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on Business Economics |
| By: | Okan Akarsu |
| Abstract: | In this paper, I explore the spillover effects of frontier firms on other firms in Türkiye, using a detailed administrative dataset with firm-level data on balance sheets, inter-firm transactions, and employment. I review key production function estimators, evaluate their assumptions and performance using a large dataset of Turkish firms, and apply estimated productivity to identify frontier firms and assess their influence on laggard firms' performance. Additionally, I contribute to the empirical literature by exploring the spillover and network effects of frontier firms on laggard firms, as well as examining the productivity convergence of laggard firms to frontier firms. The analysis reveals three key findings: (i) Frontier firms generate positive spillover effects within sectors, which enhance sales, employment, exports, and asset growth among laggard firms; (ii) detailed firm-to-firm invoice data reveals that a higher share of frontier firms in a firm’s network significantly boosts investment, net sales, and productivity growth; and (iii) laggard firms show faster productivity growth, with substantial variation across firm types and industries. |
| Keywords: | Spillover effect, Frontier firm, Total factor productivity, Production function estimation, Semiparametric estimator, Laggard firm dynamics |
| JEL: | C13 C14 C23 D24 D40 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2511 |
| By: | Yueran Ma; Benjamin Pugsley; Haomin Qin; Kaspar Zimmermann |
| Abstract: | We present new facts about the largest American companies over the past century. In manufacturing, top firms in the 1910s, 1950s, and 2010s predominantly date back to around 1900. Even as this special generation persists, turnover among top firms has been substantial. In contrast, in retail and wholesale, we do not observe a special generation among top firms. We show in a model of firm dynamics that a special generation can arise from an industrial revolution, through the adoption of a scalable technology and learning-by-doing. Top firm turnover is matched by standard idiosyncratic productivity shocks. Time-varying market size growth rates or entry costs are not sufficient to explain the facts. Among retailers and wholesalers, learning appears absent, so a special generation would be harder to sustain. Our results highlight the potential for lasting nonstationarity among the dynamics of top firms, which can result from the long echoes of technological change. |
| JEL: | D2 E2 L1 M1 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34194 |
| By: | Neave O'Clery; Ben Radcliffe-Brown; Thomas Spencer; Daniel Tarling-Hunter |
| Abstract: | Critical for policy-making and business operations, the study of global supply chains has been severely hampered by a lack of detailed data. Here we harness global firm-level transaction data covering 20m global firms, and 1 billion cross-border transactions, to infer key inputs for over 1200 products. Transforming this data to a directed network, we find that products are clustered into three large groups including textiles, chemicals and food, and machinery and metals. European industrial nations and China dominate critical intermediate products in the network such as metals, common components and tools, while industrial complexity is correlated with embeddedness in densely connected supply chains. To validate the network, we find structural similarities with two alternative product networks, one generated via LLM queries and the other derived by NAFTA to track product origins. We further detect linkages between products identified in manually mapped single sector supply chains, including electric vehicle batteries and semi-conductors. Finally, metrics derived from network structure capturing both forward and backward linkages are able to predict country-product diversification patterns with high accuracy. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.12315 |
| By: | Shujiang Cao; Shutao Cao |
| Abstract: | Measured aggregate productivity and the income share of top earners are strongly and positively correlated in the Canadian data. Productivity slowdown since the early 2000s was accompanied with a flattening income share of top earners. Motivated by these facts, we study the role of firms' top-paid workers and worker matching in accounting for the slowdown of measured total factor productivity. We first estimate total factor productivity for Canadian firms in the period of 2003-2015, taking into account the assortative matching between top workers and non-top workers. Measured total factor productivity consists of the Hicks-neutral technology and the quality of top workers. Our estimation suggests that measured aggregate total factor productivity declined from 2003 to 2015, in line with that estimated by the statistical agency. The decline of measured productivity is entirely accounted for by the declining quality of top workers, while the Hicks-neutral technology improved. Both the within-firm changes and the cross-firm reallocation of top-worker quality are important in contributing to the decline of overall top-worker quality. We also discuss possible causes of declines in the quality of top workers, e.g., the emigration of top talents as studied in recent literature. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.00516 |
| By: | Marcelo L. Bergolo; Rodrigo Ceni; Mathias Fondo; Damián Vergara |
| Abstract: | This paper leverages a large minimum wage reform in Uruguay to study the effects of minimum wages on the distribution of firm wage premia. Wage inequality decreased substantially after the reform, with almost all of the decrease attributed to a reduction in between-firm inequality. AKM variance decompositions show that the relative variance of firm fixed effects substantially decreased after the reform. A time-varying AKM model reveals that this pattern was driven by a compression in the distribution of firm fixed effects, with low-paying firms increasing their fixed effect after the minimum wage increase. Both firm-level and worker-level difference-in-differences analyses show that the minimum wage reform had a causal effect on the compression in the distribution of firm wage premia. The results suggest that minimum wages can increase the supply of "good jobs" by "making bad jobs better", in addition to reallocating workers towards "good jobs". |
| JEL: | J01 J08 J30 J38 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34188 |
| By: | Gert Bijnens (National Bank of Belgium, Research Department) |
| Abstract: | This paper provides the first systematic and comprehensive empirical study of management and strategy consulting. We unveil the workings of this opaque industry by drawing on universal administrative business-to-business transaction data based on value-added tax links from Belgium (2002-2023). These data permit us to document the nature of consulting engagements, take-up patterns, and the effects on client firms. We document that consulting take-up is concentrated among large, high-labor-productivity firms. For TFP and profitability, we find a U-shaped pattern: both high and low performers hire consultants. New clients spend on average 3 % of payroll on consulting, typically in episodic engagements lasting less than one year. Using difference-in-differences designs exploiting these sharp consulting events, we find positive effects on labor productivity of 3.6% over five years, driven by modest employment reductions alongside stable or growing revenue. Average wages rise by 2.7% with no decline in labor’s share of value added, suggesting productivity gains do not come at workers’ expense through rent-shifting. We do observe organizational restructuring with small increases in dismissal rates, and higher services procurement but reduced labor outsourcing. Our heterogeneity analysis reveals larger productivity gains for initially less productive firms, suggesting improvements in allocative efficiency. Our findings broadly align with ex-ante predictions from surveyed academic economists and consulting professionals, validating the productivity- enhancing view of consulting endorsed by most practitioners though only half of academics, while lending less support to a rent-shifting view favored by many economists. |
| Keywords: | Management Consulting, Productivity, Firm Performance, Network Data, Organizational Change, Allocative Efficiency |
| JEL: | E20 E22 E23 J0 L2 M0 O4 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202508-480 |
| By: | Jonathan Adams; Cheng Chen; Min Fang; Takahiro Hattori; Eugenio Rojas |
| Abstract: | How do information frictions and investment frictions interact? We use a continuous-time model to analytically characterize how incomplete information distorts firms’ decision rules and stationary distribution when investment is irreversible. The two frictions interact in rich and substantial ways. At the firm level, noisier information shrinks a firm’s inaction region and reduces the elasticity of investment to productivity. In the aggregate, incomplete information increases steady-state capital, exacerbates capital misallocation, and mitigates the impact of productivity shocks on aggregate investment. We test and quantify these predictions using Japanese administrative data that match firms’ forecasts with their balance sheets, incomes, and expenditures. In the data, firms underreact to news as if they face information frictions; those with more extreme underreaction are less inactive, as predicted. |
| Keywords: | heterogeneous firms; Incomplete information; irreversibility; heterogeneous beliefs; misallocation; investment; volatility |
| JEL: | D25 D84 E22 E32 |
| Date: | 2025–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedkrw:101729 |
| By: | Nocke, Volker; Rhodes, Andrew |
| Abstract: | We develop a framework to study horizontal mergers when the parties can propose remedies to an antitrust authority. Remedies are modeled as asset divestitures, which make the firm receiving the assets more efficient at the expense of the merged firm. We consider both the case where the merger affects a single market and where it affects multiple markets. Solving for the merging firms’ optimal proposal, we investigate when it involves remedies—and if so, which assets should be divested, and to whom, and how this depends on market characteristics such as the level of competitiveness. |
| Keywords: | Antitrust; horizontal mergers; structural remedies; divestitures; data |
| JEL: | L13 L40 D43 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130888 |
| By: | Riukula, Krista (ETLA - The Research Institute of the Finnish Economy); Väänänen, Touko (Aalto University) |
| Abstract: | We study the impact of transport-induced agglomeration on workers' earnings, as well as the productivity and costs of establishments, in the capital region of Finland using comprehensive individual- and establishment-level registry data. To our knowledge, we are the first to jointly examine firm- and worker-level effects of agglomeration. We find that improved workplace-to-workplace accessibility increases employees’ annual earnings, particularly among workers in smaller firms. However, we find no statistically significant effects on value added or labour costs per worker at the establishment level. We propose two potential explanations for this discrepancy: (1) differences in the composition of workers between the worker- and establishment-level analyses due to, for example, new hires, and (2) rising costs associated with increased agglomeration. Further analysis reveals that enhanced accessibility leads to higher establishment employment and increased operating expenses, such as rents. Taken together, these findings suggest that the benefits of agglomeration are primarily shared between workers and property owners. |
| Keywords: | transport project, productivity, agglomeration, accessibility |
| JEL: | R41 R42 R12 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18103 |
| By: | Chaigneau, Pierre; Edmans, Alex; Gottlieb, Daniel |
| Abstract: | This paper studies executive pay with fairness concerns: if the CEO's wage falls below a perceived fair share of output, he suffers disutility that is increasing in the discrepancy. Fairness concerns do not always lead to fair wages; instead, the firm threatens the CEO with unfair wages for low output to induce effort. The contract sometimes involves performance-vesting equity: the CEO is paid a constant share of output if it is sufficiently high, and zero otherwise. Even without moral hazard, the contract features pay-for-performance, to address fairness concerns and ensure participation. This rationalizes pay-for-performance even if effort incentives are unnecessary. |
| Keywords: | moral hazard; executive compensation; fairness |
| JEL: | D86 G32 J33 G34 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125993 |
| By: | Cullen, Julie Berry; Dahl, Gordon B. (University of California, San Diego); De Thorpe, Richard (Princeton University) |
| Abstract: | We estimate the effects of being over- or underqualified for a job using quasi-random assignment of new enlistees to over 130 different jobs in the US Air Force. Being overqualified causes higher attrition, both during technical training and afterward when individuals are working in their assigned jobs. It also results in more behavioral problems, worse performance evaluations, and lower scores on general knowledge tests about the military taken by all workers. On the other hand, overqualification results in better performance relative to others in the same job: job-specific test scores rise both during technical training and while on the job, and these individuals are more likely to be promoted. Combined, these patterns suggest that overqualified individuals are less motivated, but still outperform others in their same job. Underqualification results in a polar opposite set of findings, suggesting these individuals are motivated to put forth more effort, but still struggle to compete when judged relative to others. Consistent with differential incentives, individuals who are overqualified are in jobs which are less valuable in terms of outside earnings potential, while the reverse is true for those who are underqualified. |
| Keywords: | retention, skill acquisition, job mismatch, promotion |
| JEL: | J24 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18098 |
| By: | Mantej Pardesi; Frank Corvers; Harald Pfeifer |
| Abstract: | We study how investment spikes in technologies and complementary infrastructure influence firms' hiring and training strategies. While prior work emphasizes how technologies reallocate skill demand, few focus on how firms acquire the required skills. Using linked employer-employee data on German establishments, we identify spikes by their technological composition and capital vintages. Event study estimates show that investment spikes in ICT and production line technologies lead to an upscaling effect raising employment by external hiring followed by training of young apprentices. Combining technologies with factories and plants induces firms to use apprenticeship training without an increase in external hiring. Incumbent workers are trained when investment spikes renew the vintage of firm's capital. Our findings support a vintage human capital framework in which technology adoption induces firms to gradually adjust workforce through hiring and training while preserving expertise of incumbent workers. |
| Keywords: | investment spikes, technology adoption, technology vintages, training, skill formation |
| JEL: | J24 D22 O33 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0249 |
| By: | Yating Ru (Asian Development Bank); Elizabeth Tennant (Cornell University); David Matteson (Cornell University); Christopher Barrett (Cornell University) |
| Abstract: | Recent studies harnessing geospatial big data and machine learning have significantly advanced poverty mapping, enabling granular and timely welfare estimates in traditionally data scarce regions. While much of the existing research has focused on overall out-of-sample predictive performance, there is a lack of understanding regarding where such models underperform and whether key spatial relationships might vary across places. This study investigates spatial heterogeneity in machine learning-based poverty mapping, testing whether spatial regression and machine learning techniques produce more unbiased predictions. We find that extrapolation into unsurveyed areas suffers from biases that spatial methods do not resolve; welfare is overestimated in impoverished regions, rural areas, and single sector-dominated economies, whereas it tends to be underestimated in wealthier, urbanized, and diversified economies. Even as spatial models improve overall predictive accuracy, enhancements in traditionally underperforming areas remain marginal. This underscores the need for more representative training datasets and better remotely sensed proxies, especially for poor and rural regions, in future research related to machine learning-based poverty mapping. |
| Keywords: | poverty mapping;machine learning;spatial models;East Africa |
| JEL: | C21 C55 I32 |
| Date: | 2025–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:021518 |
| By: | Silliman, Mikko (Aalto University); Willén, Alexander (Norwegian School of Economics) |
| Abstract: | This paper reconsiders how labor market competition shapes skill development --- integrating the perspectives of both firms and workers. We show that competition serves as a catalyst for learning. It creates outside opportunities which incentivize workers to invest in their own skills, and it imposes innovation pressure that raises the value of training for firms. Using linked Norwegian survey and administrative data together with vignette experiments, we find that workers in more competitive markets accumulate skills faster than workers in concentrated markets—primarily through informal learning—and that these gains are concentrated in higher-order, transferable skills. Firms in competitive environments also invest more in formal training, treating it as a strategic necessity rather than a dispensable cost. Experimental evidence complements these findings by showing that both workers and managers expect greater returns to learning and human capital investments in competitive markets. Together, these results challenge the canonical view of competition as a source of market failure in training and instead highlight its role in facilitating both worker-led and firm-led investments in human capital. |
| Keywords: | human capital, competition, skills |
| JEL: | J24 J31 J42 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18109 |
| By: | Ziegler, Lennart (University of Vienna) |
| Abstract: | This paper examines how caseworkers influence job finding rates and job quality. To rule out selection effects, I exploit that caseworkers are assigned based on the jobseekers’ month of birth in some offices of the Austrian public employment service. Combining administrative data on caseworkers and jobseekers, I compute value-added measures for multiple jobseeker outcomes. A one-standard-deviation increase in caseworker performance corresponds to six additional days of employment in the first year and two percent higher earnings. For older workers and workers of foreign nationality, I observe the largest differences in caseworker performance. Employment and earnings effects are positively correlated, suggesting that faster job finding does not come at the expense of job quality. Analyzing differences in caseworker strategies, I find that caseworkers who refer more vacancies to jobseekers achieve higher employment rates, and those who refer better-paying jobs also achieve higher earnings. In contrast, frequent use of training programs or benefit sanctions is associated with worse job search outcomes. |
| Keywords: | job search assistance, caseworkers, unemployment, vacancy referrals |
| JEL: | J64 J68 J31 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18094 |
| By: | Wolfgang Maennig (Chair for Economic Policy, University of Hamburg); Niklas Rohde (Chair for Economic Policy, University of Hamburg) |
| Abstract: | Effects of climate emergency declarations (CEDs) have been reported in multiple cases; this is the first paper to test their potential economic impacts on the market share of electric vehicles (EVs). We use panel data on German CEDs at the district level from 2015 to 2023, employ a difference-in-differences (DiD) approach, and find that compared with districts lacking CEDs, districts with CEDs do not demonstrate significant disparities in EV registrations. We do not find evidence that climate emergencies motivate more environmentally friendly consumption. |
| Keywords: | Climate Emergency, Electric Vehicles, Transport, Local Climate Plans |
| JEL: | Q58 R5 C33 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:hce:wpaper:082 |
| By: | Adam M. Lavecchia; James Stutely |
| Abstract: | This paper documents sharp bunching in third-party reported employment earnings at a basic exemption for social security contributions among older workers. Beginning in 2012, workers age 60-64 who were receiving a public pension were required to make social security contributions equal to 9.9 percent of their employment earnings above a basic exemption threshold of $3, 500. Using administrative data on third-party reported earnings and a differences-in-bunching estimator we document sharp bunching at the $3, 500 threshold. We argue that our results represent new evidence on the role of firms in mediating the earnings response to payroll taxes. |
| Keywords: | Social security contributions; Sharp bunching; Employment Earnings |
| JEL: | H20 H24 H25 H31 H32 H55 J22 J23 J38 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:mcm:deptwp:2025-07 |
| By: | Carlos Alberto Coca Gamito (Asian Development Bank); Silvia Garcia Mandico (Asian Development Bank) |
| Abstract: | Young people in Bhutan face rising rates of exclusion from employment, education, or training, and limited access to quality jobs, despite gains in education. Entrepreneurship is often viewed as an alternative pathway, but most youth-led ventures remain necessity-driven, informal, and short-lived. Using data from the 2018–2023 Labor Force Survey and the 2024 Jobs and Skills Survey, this paper examines youth entrepreneurship dynamics, including motivations, earnings, productivity, and sectoral patterns. Findings show that opportunity-driven entrepreneurs—especially young women—achieve higher earnings and productivity, but few business ventures by young people transition beyond the early stages. A shift from necessity-driven to opportunity-driven entrepreneurship could yield economic gains equivalent to 1.4% of gross domestic product. Realizing this potential requires gender-responsive, stage-specific support and embedding entrepreneurship within a broader strategy for decent work and inclusive growth. |
| Keywords: | youth employment;entrepreneurship;decent work;gender and labor market;labor market dynamics |
| JEL: | J13 J21 J24 L26 O17 |
| Date: | 2025–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:021528 |
| By: | Dong, Sarah (Australian National University); Satyadini, Agung (Australian National University); Sinning, Mathias (Australian National University) |
| Abstract: | Both theory and evidence suggest an ambiguous relationship between business tax compliance and geographic proximity to tax offices. We study this issue using a large-scale natural field experiment with Indonesia’s tax authority involving 12, 000 micro, small, and medium enterprises (MSMEs). Businesses were randomly assigned to receive deterrence, information, or public goods letters, or no message. All letters improved compliance, with deterrence messages producing the largest gains - substantially increasing filing rates and raising monthly tax payments. Each dollar spent on deterrence letters generated about US$30 in additional revenue over the course of a year. We observe high compliance among non-treated MSMEs near metropolitan tax offices and find that enforcement messages successfully raise compliance in non-metropolitan regions to comparable levels. However, targeting already compliant MSMEs near metropolitan tax offices backfires, underscoring the need for geographically tailored tax administration strategies. These results provide novel experimental evidence on the relation between geographic proximity and the effectiveness of tax enforcement, helping to reconcile mixed findings in the tax compliance literature. |
| Keywords: | behavioral insights, natural field experiment, tax compliance |
| JEL: | C93 D90 H25 H26 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18108 |