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on Business Economics |
| By: | Pau Roldan-Blanco; Josep Pijoan-Mas |
| Abstract: | We study how the co-existence of fixed-term (FT) and open-ended (OE) contracts shapes firm dynamics, firm selection, worker allocation, aggregate productivity, and output. Using rich Spanish administrative data, we document that the use of fixed- term contracts is very heterogeneous across firms within narrowly defined sectors. Particularly, the relationship between the share of temporary workers and firm size is positive within firm but negative between firms. To explain these facts, we write a model of firm dynamics with technology heterogeneity, search-and-matching frictions, and a two-tier labor market structure. Our model emphasizes a key trade-off between contracts, namely, that while FT contracts give flexibility to firms, they also create more worker turnover, which is costly through the need to hire new workers and through the loss of firm-specific human capital. We find that limiting the use of FT contracts decreases the share of temporary employment and increases aggregate productivity —as better firm selection offsets increased misallocation of workers— but it also increases unemployment, output, and welfare. |
| Keywords: | dual labor markets, firm dynamics, temporary contracts, unemployment |
| JEL: | D83 E24 J41 L11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1531 |
| By: | Ihsaan Bassier; Joshua Budlender |
| Abstract: | When firm productivity or product demand rises, workers typically share in the gains through higher wages or expanded employment. We show that for firms under monopsony with a binding minimum wage, this link from firm gains to worker outcomes breaks sharply. Revenue-productivity improvements raise revenues but not wages or employment: firms simply maintain the minimum wage and absorb the gains into higher wage markdowns. We find compelling evidence for these predictions using South African administrative data, based on a cross-sectional kink design as well as within-firm responses to internal and shift-share trade shocks. These results reveal a previously overlooked monopsonistic margin - productivity -induced markdown adjustment - and we show using a structural model that this substantially diminishes the intended returns of policies such as employment subsidies. |
| Keywords: | Monopsony, Rent-sharing, Minimum wage, Firm productivity |
| Date: | 2025–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2134 |
| By: | Santiago Alvarez-Blaser; Raphael Auer; Sarah M. Lein; Andrei A. Levchenko; Raphael A. Auer; Sarah Marit Lein |
| Abstract: | This paper uses barcode-level price data for 16 advanced and emerging market countries over the period 2005–2022 to investigate the role of individual firms and product categories in aggregate inflation. We decompose inflation into the component due to macroeconomic shocks and the granular residuals capturing the impact of individual firms and product categories, respectively. In advanced economies, the firm granular residual accounts for 41% of the variance of overall inflation, while the product category granular residual accounts for another 15%. Most of the variation in the firm granular residual is due to idiosyncratic shocks rather than to higher sensitivity of larger firms to common shocks. In the cross-section of countries, granular residuals are less important in economies with less concentrated market shares and higher inflation, such as emerging markets. Granular forces also contributed to the post-COVID inflation surge, with the firm-level component explaining roughly one-third of the 2021–2022 inflation in advanced economies. Finally, granularities are associated with a more sluggish response of inflation to monetary policy shocks, suggesting that market concentration can influence monetary non-neutrality. |
| Keywords: | inflation, price setting, firm-level shocks, granular fluctuations, large firms |
| JEL: | E31 E32 L11 L16 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12262 |
| By: | Kikuchi, Tatsuru |
| Abstract: | This paper investigates how executive demographics—particularly age and gender—influence artificial intelligence (AI) investment decisions and subsequent firm productivity using comprehensive data from over 500 Japanese enterprises spanning 2018-2023. Our central research question addresses the role of executive characteristics in technology adoption, finding that CEO age and technical background significantly predict AI investment propensity. Employing these demographic characteristics as instrumental variables to address endogeneity concerns, we identify a statistically significant 2.4\% increase in total factor productivity attributable to AI investment adoption. Our novel mechanism decomposition framework reveals that productivity gains operate through three distinct channels: cost reduction (40\% of total effect), revenue enhancement (35\%), and innovation acceleration (25\%). The results demonstrate that younger executives (below 50 years) are 23\% more likely to adopt AI technologies, while firm size significantly moderates this relationship. Aggregate projections suggest potential GDP impacts of ¥1.15 trillion from widespread AI adoption across the Japanese economy. These findings provide crucial empirical guidance for understanding the human factors driving digital transformation and inform both corporate governance and public policy regarding AI investment incentives. |
| Keywords: | Artificial Intelligence, Executive Demographics, Technology Adoption, Productivity, Digital Transformation |
| JEL: | D24 L25 M12 O33 O47 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126734 |
| By: | Martin Peitz; Anton Sobolev |
| Abstract: | A firm may decide to make total-surplus-reducing purchase recommendations in response to consumer heterogeneity in an experience good setting. First, we show under which conditions the firm chooses to make such biased recommendations in a monopoly setting. Second, we propose a duopoly model with differentiated products in which single-product firms compete in uniform prices and recommendation policies. We provide conditions under which both firms choose to bias their recommendations, whereas the bias would be absent if products were more differentiated or one of the two products were withdrawn from the market. |
| Keywords: | recommendation bias, recommender system, competition |
| JEL: | L12 L13 L15 D21 D42 D43 M37 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_715 |
| By: | Masayuki MORIKAWA |
| Abstract: | Using micro-level data on Japanese firms, this study analyzes the relationship between productivity and wages, with a focus on comparing aggregate-level and firm-level figures. The main findings are as follows. First, at the macro level, productivity growth and real wage growth are diverging, but, at the firm level, there is a strong positive relationship between productivity growth and wage growth, indicating that productivity and wages have not decoupled. Second, a divergence exists between simple average and aggregate (i.e., weighted average) wage trends, with aggregate real wages exhibiting a greater downward trend. Third, dynamic Olley-Pakes decomposition reveals that the covariance term contributes negatively to changes in real wages. In other words, the relationship between higher value-added share and higher wages at the firm level is weakening. In contrast, the covariance term has a large positive effect on productivity growth. These results suggest that while productivity growth is essential for raising real wages, policies that promote productivity through resource reallocation may conflict with those aimed at increasing labor’s share of value-added. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25106 |
| By: | Sonia Falconieri; Paolo F. Volpin; Francisco Urzúa; Marcelo Ortiz |
| Abstract: | Since Norway's board gender reform in 2003, many European countries have introduced gender targets for the boards of listed firms. We examine how these regulations affected the gender of newly appointed chief executive officers (CEOs) in private firms. Using cross- country and industry-level variation in exposure to the reform, we document an 8 to 13 percent increase in the number of appointments of female CEOs in industries with listed firms subject to the reforms, and no change in industries without such exposure. The effect is stronger in countries with mandatory quotas and where board appointments are more salient. The results indicate that board gender regulations generated positive spillover effects beyond the targeted listed firms, increasing the representation of women in top executive positions in private firms; however, they did not lead to a broader country-level cultural shift. |
| Keywords: | board quotas, female CEOs, private firms |
| JEL: | G14 G34 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1532 |
| By: | Aline Blankertz; Brianna Rock; Nicholas Shaxson |
| Abstract: | This paper presents striking new data about the scale of Google's involvement in the global digital and corporate landscape, head and shoulders above the other big tech firms. While public attention and some antitrust scrutiny has focused on these firms' mergers and acquisitions (M&A) activities, Google has also been amassing an empire of more than 6, 000 companies which it has acquired, supported or invested in, across the digital economy and beyond. The power of Google over the digital markets infrastructure and dynamics is likely greater than previously documented. We also trace the antitrust failures that have led to this state of affairs. In particular, we explore the role of neoclassical economics practiced both inside the regulatory authorities and by consultants on the outside. Their unduly narrow approach has obscured harms from vertical and conglomerate concentrations of market power and erected ever higher hurdles for enforcement action, as we demonstrate using examples of the failure to intervene in the Google/DoubleClick and Google/Fitbit mergers. Our lessons from the past failures can inform the current approach towards one of the biggest ever big tech M&A deals: Google's $32 billion acquisition of the Israeli cloud cybersecurity firm Wiz. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.02931 |
| By: | Igli Bajo; Frederik H. Bennhoff; Alessandro Ferrari |
| Abstract: | Recessions are periods in which the least productive firms in the economy exit, and as the economy recovers, they are replaced by new and more productive entrants. These cleansing effects improve the average firm productivity. At the same time, recessions induce a loss of varieties. We show that the long-run welfare effects trade off these two forces. This trade-off is governed by love-of-variety and the elasticity of substitution in aggregate production. If industry output is aggregated with the standard CES aggregator, recessions do not bring about any improvement in GDP and welfare. If the economy features more love-of-variety than CES, the social planner optimally subsidizes economic activity both in steady state and even more so in recessions to avoid firm exit. We use the model and quasi-exogenous variation in demand to estimate love-of-variety. We find it to be significantly higher than implied by CES aggregation, suggesting that even the long-run effects of recessions are negative. Finally, we quantitatively characterize the optimal policy response both along the transition and in the steady state. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.09162 |
| By: | Cristina Tello-Trillo; Lawrence Schmidt; Sean Streiff |
| Abstract: | This paper details the methodology for creating an updated Compustat-Longitudinal Business Database (LBD) bridge, facilitating linkage between company identifiers in Compustat and firm identifiers in the LBD. In addition to data from Compustat, we incorporate historical data on public companies from various public and private sources, including information on executive names. Our methodology involves a series of stages using fuzzy name and address matching, including EIN, telephone number, and industry code matching. Qualified researchers with approved proposals can access this bridge though the Federal Statistical Research Data Centers. The Compustat-SSL bridge serves as a crucial resource for longitudinal studies on U.S. businesses, corporate governance, and executive compensation. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-65 |
| By: | Zainab Iftikhar; Anna Zaharieva |
| Abstract: | This paper evaluates the effects of low-skill immigration on small businesses, wages, and employment in Germany. We develop a search and matching model with heterogeneous workers, cross-skill matching, and endogenous entry into entrepreneurship. The model is calibrated using data from the German SocioEconomic Panel (SOEP). Quantitative analysis shows that low-skill immigration increases the welfare of high-skill workers. It also leads to the endogenous expansion of immigrant entrepreneurial activities, generating positive spillovers for all demographic groups except native entrepreneurs. However, the gains are outweighed by the losses in welfare of low-skill workers, and overall, there is a marginal loss of per-worker welfare to the economy. Policies restricting immigrant entrepreneurship relax competition for native small businesses but reduce welfare for all other worker groups. |
| Keywords: | entrepreneurship, small business, self-employment, search frictions, immigration |
| JEL: | J23 J31 J61 J64 L26 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_714 |
| By: | Malik Curuk; Jérôme Héricourt; Gonzague Vannoorenberghe |
| Abstract: | Estimating the effects of goods and labor market power on firm pricing behavior is difficult since firm-level output and employment are jointly determined. We exploit the variation in the sets of destination countries across exporting firms, which enables us to separately identify the effects of goods and labor market power on pass-through rates by reducing the comovement of firm size across specific sales markets and in its local labor market. We present a theoretical framework in which multi-destination exporters are oligopolists in their goods markets and oligopsonists in their local labor market. Combining firm-level trade data per product-destination with establishment-level balance sheet data and employment zone identifiers for the universe of French firms from 1995 to 2015, we construct theoretically sound proxies for labor and goods market power and jointly estimate their effects on export prices using exchange rate shocks as the source of identifying variation in firm demand. Consistent with the model's predictions, we provide robust evidence that firms with stronger labor market power have a lower pass-through of changes in their effective exchange rate into export prices conditional on their goods market power. The findings indicate a sizable degree of labor market power for French exporters. |
| Keywords: | Labor Market Power;Goods Market Power;Exchange Rate;Pass-through |
| JEL: | F16 F31 J42 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-15 |