. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25064 |
| By: | Jihwan Do (Yonsei University); Jeremy Kettering (Alvernia University) |
| Abstract: | We examine a model of imperfect competition characterized by endogenous entry, where two firms decide whether to enter the market or remain out and subsequently determine their output upon entry. A key aspect of the model is the presence of uncertain market demand, with one firm possessing an informational advantage over its competitor. It is shown that in the unique equilibrium with endogenous entry, informational asymmetry distorts the entry incentives for the better-informed firm, potentially causing it to earn lower profits than its rival. Moreover, market entry may be excessive from a consumer surplus viewpoint, and more precise information can have non-monotonic effects on welfare due to the entry distortions. Within this framework, we also analyze various regulatory measures and policies aimed at enhancing consumer welfare. |
| Keywords: | Oligopoly; Market entry; Asymmetric information; Competition policy; Strategic disadvantage of information |
| JEL: | D43 D82 L13 L50 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-253 |
| By: | Irene Alvarado-Quesada (Department of Economic Research, Central Bank of Costa Rica); Jose Pablo Barquero-Romero (Department of Economic Research, Central Bank of Costa Rica); Cristian Sancho-Brenes (Department of Economic Research, Central Bank of Costa Rica) |
| Abstract: | This study examines, for the first time, the exposure of the credit portfolio of the banking system in Costa Rica to hydrometeorological events, specifically excess rainfall events, with a focus on firm credit at the canton level. We propose a credit risk indicator to identify cantons with credit portfolios that are more affected by rainfall events. Moreover, we introduce a novel approach with respect to firm level data to assign a single productive location to firms with two or more establishments. We find that cantons with the highest number of excess rainfall events represent a small share of the average credit balance of the country. Furthermore, we observe that the top three cantons with the highest credit risk score are driven by economic activities that are not expected to be notably vulnerable to extreme rainfall. |
| Keywords: | Hydrometeorological Events;Physical Risks;Banking Sector;Credit Risk |
| JEL: | Q54 G21 G28 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:apk:epolec:2401 |