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on Business Economics |
| By: | Sipeng Zeng; Xiaoning Wang; Tianshu Sun |
| Abstract: | Although Artificial Intelligence (AI) holds great promise for enhancing innovation and productivity, many firms struggle to realize its benefits. We investigate why some firms and industries succeed with AI while others do not, focusing on the degree to which an industrial domain is technologically integrated with AI, which we term "domain AI readiness". Using panel data on Chinese listed firms from 2016 to 2022, we examine how the interaction between firm-level AI capabilities and domain AI readiness affects firm performance. We create novel constructs from patent data and measure the domain AI readiness of a specific domain by analyzing the co-occurrence of four-digit International Patent Classification (IPC4) codes related to AI with the specific domain across all patents in that domain. Our findings reveal a strong complementarity: AI capabilities yield greater productivity and innovation gains when deployed in domains with higher AI readiness, whereas benefits are limited in domains that are technologically unprepared or already obsolete. These results remain robust when using local AI policy initiatives as instrumental variables. Further analysis shows that this complementarity is driven by external advances in domain-AI integration, rather than firms' own strategic pivots. Time-series analysis of IPC4 co-occurrence patterns further suggests that improvements in domain AI readiness stem primarily from the academic advancements of AI in specific domains. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.09634 |
| By: | François Derrien (HEC Paris - Ecole des Hautes Etudes Commerciales); Jean-Stéphane Mésonnier (Centre de recherche de la Banque de France - Banque de France, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Guillaume Vuillemey (HEC Paris - Ecole des Hautes Etudes Commerciales, CEPR - Center for Economic Policy Research) |
| Abstract: | Firm births are key drivers of employment growth, productivity gains, and "creative destruction". We show that set-up costs create sizable financial constraints for new firms. When firms face high set-up costs, they can only be established by leveraging up and lengthening debt maturity. We empirically confirm these predictions in a large sample of young French firms. Leverage is higher and debt maturity is longer in high set-up cost industries. Last, we show that, following an exogenous shock that reduces banks' supply of long-term loans, there is relatively lower firm creation in high set-up cost manufacturing industries. |
| Date: | 2025–01–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05156025 |
| By: | Serguey Braguinsky; Joonkyu Choi; Yuheng Ding; Karam Jo; Seula Kim |
| Abstract: | We provide evidence that mega firms have played an increasingly important role in shaping new technological trajectories in recent years. While the share of novel patents---defined as patents introducing new combinations of technological components---produced by mega firms declined until around 2000, it has rebounded sharply since then. Furthermore, we find that the technological impact and knowledge diffusion of novel patents by mega firms have grown relative to those by non-mega firms after 2001. We also explore potential drivers of this trend, presenting evidence that the rise in novel patenting by mega firms is tied to their disproportionate increase in cash holdings and the expansion of their technological scope. Our findings highlight an overlooked positive role of mega firms in the economywide innovation process. |
| Keywords: | Mega Firms; Innovation; Novel Patents; Knowledge Diffusion |
| JEL: | O31 O33 O34 L11 L25 |
| Date: | 2025–08–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-60 |
| By: | Ding Dong; Allen Hu; Zhaorui Li; Zheng Liu |
| Abstract: | Using novel measures of information acquisition, we document causal evidence of a feedback loop between firms’ credit access and information acquisition. To examine the macroeconomic implications of this feedback loop, we develop a tractable general equilibrium framework with financial frictions and endogenous information acquisition. In line with the empirical evidence, the model predicts that a rise in information costs raises the level of uncertainty and reduces a firm’s equity value, hampering its credit access. On the other hand, tightened credit constraints restrain activity of high-productivity firms, leading to misallocation that reduces aggregate productivity and firm profits, and discouraging information acquisition. This feedback loop creates a finance-uncertainty trap that substantially amplifies and prolongs business cycle fluctuations. |
| Keywords: | information acquisition; endogenous uncertainty; financial frictions; misallocation; Business Cycles |
| JEL: | D83 E32 E44 |
| Date: | 2025–07–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:101432 |
| By: | Heng Geng (Victoria University of Wellington); Harald Hau (University of Geneva); Pengfei Liu (University of Auckland) |
| Abstract: | Corporate Opportunity Waiver (COW) laws permit firms to suspend fiduciary duties related to corporate opportunities. Fich, Harford, and Tran (2023) argue that these laws reduced firm innovation and lowered corporate valuation for research-intensive firms. However, we are unable to replicate these results. We further show that the reported decline in Tobin's q is confounded by the effects of the dot-com bubble burst. Moreover, public firms subject to COWs reduce takeover defenses, contradicting their argument that COW laws weaken corporate governance. Overall, their conclusion that COW laws foster managerial disloyalty and harm shareholder value is not supported by the data. |
| Keywords: | COW laws, fiduciary duties, shareholder value, innovation |
| JEL: | G34 G38 O34 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2567 |
| By: | Ewens, Michael (California Institute of Technology); Giroud, Xavier |
| Abstract: | We introduce a novel measure of corporate hierarchies for over 2, 500 U.S. public firms. This measure is obtained from online resumes of 16 million employees and a network estimation technique that allows us to identify hierarchical layers. Equipped with this measure, we document several facts about corporate hierarchies. Firms have on average ten hierarchical layers and a pyramidal organizational structure. More hierarchical firms have a more educated workforce, higher internal promotion rates, and longer employee tenure. Their operating performance is higher, but they face higher administrative costs. They are more active acquirers and produce more patents, but not higher-quality patents. They exhibit lower stock return volatility and more stable cash flows. We also examine how companies adjust their hierarchies in response to demand and knowledge shocks. We find that biotech companies increased their number of layers following the Covid-19 pandemic, while companies flattened their hierarchies following the adoption of artificial intelligence (AI) technologies. These findings are consistent with the theoretical predictions of existing models of corporate hierarchies. |
| Date: | 2025–08–14 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:yj4he_v1 |
| By: | Viral V. Acharya; Matteo Crosignani; Tim Eisert; Christian Eufinger |
| Abstract: | We document how the interaction of supply chain pressures, elevated household inflation expectations, and firm pricing power contributed to the pandemic-era surge in consumer price inflation in the euro area. Initially, supply chain disruptions raised inflation, particularly in manufacturing, through a cost-push channel, while also elevating inflation expectations. In turn, higher inflation expectations appear to have lowered the price elasticity of consumer demand and strengthened firms’ pricing power, enabling even firms in service sectors that were initially unaffected by supply constraints to raise markups. Through this expectations mechanism, localized inflation in sectors sensitive to supply-side shocks generalized into broad-based inflation. |
| Keywords: | inflation expectations; euro area; firm markups; market power; supply chain |
| JEL: | E31 E58 D84 L11 |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:101469 |
| By: | Lyttelton, Thomas; Nelson, Dylan; Wilmers, Nathan |
| Abstract: | Prominent employers, from Microsoft to the State of Maryland, are increasingly dropping college degree requirements when hiring. Does this provide upward mobility for workers without a college degree? Matching job postings to hires in US administrative data, we show that employers have reduced the share of posts requiring a college degree by more than 10% since 2011. Non-college workers who move to jobs that have dropped degree requirements see substantial and enduring upward mobility. Compared to similar workers on similar pre-hire earnings trajectories, they earn a $6000 per year premium that endures for at least five years after the job move and across subsequent transitions. These hires are more likely to be Black, Hispanic, and female than incumbent workers. Employers also see benefits, as removing degree requirements reduces labor costs: although non-college workers hired into decredentialed jobs earn more than similar non-college workers, they make less than college graduates hired in the same job. Despite these benefits, most employers that drop explicit college requirements continue to hire college graduate applicants into those positions. We find suggestive evidence that employers struggle to integrate new non-college hires and that they face backlash from existing employees. Overall, decredentialed jobs are a promising route to upward mobility for disadvantaged workers, but only when employers follow through beyond job posting language. |
| Date: | 2025–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:4kgj9_v1 |
| By: | Derenoncourt, Ellora (Princeton University); Gerard, Francois (Queen Mary, University of London); Lagos, Lorenzo (Brown University); Montialoux, Claire (UC Berkeley) |
| Abstract: | We study the role of union heterogeneity in shaping wages and inequality among unionized workers. Using linked employer-employee data from Brazil and job moves across multi-firm unions, we estimate over 4, 800 union-specific pay premia. Unions explain 3–4% of earnings variation. While unions raise wages on average, the standard deviation in union effects is large (6-7%). Validating our approach, wages fall in markets with higher vs. lower union premia following a nationwide right-to-work law. Linking premia to detailed data on union attributes, we find that unions with strike activity, collective bargaining agreements, internal competition, and skilled leaders secure higher wages. High-premium unions compress wage gaps by education while the average union exacerbates them. Post right-to-work, however, worker support for high-premium unions falls when between-group bargaining differentials are large. Our findings show that unions are not a monolith—their structure and actions shape their wage effects and, consequently, worker support. |
| Keywords: | wage inequality, pay premia, unions, right-to-work |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18065 |
| By: | Pablo D'Erasmo; Selman Erol; Guillermo Ordoñez |
| Abstract: | Recent U.S. and European regulations promote centrally clearing derivatives to reduce complexity and systemic risk in the financial system. We argue that more clearing does not guarantee less systemic risk. We identify conditions under which the core clears less intensively than the periphery, which increases systemic risk by substituting multilateral netting for bilateral netting and making contagion less likely to start in the core but more likely to spread from the core. We study confidential derivatives regulatory data and find evidence of such clearing patterns. We further explore the implications of complexity and centrality within the financial system for stability |
| Keywords: | Central Clearing; Systemic Risk; Interbank Networks; Central Counterparty (CCP); Over-the-Counter Trading (OTC) |
| JEL: | G20 E50 L14 |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:101515 |
| By: | Tobler, Lina; Fervers, Lukas; Reiff, Annika |
| Abstract: | In response to increasing difficulties faced by firms in filling training positions, Germany intro-duced a minimum apprenticeship wage (MAW) of 515€ in 2020. Theoretically, the MAW’s effect is ambiguous: higher costs may reduce firms’ incentives to offer training positions, while increased wages could make apprenticeships more attractive, potentially increasing applicant numbers. It remains unclear which effect predominates in terms of actual take-ups. This paper provides first empirical analyses of the MAW’s impact on offered apprenticeship positions and actual take-ups. Using a difference-in-differences design with firm-level panel data, we find negative effects on both offered and filled trainings. This finding is robust to sensitivity analyses, including placebo tests for diverging trends before treatment, effects on other employee groups, inclusion of controls covering COVID-19 affectedness, post-treatment selection and attrition. The results suggest that the negative impact on offers dominated possible gains and did not lead to more entrants into the training system. |
| Date: | 2025–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:hjb74_v1 |
| By: | Contractor, Zara (Middlebury College); Reyes, Germán (Middlebury College) |
| Abstract: | Generative AI is transforming higher education, yet systematic evidence on student adoption remains limited. Using novel survey data from a selective U.S. college, we document over 80 percent of students using AI academically within two years of ChatGPT's release. Adoption varies across disciplines, demographics, and achievement levels, highlighting AI's potential to reshape educational inequalities. Students predominantly use AI for augmenting learning (e.g., explanations, feedback), but also to automate tasks (e.g., essay generation). Positive perceptions of AI's educational benefits strongly predict adoption. Institutional policies can influence usage patterns but risk creating unintended disparate impacts across student groups due to uneven compliance. |
| Keywords: | technology adoption, higher education, Generative AI, ChatGPT, student learning |
| JEL: | I23 O33 I21 J24 D83 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18055 |
| By: | Elías Albagli; Mr. Francesco Grigoli; Emiliano Luttini; Dagoberto Quevedo; Marco Rojas |
| Abstract: | This paper documents five empirical facts about the role of strategic complementarities in firms’ price-setting behavior, using administrative data from Chilean firms. (1) Strategic complementarities play a dominant role in price setting, exerting a stronger influence than changes in marginal costs. (2) While the strength of strategic complementarities varies across sectors, they consistently outweigh the role of cost changes. (3) In high-inflation environments, firms become more responsive to changes in the prices of their competitors. (4) Firms respond more strongly to competitor price increases than to decreases, mirroring the `rockets and feathers' phenomenon of costs. (5) Strategic complementarities are stronger among firms with fewer competitors, larger market shares, and broader customer bases. These findings suggest that strategic complementarities---a source of real rigidities---are sizable, state-dependent, asymmetric, and shaped by market structure. |
| Keywords: | Pass-through; price setting; strategic complementarities; state dependency; market structure |
| Date: | 2025–08–15 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/164 |
| By: | Voraprapa Nakavachara; Chanon Thongtai; Thanarat Chalidabhongse; Chanathip Pharino |
| Abstract: | This paper investigates whether climate-friendly food products command a price premium in consumer markets. Using product-level data from a supermarket in Sweden, we examine the relationship between front-of-package climate impact scores and retail prices, controlling for product size, nutritional content, and fixed effects. Contrary to the intuitive expectation of a positive green premium, we find no evidence that climate-friendly products are priced higher. In some product categories, products with better climate scores are in fact associated with lower prices, suggesting a negative premium, an outcome that gives rise to what we refer to as the green premium puzzle. We argue that market frictions such as competing consumer priorities, psychological distance from climate issues, and skepticism toward environmental labeling may suppress the price signals intended to reward sustainable consumption. These findings offer important insights for producers, retailers, and policymakers seeking to align climate goals with effective market incentives in the transition toward a more sustainable society. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.10333 |
| By: | Gregory-Smith, Ian (University of Sheffield); Bryson, Alex (University College London); Gomez, Rafael (University of Toronto) |
| Abstract: | We examine the role that racial discrimination plays in the decision to retain or release an employee. Our empirical setting allows us to separate the retention decision from the wage decision. For the first four years of a player’s career, wages are mechanically determined and players are under a restricted ‘rookie’ contract, during which they can be released without cost. Players who survive in the league beyond four years receive a large uptick in their remuneration upon signing their first ‘free-agency’ contract. Consequently, marginal decisions over employment retention during the rookie contract have substantial implications for earnings realised over a player’s career. We find subtle but significant differences in retention rates between Black and White players (approximately 3 percentage points) that can’t be explained by a comprehensive set of individual characteristics including their productivity. We also show that traditional wage gap estimates, which appear to show equal earnings between Black and White players conditional upon playing position and productivity, mask underlying disparities in career earnings that become apparent when adjusting for these unequal retention rates. |
| Keywords: | retention, wages, discrimination |
| JEL: | J71 J31 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18079 |
| By: | Hangcheng Zhao; Ron Berman |
| Abstract: | Online sellers have been adopting AI learning algorithms to automatically make product pricing and advertising decisions on e-commerce platforms. When sellers compete using such algorithms, one concern is that of tacit collusion - the algorithms learn to coordinate on higher than competitive. We empirically investigate whether these concerns are valid when sellers make pricing and advertising decisions together, i.e., two-dimensional decisions. Our empirical strategy is to analyze competition with multi-agent reinforcement learning, which we calibrate to a large-scale dataset collected from Amazon.com products. Our first contribution is to find conditions under which learning algorithms can facilitate win-win-win outcomes that are beneficial for consumers, sellers, and even the platform, when consumers have high search costs. In these cases the algorithms learn to coordinate on prices that are lower than competitive prices. The intuition is that the algorithms learn to coordinate on lower advertising bids, which lower advertising costs, leading to lower prices. Our second contribution is an analysis of a large-scale, high-frequency keyword-product dataset for more than 2 million products on Amazon.com. Our estimates of consumer search costs show a wide range of costs for different product keywords. We generate an algorithm usage and find a negative interaction between the estimated consumer search costs and the algorithm usage index, providing empirical evidence of beneficial collusion. Finally, we analyze the platform's strategic response. We find that reserve price adjustments will not increase profits for the platform, but commission adjustments will. Our analyses help alleviate some worries about the potentially harmful effects of competing learning algorithms, and can help sellers, platforms and policymakers to decide on whether to adopt or regulate such algorithms. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.08325 |
| By: | Benjamin Lahey; Benjamin Hyman; Karen Ni; Laura Pilossoph |
| Abstract: | We document the extent to which workers in AI-exposed occupations can successfully retrain for AI-intensive work. We assemble a new workforce development dataset spanning over 1.6 million job training participation spells from all U.S. Workforce Investment and Opportunity Act programs from 2012-2023 linked with occupational measures of AI exposure. Using earnings records observed before and after training, we compare high AI exposure trainees to a matched sample of similar workers who only received job search assistance. We find that AI-exposed workers have high earnings returns from training that are only 25 percent lower than the returns for low AI exposure workers. However, training participants who target AI-intensive occupations face a penalty for doing so, with 29 percent lower returns than AI-exposed workers pursuing more general training. We estimate that between 25 percent to 40 percent of occupations are “AI retrainable” as measured by its workers receiving higher pay for moving to more AI-intensive occupations—a large magnitude given the relatively low-income sample of displaced workers. Positive earnings returns in all groups are driven by the most recent years when labor markets were tightest, suggesting training programs may have stronger signal value when firms reach deeper into the skill market. |
| Keywords: | artificial intelligence; active labor market policies; job training; labor markets |
| JEL: | J08 M53 O31 |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:101471 |
| By: | Maczulskij, Terhi; Jurvanen, Outi |
| Abstract: | Abstract This paper examines how firms’ environmental performance responds to product- and destination-specific export demand shocks in their export markets. We draw on unique administrative data for Finnish manufacturing firms from 1999 to 2018, matched with national customs records, greenhouse gas emissions, and energy use. The results show that while export demand shocks significantly increase firms’ export volumes and energy consumption, they do not improve overall environmental performance. Specifically, we find no significant effects on carbon intensity or total energy intensity, although fuel intensity declines, particularly in more polluting industries. Heterogeneity and mechanism analyses further reveal that financially weaker firms experience increases in emissions and carbon intensity, suggesting that financial constraints may limit their ability to adopt cleaner technologies. Overall, the findings highlight the critical role of firm-level characteristics in shaping the environmental consequences of trade shocks and suggest that export-promotion policies should account for firms’ financial capacities to support green investments and sustainable outcomes. |
| Keywords: | Emissions, Energy expenditure, Energy intensity, Export demand shock, Firm-level, Carbon intensity |
| JEL: | D22 F22 O30 |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:132 |
| By: | Holzer, Harry J. (Georgetown University) |
| Abstract: | In this paper, I examine what we know and don’t know about both private and public workforce development in the US. I highlight three of the most important categories of programs and policy: a) Workforce development in accredited higher education institutions, particularly community colleges; b) Other publicly-funded or private training and services, including “sectoral training” that targets specific high-demand sectors of the economy; and c) On-the-job or work-based learning, including apprenticeships. I summarize the theoretical literature on workforce development and a broad landscape of the three key categories. I synthesize the empirical literature on workforce development, beginning with comparisons of different data sources, outcome measures and empirical methods used before reviewing the literature on estimated impacts in each of the three categories. I then consider the international evidence on workforce development, and how public efforts differ between the US and other industrial countries, before concluding. |
| Keywords: | WIOA, sectoral, community college, training, workforce, apprenticeship work-based learning |
| JEL: | J24 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18061 |
| By: | Albertazzi, Ugo; Ferrando, Annalisa; Gori, Sofia; Rariga, Judit |
| Abstract: | This paper explores empirically the cost channel of monetary policy transmission during the recent period of monetary policy tightening in the euro area. We combine unique data on firms’ selling price expectation from the Survey on the access to finance of enterprises (SAFE), information on firms’ borrowing from the euro area-wide credit register (AnaCredit) and ECB monetary policy surprises. Firms revise upwards their one-year-ahead selling price expectations following monetary announcements in a tightening cycle and this effect increases in firms’ working capital exposure. The paper provides supportive evidence on the existence of a cost channel of monetary policy, adding to our understanding of monetary policy transmission to firms in the euro area. JEL Classification: G30, E52, D84 |
| Keywords: | firm financing, monetary policy, selling price expectations |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253097 |
| By: | Saroj Bhattarai; Arpita Chatterjee; Gautham Udupa |
| Abstract: | We estimate distributional implications of global food and oil price shocks by utilizing monthly panel data on consumption and income from India, and an IV strategy that removes variation coming from global demand shocks. While both shocks lead to stagflationary aggregate dynamics, they differ in terms of distributional consequences. Consumption of lower income deciles is affected more by exogenous increases in food prices, while consumption of both tails of the income distribution is affected similarly by exogenous increases in oil prices. These heterogeneous negative consumption responses largely mirror the pattern of heterogeneity in wage income responses. Increases in relative expenditure of food, despite a rise in the relative local price of food, provides clear evidence for non-homothetic demand in non-durable consumption. Estimating the slopes of the Engel curve by impulse response matching, we find that food, compared to fuel, is a necessary consumption good for all income groups. Comparing the model predictions with the empirical consumption responses, we decompose the role played by wage income, relative price changes, and non-homotheticity in explaining our results. |
| Keywords: | Global Price shocks; Food prices; Oil prices; Inequality; Household heterogeneity; Household consumption; Necessary good; Non-homotheticity; India |
| JEL: | E31 E32 F62 O11 |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:1414 |
| By: | Francesco Amodio (McGill University); Emanuele Brancati (Sapienza University of Rome); Nicolás de Roux (Universidad de los Andes); Michele Di Maio (Sapienza University of Rome) |
| Abstract: | We measure firms’ wage-setting power in 16 Latin American and Caribbean countries. Exploiting variation in firms’ exposure to trade and exchange rates, we generate shocks to labor demand to trace out firm-level labor supply curves and quantify labor market power. We estimate an inverse labor supply elasticity of 0.82, implying that workers receive 55 cents per additional dollar produced. Wage-setting power is significantly higher among firms in countries with lower union density, limited collective bargaining, and no unemployment protection. This underscores the role of labor market institutions in shaping firms’ wagesetting power and the distribution of the gains from trade. |
| Keywords: | firms, labor market power, labor institutions |
| JEL: | J31 J50 O54 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021499 |
| By: | Katharine C. Sadowski |
| Abstract: | Childcare is essential for working families, yet it remains increasingly unaffordable and inaccessible for parents and offers poverty-level wages to many employees. While research suggests minimum wage policies may improve the welfare of low-wage workers, there is also evidence they may increase firm exits, especially among smaller, low-profit firms, which could reduce access and harm consumer well-being. This study is the first to examine these trade-offs in the childcare industry, a labor-intensive, highly regulated sector where capital-labor substitution is limited, and to provide evidence on how minimum wage policies affect a dual-sector labor market in the U.S., where self-employed and waged providers serve overlapping markets. Using variation from state-level minimum wage increases between 1995 and 2019 and unique microdata, I implement a cross-state county border discontinuity design to estimate impacts on the stocks, flows, and composition of childcare establishments. I find that while county-level aggregate establishment stocks and employment remained stable, establishment-level turnover increased, and employment decreased. I reconcile these findings by showing that minimum wage increases prompted reallocation, with larger establishments in the waged-sector more likely to enter and less likely to exit, making this one of the first studies to link null aggregate effects to shifts in establishment composition. Finally, I show that minimum wage increases may negatively affect the self-employed sector, resulting in fewer owners with advanced degrees and more with only high school education. These findings suggest that minimum wage policies reshape who provides care in ways that could affect both quality and access. |
| Keywords: | Child Care, Early Childhood Education, Minimum Wage |
| JEL: | H32 H44 H75 I21 I28 J13 J38 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-53 |
| By: | Rehim Kılıç |
| Abstract: | This paper fills an important gap in the volatility forecasting literature by comparing a broad suite of machine learning (ML) methods with both linear and nonlinear econometric models using high-frequency realized volatility (RV) data for the S&P 500. We evaluate ARFIMA, HAR, regime-switching HAR models (THAR, STHAR, MSHAR), and ML methods including Extreme Gradient Boosting, deep feed-forward neural networks, and recurrent networks (BRNN, LSTM, LSTM-A, GRU). Using rolling forecasts from 2006 onward, we find that regime-switching models—particularly THAR and STHAR—consistently outperform ML and linear models, especially when predictors are limited. These models also deliver more accurate risk forecasts and higher realized utility. While ML models capture some nonlinear patterns, they offer no consistent advantage over simpler, interpretable alternatives. Our findings highlight the importance of modeling regime changes through transparent econometric tools, especially in real-world applications where predictor availability is sparse and model interpretability is critical for risk management and portfolio allocation. |
| Keywords: | Realized volatility; Machine learning; Regime-switching; Nonlinearity; VaR; forecasting |
| JEL: | C10 C50 G11 G15 |
| Date: | 2025–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-61 |
| By: | Lihua Liu; Yi Chen; Mingli Xu |
| Abstract: | Executive accountability is increasingly viewed as a critical mechanism for improving corporate environmental performance, especially in state-owned enterprises (SOEs) that dominate high-emission sectors such as energy, infrastructure, and heavy industry. This study examines whether China's Accountability System for Irregular Operations and Investments (ASIOI) curbs environmental violations in SOEs. Exploiting the staggered regional implementation of ASIOI as a quasi-natural experiment, we find that the policy leads to a significant reduction in SOE environmental misconduct. Drawing on a criminology-based cost-benefit framework, we identify three underlying mechanisms: strengthened internal controls, increased green investment, and enhanced green innovation. Further analyses reveal that the deterrent effect of ASIOI is more pronounced in SOEs that exhibit weaker regulatory oversight and stronger incentives to commit violations. By focusing on politically embedded SOEs, this study shows how accountability mechanisms can catalyze proactive green transformation, enhancing the strategic role of public governance in sustainability transitions. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.08797 |