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on Business Economics |
| By: | Cesar Barreto; Antoine Bertheau; Dogan Gulumser; Alexander Hijzen; Astrid Kunze; Marta Lachowska; Anne Sophie Lassen; Salvatore Lattanzio; Benjamin Lochner; Stefano Lombardi; Jody Meekes; Balazs Murakozy; Oskar Nordstrom Skans; Marco Palladino |
| Abstract: | We quantify the role of gender-specific firm wage premiums in explaining the private-sector gender gap in hourly wages using a harmonized research design across 11 matched employer-employee datasets—ten European countries and Washington state, USA. These premiums contribute to the gender wage gap through two channels: women’s concentration in lower-paying firms (sorting) and women receiving lower premiums than men within the same firm (pay-setting). We find that firm wage premiums account for 10 to 30 percent of the gender wage gap. While both mechanisms matter, sorting is the predominant driver of the firm contribution to the gender wage gap in most countries. We document three patterns that are broadly consistent across countries: (1) women’s sorting into lower-paying firms increases with age; (2) women are more concentrated in low-paying firms with a high share of part-time workers; and (3) women receive about 90 percent of the rents that men receive from firm surplus gains. |
| Keywords: | Gender wage gap; Firms; Cross country comparison |
| JEL: | C52 J24 J31 J71 |
| Date: | 2025–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedhwp:102275 |
| By: | M. Sadra Heydari; Zafer Kanik; Santiago Montoya-Bland\'on |
| Abstract: | We introduce heterogeneous R&D productivities into an endogenous R&D network formation model, generalizing the framework in Goyal and Moraga-Gonzalez (2001). Heterogeneous productivities endogenously create asymmetric gains for connecting firms: the less productive firm benefits disproportionately, while the more productive firm exerts greater R&D effort and incurs higher costs. For sufficiently large productivity gaps between two firms, the more productive firm experiences reduced profits from being connected to the less productive one. This overturns the benchmark results on pairwise stable networks: for sufficiently large productivity gaps, the complete network becomes unstable, whereas the Positive Assortative (PA) network -- where firms cluster by productivity levels -- emerges as stable. Simulations show that the PA structure delivers higher welfare than the complete network; nevertheless, welfare under PA formation follows an inverted U-shape in the fraction of high-productivity firms, reflecting crowding-out effects at high fractions. Altogether, a counterintuitive finding emerges: economies with higher average R&D productivity may exhibit lower welfare through (i) the formation of alternative stable R&D network structures or (ii) a crowding-out effect of high-productivity firms. Our findings highlight that productivity-enhancing policies should account for their impact on endogenous R&D alliances and effort, as such endogenous responses may offset or even reverse the intended welfare gains. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.23337 |
| By: | Huiyu Li; Chen Lian; Yueran Ma; Emily Martell |
| Abstract: | We document new facts that link firms’ markups to borrowing constraints: (1) less constrained firms within an industry have higher markups, especially in industries where assets are difficult to borrow against and firms rely more on earnings to borrow; (2) markup dispersion is also higher in industries where firms rely more on earnings to borrow. We explain these relationships using a standard Kimball demand model augmented with borrowing against assets and earnings. The key mechanism is a two-way feedback between markups and borrowing constraints. First, less constrained firms charge higher markups, as looser constraints allow them to attain larger market shares. Second, higher markups relax borrowing constraints when firms rely on earnings to borrow, as those with higher markups have higher earnings. This two-way feedback lowers TFP losses from markup dispersion, particularly when firms rely on earnings to borrow. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-75 |
| By: | Armstrong, Mark; Vickers, John |
| Abstract: | We study a market in which firms each might supply a number of variants, or "brands", of fundamentally the same product. Consumers differ in the sets of brands they consider, and firms compete using (multi-dimensional) mixed pricing strategies. We show when firms apply uniform pricing across their brands, and when they use segmented pricing so that one "discount" brand is priced below another "premium" brand. We study the case of symmetric brands in particular, and discuss the impact of a firm introducing a new brand, of imposing a requirement to set uniform prices across brands, and of mergers between firms. |
| Keywords: | Price dispersion, price discrimination, multiproduct firms, mixed strategies, oligopoly, multibranding, multi-channel selling. |
| JEL: | C72 D43 D83 L13 M31 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127017 |
| By: | Pierre-Louis Vézina; Cevat Giray Aksoy; Piotr Lewandowski |
| Abstract: | We examine business creation by Ukrainian refugees in Poland following the Russian invasion. We find that Ukrainians started 38, 833 firms in 2022–23, accounting for 7% of all registrations. Our survey shows that 58% of post-invasion Ukrainian founders are refugees, and cross-county regressions show that a 10% increase in adult male Ukrainian refugees is associated with a 2.7% increase in Ukrainian firm registrations. We then show that new Ukrainian businesses stimulate Polish entrepreneurship. Using a shift-share strategy based on refugee shocks and Ukrainians’ comparative advantage, we find that a 10% increase in Ukrainian registrations led to 2.3% more Polish firms. |
| Keywords: | migration, firms, entrepreneurship, multiplier |
| JEL: | F22 L26 O15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ibt:wpaper:wp072025 |
| By: | Kala, Namrata (MIT Sloan School of Management; BREAD; CEPR; J-PAL; NBER); Haseeb, Muhammad (University of Bristol); Fenske, James (University of Warwick) |
| Abstract: | Effective regulatory design requires an understanding of how regulatory burden affects regulated entities. Using novel data on all applications for environmental permits in five Indian states and a natural experiment, we estimate how regulatory burden of environmental permitting affects firms. Difference-in-difference estimates show that deregulation induces smaller firms to enter and increases entry. Standard data sources would miss these substantial effects, underscoring the importance of collecting data across the firm size distribution. We also use full texts of permit certificates to create novel measures of regulatory burden. Firms in industries with reduced regulations face fewer, less stringent, permit conditions. |
| Keywords: | JEL Classification: |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:784 |
| By: | Yörük, Baris (University at Albany, SUNY); Oxley, Jonathan (Georgia State University); Harrison, Teresa (Drexel University) |
| Abstract: | In this paper, we examine specifically how the presence of corporate firms is associated with nonprofit, charitable activity in US metropolitan areas. We find evidence of a positive association consistent with Card, Hallock, and Moretti (2010) and, due to a longer time horizon with additional information on nonprofit activity, are able to provide additional investigation into how firm location affects size of the nonprofit sector and other nonprofit activities such as fundraising. Our estimates suggest a lower bound on the spillovers such that the presence of an additional firm headquarters within a metropolitan statistical area (MSA) leads to a $8.2 million increase in total charitable contributions within the same MSA. Moreover, a $1 billion rise in the aggregate market value of firms within an MSA corresponds to a $0.8 million increase in local charitable donations. |
| Keywords: | nonprofit organizations, corporate headquarters, charitable giving |
| JEL: | L30 D22 H10 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18330 |
| By: | Nguyen, Thao Trang (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Domini, Giacomo; Grazzi, Marco; Moschella, D.; Treibich, Tania (RS: GSBE MORSE, Macro, International & Labour Economics) |
| Abstract: | We examine the effects of adopting automation technologies on the export performance of French manufacturing firms during the 2002–2019 period. Adoption is identified through imports of automation-related capital goods, and its effects are estimated by means of a staggered difference-in-differences method. Our results indicate that automation significantly improves export outcomes, such as export value, the export to sales ratio and particularly the number of destination countries. However, its effect on the number of exported products is limited. These results are primarily driven by single-product firms, which expand their product portfolios, often toward more complex products, and increase their presence in high-income countries. Multi-product firms, instead, tend to streamline their product offerings while targeting low-income markets. These findings underscore the distinct mechanisms of learning effects and resource reallocation that shape automation strategies and drive export success. |
| JEL: | L11 L22 L25 O14 |
| Date: | 2025–11–28 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2025028 |
| By: | Maczulskij, Terhi |
| Abstract: | Abstract This paper examines how firms’ innovation activity responds to product- and destination-specific export demand shocks in their export markets. I draw on unique administrative data for Finnish manufacturing firms from 1999 onwards, matched with national customs records, patent data, and innovation and R&D surveys. The analysis reveals that positive export demand shocks significantly increase patenting activity and the likelihood of introducing new product innovations, while negative shocks reduce patenting and exports. The study finds that these innovation responses are dynamic, with patent applications rising in the short term and granted patents materializing over longer horizons. Heterogeneity analysis shows that more productive and financially stronger firms benefit disproportionately from export demand expansions. This pattern suggests that financial constraints may limit the ability of firms to adopt new innovations even as they expand production. |
| Keywords: | Export demand shock, Firm-level, Innovation, Manufacturing |
| JEL: | F14 O19 O30 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:134 |
| By: | Mert Demirer; Andrey Fradkin; Nadav Tadelis; Sida Peng |
| Abstract: | We document six facts about the structure and dynamics of the LLM market using API usage data from OpenRouter and Microsoft Azure. First, we show rapid growth in the number of models, creators, and inference providers, driven by open-source entrants. Second, we show price declines and persistent price heterogeneity across and within intelligence tiers, with open-source models being 90% cheaper than comparable closed-source models of the same intelligence. Third, we document market dynamism, with frequent turnover among leading models and creators. Fourth, we present evidence of horizontal and vertical differentiation, with no single model dominating across use cases, and demand for intelligence varying widely across applications. Fifth, we estimate preliminary short-run price elasticities just above one, suggesting limited scope for Jevons-Paradox effects. Finally, we show that although the share of firms that use multiple models increased over time, most firms concentrate their use on a single model, consistent with experimentation rather than persistent reliance on multiple models. |
| JEL: | L0 L10 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34608 |
| By: | Do Yoon Kim; Roberto Fontana; Shane Greenstein |
| Abstract: | The study examines the quasi-natural experiments provided by the staggered introduction of open drivers in the supply chains for routers. It is rare to observe components become open and measure whether openness generates a statistical impact on more products and innovative products. This study collects novel data on all routers and subcomponents introduced between 2000 and 2018, characterizing each firm's position in a supply chain as either an upstream component provider or a downstream router assembler. Following prior literature, openness influences a firm's ability to negotiate with current and potential partners, which is labeled as autonomy. Evidence suggests that openness enhances supplier autonomy, increases the introduction of new products, and leads to a greater number of products located closer to the technical frontier. These estimates suggest that openness increased product introductions by enlarging the options available to component suppliers. The largest component suppliers benefited from greater sales, and no evidence indicates that openness aided entrants, small firms, or assemblers. |
| JEL: | L23 L63 O36 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34603 |
| By: | Larissa Fuchs; Matthias Heinz; Pia Pinger; Max Thon |
| Abstract: | We conduct a randomized controlled trial (RCT) with a leading technology firm to study how highlighting flexibility and career advancement in job advertisements causally affects the applicant pool. Highlighting career advancement increases the number of applications from men for entry-level positions and attracts additional applicants with strong qualifications and a good fit, which in turn leads to more interview invitations. By contrast, highlighting flexibility increases applications from both women and men at the entry level but provides limited evidence of attracting higher-quality or better-fit applicants. A complementary survey experiment among STEM students shows how job advertisements shape beliefs about the firm’s job characteristics and work environment. Overall, our results show that the amenities firms choose to highlight can powerfully influence both the size and characteristics of their applicant pool. |
| Keywords: | hiring, field experiments, job advertisements, gender |
| JEL: | M51 M52 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12331 |
| By: | Andrea Ciaccio; Francesco Moscone; Elisa Tosetti |
| Abstract: | In this paper we investigate the causal impact of the European Union Emissions Trading System, a cap-and-trade scheme limiting greenhouse gas emissions of firms, on their environmental performance. Although previous studies have focused primarily on the effect of the emission cap imposed by the policy, we argue that the trading mechanism creates complex interdependencies among firms that can change the policy's intended effects. We develop a novel Difference-in-Differences approach that disentangles the direct causal effects of the scheme on regulated firms from the indirect spillover effects arising from trading among firms. By incorporating potential interference between treated units, our methodology allows a more comprehensive assessment of the policy's overall effectiveness. Monte Carlo simulations show that our proposed estimators perform well in finite samples, confirming the reliability of our approach. To assess the direct and indirect effects of the scheme, we construct a novel database on emissions of European industrial sites by matching information on treated plants from the European Commission's Community Independent Transaction Log with emission data from the European Pollutant Release and Transfer Register for the years from 2001 to 2017. We find that the scheme reduced emissions only for non-trading plants, but such reduction is entirely offset when accounting for spillovers from trading plants, thus suggesting that the trading mechanism neutralizes the environmental benefits of the policy. Our findings have important implications for the design of future environmental policies and the ongoing evaluation of cap and trade policies. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.15377 |
| By: | Jesse Bricker; Alice Henriques Volz; Kevin B. Moore |
| Abstract: | Privately owned business assets are an important source of wealth for families across the world, but measurement issues are believed to hamper our understanding of these firms. We use income and valuations of private firms in the Survey of Consumer Finances (SCF), first validating the data against external aggregates and then using these data to find rates of return for private firms. With the exception of the years leading up to the Global Financial Crisis, overall rates of return on public firms have generally outpaced rates of return on private firms during the past 30 years. |
| Keywords: | Assets; Private firms; Public firms; Rates of return; Wealth |
| JEL: | D31 G11 G50 |
| Date: | 2025–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-107 |
| By: | Kujtim Avdiu; Jochen Güntner; Karin Mayr-Dorn; Esther Segalla |
| Abstract: | This paper studies the external and internal financing decisions of multinational enter prises (MNEs) and their role in the transmission of shocks across borders. We augment the costly-state-verification model of Bernanke et al. [1999] with the internal capital market constraint of an MNE and derive predictions for the optimal response of external and internal borrowing, both at home and abroad, to a change in the return on capital of a foreign affiliate. Using mandatory-reporting data on all Austrian MNEs and their FDI relationships with German affiliates for 2007–2022, we validate our theoretical pre dictions empirically and find that Austrian parent firms extend less internal credit to more productive German affiliates and reduce their own stock of external liabilities with domestic banks relative to the affiliate’s total assets, whereas more productive German affiliates reduce their share of internal liabilities with Austrian parents and increase their external leverage instead. |
| Keywords: | Bank lending, external finance, financial frictions, internal capital markets, multinational firms |
| JEL: | D24 E44 F23 G32 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:jku:econwp:2025-13 |
| By: | Laurent Bach (ESSEC Business School); Antoine Bozio (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris); Arthur Guillouzouic (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IPP - Institut des politiques publiques); Clément Malgouyres (IPP - Institut des politiques publiques, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We link French households' tax records to the corporations they control, and build a payout-policy–neutral income measure, with corresponding tax burdens including those of "billionaires": the top 0.0002%. De- fined as such, income is more concentrated than taxable income, it better predicts rich-list membership, and persists more among billionaires. Personal taxes remain progressive until the top 0.1%, but eventually decline to 2% of income. Corporate taxes are an imperfect progressive backstop, as total tax rates fall from 45% at the 0.1% threshold to 25% for billionaires. Among these, the tax burden is global and tax-efficient pyramidal control over businesses ubiquitous. |
| Keywords: | Corporate tax, Business Income, Tax progressivity, Income distribution |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:ipppap:hal-05423119 |
| By: | Philippe d'Astous; Thomas Geelen; Jakub Hajda |
| Abstract: | How does workforce aging affect corporate investment? We investigate this question using comprehensive matched employer-employee data. Exploiting variation in the age of newly hired workers, we find that firms hiring older workers significantly boost capital investment. Specifically, a typical increase in the average age of new hires raises investment rates by 0.3 percentage points—a 2.6% increase relative to the sample mean. To establish causality, we implement a shift-share instrumental variable approach that leverages industry-level demographic trends interacted with firms’ initial workforce composition. Our results are consistent with a model where firms optimally choose between hiring younger and older workers who differ in productivity and wages. |
| Keywords: | corporate investment, workforce aging, labor heterogeneity |
| JEL: | G30 G31 J1 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:rsi:irersi:20 |
| By: | Andres Almazan; Nathan Swem; Sheridan Titman; Gregory Weitzner |
| Abstract: | We analyze firms' IPO decisions using detailed financial data on US private firms. We find that firms with higher external capital needs are more likely to go public. Following the IPO, firms increase their investment and debt issuance, resulting in leverage ratios close to their pre-IPO levels. Finally, newly public firms borrow from an expanded pool of lenders at improved terms, with a decrease in the within-firm dispersion in banks' private risk assessments. Our evidence is consistent with firms going public to improve their access to capital, which is facilitated by a reduction in asymmetric information. |
| Keywords: | Bank debt; Capital structure; Asymmetric information; IPOs |
| JEL: | G14 G32 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-102 |