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on Business Economics |
| By: | Ritam Chaurey; Gaurav Nayyar; Siddharth Sharma; Eric Verhoogen |
| Abstract: | Knowledge spillovers among firms are widely viewed as a key driver of agglomeration and growth, but are difficult to estimate cleanly. We randomly allocated an energy-efficient motor --- a “servo'” motor --- among leather-goods firms in Dhaka, Bangladesh, and tracked adoption, information flows, beliefs about energy savings, and other variables. We use the difference between actual exposure and expected exposure (from simulated randomization draws) to identify the effect of exposure. We find a robust positive effect of exposure to treated neighbors within a small geographic area (500 meters in our baseline specification) on information flows and adoption. A marginal value of public funds (MVPF) calculation taking learning spillovers into account yields a significantly larger value than one considering only treated firms and suggests that adoption subsidies would be a cost-effective policy intervention. |
| JEL: | L23 L67 O12 O14 R11 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34296 |
| By: | Jakob Beuschlein; Jósef Sigurdsson; Horng Chern Wong |
| Abstract: | We study the effects of corporate acquisitions on workers using Swedish administrative data and document substantial, persistent earnings losses following acquisitions. These losses reflect both displacement and wage cuts among stayers from target firms. We find no evidence that increased monopsony power accounts for these wage cuts. Instead, they are concentrated in acquisitions where the acquiring-firm CEO sat on the board of the target prior to the transaction. Such acquisitions increase acquiring-firm profits and CEO pay, without affecting total employment or revenue, consistent with rent redistribution. Overall, acquisitions reduce wages and disrupt employment, with profit gains partly extracted from workers. |
| Keywords: | mergers and acquisitions, wages, layoffs, monopsony, firm performance, managers |
| JEL: | G34 J23 J31 J42 J63 L25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12162 |
| By: | Michela GIORCELLI; Yuki HIGUCHI; Yutaro TAKAYASU; Mari TANAKA |
| Abstract: | In the aftermath of World War II, a large-scale management program, sponsored by the United States and known as the Productivity Program, was implemented in several European countries and Japan. The program involved sending corporate executives to observe business practices at U.S. firms and aimed to share modern management practices and enhance productivity in the recipient countries. In this paper, we first summarize the similarities and differences in how the program was implemented in Japan and European countries based on historical documents. Next, using data on Japanese firms that participated in the program, combined with a database of stock-listed firms, we document the characteristics of participating firms and compare them to other stock-listed firms during the same period. We also provide a simple comparison of firm performance over the first two decades of the program between participating firms and non-participating firms with similar initial characteristics. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25092 |
| By: | Utsoree Das (University of Geneva); Erik Katovich (University of Connecticut); Jonah M. Rexer (The World Bank) |
| Abstract: | Empirical evidence and economic theory suggest multinational firms are more productive than their local counterparts. What explains the persistence of local firms and the recent surge in local content policies? Using a global database of corporate ownership changes for 35, 567 commercial mines between 2000-2022, we test whether local firms have a comparative advantage in dealing with weak institutions, corruption, and conflict, which could attenuate or reverse the multinational advantage. We confirm that, on average, output declines by 8% after mines are taken over by local firms. Localized assets also exhibit higher air pollution, indicating lower operational quality. However, in states with weak governance, localization increases mine output by 8%. Local firms also generate more economic activity, urbanization, and non-agricultural employment around mines, indicating stronger local linkages. While multinational mining firms exhibit increasing returns to scale, local firms exhibit decreasing returns, suggesting they may grow based on their ability to navigate institutional weaknesses rather than their productivity. Results highlight the role of institutions in determining relative advantages of multinational versus local firms. |
| Keywords: | Resources, governance, firm ownership, foreign investment, conflict |
| JEL: | F L O Q |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2025.15 |
| By: | Tino, Stephen |
| Abstract: | This paper examines the importance of labor market power and firm productivity for understanding the immigrant-native pay gap. Using matched employer-employee data from Canada, I estimate a wage-posting model that incorporates two-sided heterogeneity and strategic interactions in wage setting. In the model, firms mark down wages below the marginal revenue product of labor (MRPL), and the equilibrium immigrantnative pay gap arises from differences in wage markdowns and MRPL. The findings suggest that immigrants earn 77% of their MRPL on average, compared to 84% for natives. I also decompose the immigrant-native pay gap using counterfactual exercises that account for general equilibrium responses of workers and firms. The results of the counterfactuals suggest that (i) differences in labor supply curves contribute significantly to earnings inequality between immigrants and natives; (ii) immigrants tend to work at more productive firms, driven by their tendency to work in cities where firms are more productive on average; and (iii) heterogeneity in firm productivity magnifies the contribution of labor supply differences to the immigrant-native pay gap, highlighting the importance of interaction effects. |
| Keywords: | Immigration, inequality, monopsony, firm productivity, immigrant-native earnings differential |
| JEL: | J01 J15 J23 J31 J42 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:clefwp:327118 |
| By: | Alessandra Peter |
| Abstract: | In this paper, I document systematic heterogeneity in ownership and financing of firms across Eurozone countries. To rationalize these differences, I build a quantitative general equilibrium model of workers and entrepreneurs who choose debt and equity financing of their firms, subject to rich country-specific financial frictions. The novel data on firm ownership and financing, combined with the structure of the model, allows me to quantify the level of debt and equity frictions in each country. Quantitatively, I find much larger output effects from equity frictions: harmonizing them across countries would lead to nearly four times larger output effects compared to debt frictions, and removing them would increase aggregate output by 75\% more. The larger impact on output is due not only to the estimated levels and dispersion of equity frictions, but also to the fact that equity provides greater risk sharing, which further incentivizes entrepreneurs to expand their firms. Through their effect on risk sharing, equity frictions also rationalize the observed negative relationship between equity financing and wealth inequality. Quantitatively, they are responsible for over 70\% of the explained variation in top wealth shares across countries. |
| JEL: | E02 E44 G32 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34301 |
| By: | César Barreto; Christian Merkl |
| Abstract: | Our paper documents the importance of ex ante worker heterogeneity for labor market dynamics and for the composition of the unemployment pool over the business cycle. In recessions, the unemployment pool shifts toward workers with higher wages in their previous jobs. Based on administrative data for Germany and two-way worker and firm wage fixed effects, we show that this shift is mainly connected to worker heterogeneity, not to firm heterogeneity. We calibrate a search and matching model with ex ante worker heterogeneity to the estimated relative residual wage dispersion across worker fixed-effect groups. We show that a lower idiosyncratic match-specific shock dispersion for high-wage workers is key for the larger relative fluctuations of their separation rate as well as for the positive comovement between prior wages and fixed effects of unemployed workers with aggregate unemployment. We argue that firm-based explanations, such as cyclical financial frictions, are unlikely to be key drivers for the documented empirical patterns. |
| Keywords: | labor market flows, separations, fixed effects, labor market dynamics |
| JEL: | E24 J16 J31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12165 |
| By: | Pierluigi Murro; Valentina Peruzzi |
| Abstract: | This paper examines whether judicial enforcement shapes firms' participation in global value chains (GVCs). Exploiting Italy's 2013 court reorganization as a natural experiment, we combine firm-level survey data with administrative records and implement a spatial discontinuity IV design. We find that longer trials significantly reduce the probability of GVC participation: even delays of just a few weeks in civil proceedings translate into sizeable declines, underscoring the economic value of timely enforcement. The effect is concentrated among downstream firms and in trade with advanced markets, and operates through external finance, product complexity, and firm opacity |
| Keywords: | Global value chains; Judicial enforcement; Regional development; Product complexity |
| JEL: | F10 F61 K41 R11 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:sap:wpaper:wp264 |
| By: | Gaétan de Rassenfosse (Ecole polytechnique federale de Lausanne); Ling Zhou (Ecole polytechnique federale de Lausanne); |
| Abstract: | A patent system is a central tool in innovation policy. The prospect of monopolistic pricing supposedly encourages firms to innovate. However, there is scant empirical evidence supporting the existence of higher markups for patent-protected products. Using an original dataset that links consumer products to the patents that protect them, we study the impact of patent protection on product prices. Exploiting exogenous variations in patent status, we find that a loss of patent protection leads to an 8–10 percent drop in product prices. The price drop is larger for more important patents and is more pronounced in more competitive product markets. |
| Keywords: | innovation; markup; patent system; product; R&D incentive |
| JEL: | O31 O34 L11 D42 K11 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iip:wpaper:29 |
| By: | Gopal, Bhargav |
| Abstract: | This study examines the impact of California's SB826, enacted in 2018 and requiring at least one female director on corporate boards by 2019, on financial performance and governance. The quota reduced the share of all-male boards by 24 percentage points without harming financial performance from 2018 to 2021. Governance measures remained stable. Firms responded with both tokenism and meaningful integration, with tokenism more common in larger boards and those in male-dominated industries. I find that SB826 reduced firms' reliance on existing networks, suggesting that network barriers may have previously prevented some qualified women from joining boards. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:clefwp:327120 |
| By: | Nakov, Anton; Ghassibe, Mishel |
| Abstract: | Business cycles with pronounced inflation can have sectoral origins and often feature a growing share of price-adjusting firms. Rationalizing such phenomena requires enhancing our modeling toolkit. We do that by building a non-linear equilibrium multi-sector framework featuring a general input-output network and optimal decisions on the timing and size of price adjustments. The interaction of our ingredients creates equilibrium cascades: large movements in aggregates trigger price adjustment decisions on the extensive margin. Following demand shocks, such as monetary interventions, networks dampen cascades, thus slowing down price adjustment decisions and giving central banks substantial power to stimulate the real economy with limited inflationary consequences. In contrast, under supply shocks, networks amplify cascades, leading to fast increases in the frequency of repricing and large inflationary swings. Applied to Euro Area data, the interaction of networks with cascades allows to quantitatively match the surges in inflation and repricing frequency in the post-Covid era. JEL Classification: E31, E32 |
| Keywords: | large shocks, menu costs, networks, non-linear business cycles |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253123 |
| By: | Masyayuki Okada (Institute for Monetary and Economic Studies, Bank of Japan (E-mail: masayuki.okada@boj.or.jp)); Kazuhiro Teramoto (Graduate School of Economics, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo, Japan. 186-8603. (Email: k.teramoto@r.hit-u.ac.jp)) |
| Abstract: | This paper proposes a novel mechanism explaining why large firms exhibit stronger stock price responses to monetary policy surprises. Empirically, we show that endogeneity arising from the ex-post predictability of these surprises disproportionately affects large firms, leading to overestimated stock return responses. We develop an asset pricing model with granular-origin aggregate fluctuations and investors' imperfect knowledge of monetary policy rule parameters. The model demonstrates that belief revisions about the policy stance drive both monetary policy surprises and heterogeneous stock price responses through changes in the risk premium - even without investor heterogeneity or differential effects of policy shocks on firm fundamentals. |
| Keywords: | monetary policy surprises, stock returns, high-frequency identification, partial information, learning, granular-origin aggregate fluctuations |
| JEL: | E43 E44 E52 E58 G12 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ime:imedps:25-e-06 |
| By: | Francesc Dilmé; Aaron Kolb |
| Abstract: | We revisit the classic chain-store paradox by introducing a novel element: the arrival of exogenous, public signals about the incumbent’s private type over time. As the horizon lengthens, two opposing forces come into play. On one hand, standard reputational incentives grow stronger; on the other, the increasing availability of information makes it more difficult to sustain a reputation. We show that full deterrence can still emerge as the horizon grows arbitrarily long, though not always, and we provide a complete characterization of the conditions under which it arises. |
| Keywords: | Entry deterrence, reputation, chain-store parardox |
| JEL: | C72 C73 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_704 |
| By: | Kazuyuki MOTOHASHI; Naotoshi TSUKADA; Kenta IKEUCHI |
| Abstract: | Corporate scientists that are involved in scientific activities, often leading to research paper publications, are important for corporate innovation, since science-based innovation tends to be transformative, spanning the boundaries of existing R&D pipelines. Such scientists can also play a role as a bridge between academic researchers, injecting scientific knowledge from outside the firm. However, the publication of internal corporate scientific activities could benefit competitor firms, providing them with input towards their own transformative innovation. In this study, we analyze this trade-off using a linked dataset of research papers and patents (disambiguated by paper author and patent inventor information and patent citation in research papers) of Japanese firms. Specifically, we analyzed two aspects, (1) contribution of corporate scientist research papers to in-house innovation (patent) and (2) capacity of corporate scientists to absorb scientific findings from outside their firms to obtain high quality patents. Our findings indicate that corporate scientists contribute to both aspects of innovation in their firms. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25089 |