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on Business Economics |
| By: | Jarkko Harju (Tampere University & Finnish Centre of Tax Systems Research (FIT)); Toni Juuti (Labour Institute for Economic Research & Tampere University & FIT); Tuomas Matikka (VATT Institute for Economic Research & FIT) |
| Abstract: | Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses. High-income earners also establish more successful and productive businesses than others. In contrast, parental income is not linked with selection into new entrepreneurship or firm-level outcomes. We find that income gains from entrepreneurship are rather similar across individual and parental characteristics, and that entrepreneurship is associated with upward income mobility regardless of initial income levels. Overall, our findings suggest that entrepreneurship can serve as an upward economic ladder for individuals from diverse backgrounds. |
| Keywords: | entrepreneurship, income mobility, productivity |
| JEL: | L26 J24 J3 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:fit:wpaper:41 |
| By: | Diego Sancho-Bosch (Department of Economic Analysis, Universidad Complutense de Madrid (Spain)); Elena Huergo (ICAE – Department of Economic Analysis, Universidad Complutense de Madrid (Spain)) |
| Abstract: | This paper examines how the level of public R&D subsidies and firm size jointly influence firms’ net R&D investment. Using data on Spanish manufacturing firms from 2008 to 2018, we estimate parametric and non-parametric dose–response functions after applying entropy weighting to balance covariate distributions across treatment levels. The results reveal an inverted U-shaped relationship between subsidy intensity and net R&D expenditure for small, medium-sized, and large firms, but not for very large firms, which display a negative linear pattern. We also find substantial heterogeneity in subsidy effects within both the SME and large-firm categories, and show that the public funding share of R&D expenditure at which the positive impact of subsidies peaks declines markedly with firm size. These findings suggest that support schemes should implement progressively lower maximum subsidy rates, rather than relying on only two distinct caps for SMEs and larger firms. Overall, the results underscore firm size as a critical determinant of innovation policy effectiveness and provide practical guidance for optimizing subsidy design. |
| Keywords: | R&D support, policy evaluation, dose-response, entropy balancing. |
| JEL: | L24 L25 O32 R11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ucm:doicae:2509 |
| By: | Bloom, Nicholas; Kawakubo, Taka; Meng, Charlotte; Mizen, Paul; Riley, Rebecca; Senga, Tatsuro; Van Reenen, John |
| Abstract: | We link new forecast and management data on over 20, 000 firms to data on productivity in manufacturing and services. The panel survey was administered in the UK in July 2017 and November 2020, coinciding with two periods of considerable uncertainty from Brexit and Covid. We find that better-managed firms make more accurate forecasts for firm-level turnover and macro-level GDP. Uniquely, we show better-managed firms are also aware that they make more accurate forecasts and have greater confidence in their predictions. This highlights how superior forecasting ability enables well-managed firms to make improved operational and strategic choices. |
| Keywords: | management; productivity; expectations; uncertainty; forecasting |
| JEL: | L20 M20 O32 O33 |
| Date: | 2025–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130291 |
| By: | Junhui Jeff Cai; Xian Gu; Liugang Sheng; Mengjia Xia; Linda Zhao; Wu Zhu |
| Abstract: | This paper studies whether, how, and for whom generative artificial intelligence (GenAI) facilitates firm creation. Our identification strategy exploits the November 2022 release of ChatGPT as a global shock that lowered start-up costs and leverages variations across geo-coded grids with differential pre-existing AI-specific human capital. Using high-resolution and universal data on Chinese firm registrations by the end of 2024, we find that grids with stronger AI-specific human capital experienced a sharp surge in new firm formation$\unicode{x2013}$driven entirely by small firms, contributing to 6.0% of overall national firm entry. Large-firm entry declines, consistent with a shift toward leaner ventures. New firms are smaller in capital, shareholder number, and founding team size, especially among small firms. The effects are strongest among firms with potential AI applications, weaker financing needs, and among first-time entrepreneurs. Overall, our results highlight that GenAI serves as a pro-competitive force by disproportionately boosting small-firm entry. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.06506 |
| By: | Saiz, Lorena; Kocabaş, Serkan |
| Abstract: | This study investigates how credit supply shocks impact firm-level investment across the euro area using the novel AnaCredit database. Employing the methodology developed by Amiti and Weinstein (2018), we decompose loan growth rates into four components: bank-specific, firm-specific, industry-specific, and common shocks. Our findings show that idiosyncratic bank supply shocks significantly affect firm-level investment, particularly among firms that are highly dependent on bank loans. Furthermore, these granular bank-specific shocks explain most of the aggregate loan dynamics. We also find that the effects of bank shocks vary depending on firm characteristics, such as firm size, loan portfolio composition, and reliance on external financing. These results underscore the critical role banks play in shaping investment dynamics, especially under varying economic conditions. JEL Classification: E22, E50, G21, G31 |
| Keywords: | AnaCredit, bank credit, credit supply, investment, real effects |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263173 |
| By: | Philip Bunn; Nicholas Bloom; Craig Menzies; Paul Mizen; Gregory Thwaites; Ivan Yotzov |
| Abstract: | We present new evidence on how firms set prices using direct questions from a large, economy-wide survey of UK firms. Since 2023, 54% of firms report setting prices in a state-dependent manner, as opposed to changing prices at fixed intervals. In contrast, 44% of firms used state-dependent pricing in 2019. Smaller firms, those with a higher share of non-labour costs, and those reporting higher subjective uncertainty around sales and prices are more likely to be state-dependent. We then analyse the implications of price-setting behaviour for inflation dynamics. State-dependent firms experienced a sharper increase in price growth over 2022-2023, and also a faster subsequent decline. Using evidence from a randomised survey experiment, firm-level forecast errors, and local projections, we show that prices of state-dependent firms respond faster to cost shocks. The difference between state-dependent and time-dependent firms is furthermore larger for bigger shocks, consistent with theoretical predictions. |
| JEL: | C83 D22 D84 E31 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34666 |
| By: | Holtmann, Svea; Braun, Anna-Sophie; Cho, Jae; Koch, Reinald; Langenmayr, Dominika |
| Abstract: | We study a 2018 reform in South Korea that reduced tax credits for automation investments. This reform increased the tax cost of investing in robots and thus resembles a robot tax. Exploiting this natural experiment with industry-level data on robot installations and firm-level data from Orbis, we document a sharp decline in automation investments after the reform in industries with a large share of affected firms. At the firm level, we find that affected firms increased employment, consistent with the notion that robots replaced workers. The effects are heterogeneous: financially constrained firms cut investment overall, while unconstrained firms substituted away from robots, hired more workers, and reallocated resources toward more productive uses. For the latter group, we find improvements in various measures of investment quality, suggesting that the tax credit induced inefficient overinvestment in automation. Our evidence informs ongoing debates on robot taxation and the efficiency of tax incentives. |
| Keywords: | tax credits, automation, robot tax |
| JEL: | H25 H32 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:335022 |
| By: | Yusuf Emre Akgunduz; Gokce Karasoy Can; Elif Ozcan Tok |
| Abstract: | This paper examines the impact of pre-pandemic digitalization investments on pandemic performance, using data from Türkiye. We compare firms that adopted digital technologies before the pandemic with those that did not, employing a coarsened exact matching and difference-in-differences approach. Our first contribution is the development of a novel firm-level digitalization index, constructed using firm-to-firm trade data. The findings show that digitalized firms outperformed their non-digitalized pairs across key metrics, including assets, sales, employment, profitability, and export shares. In particular, digitalized firms have real assets, real sales, and employment that are 3 percent, 5 percent, and 2 percent higher, respectively. The impact of digitalization is even more pronounced in terms of profitability, return on assets, and export share, with higher levels ranging from 0.13 percentage points to 0.50 percentage points. To explain these results, we identify key channels through which digitalization enhanced firm performance which is our second contribution. Specifically, we show that digitalized firms expanded their trade networks—adding more partners and operating over greater distances—reduced labor churn rates, and improved productivity and competitiveness. Digitalization expands market reach, boosting the number of trading partners by 5 percent, while also increasing the average distance to trade partners by 2 percent more than less digitalized firms. |
| Keywords: | Digitalization, COVID-19, Coarsened Exact Matching, differences-in- differences, firm performance |
| JEL: | O33 C55 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2602 |
| By: | Grace Weishi Gu; Galina Hale; Bhavyaa Sharma; Jinhong Wu |
| Abstract: | Do banks help or hamper green transition? To answer this question, we analyze the dynamics of bank lending to firms in the US, EU, and separately Denmark in relation to the borrowers' emissions of CO2. We evaluate the allocation of bank loans across industries and within industries across firms, allowing for heterogeneity of firm emissions and changes in these emissions. To facilitate green transition, bank lending needs to flow to greener and greening firms, but not out of high-emission industries that need funding to transition to cleaner production methods. Using syndicated loan data, we find that for US borrowers, bank lending was likely hampering green transition, while in the EU bank lending is more likely to facilitate it. Zooming in on Denmark, for which we have data on the full universe of firms and banks, we find more significant credit reallocation to greener firms, especially within industries. However, the reallocation of funds to green firms is, to a large extent, a byproduct of green firms becoming bigger. We do not find any evidence consistent with banks active stewardship of green transition. |
| JEL: | F21 G21 Q54 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34681 |
| By: | Sarah Fleche; Eva Moreno Galbis; Ariell Reshef; Claudia Senik |
| Abstract: | We study how the widespread diffusion of ICT affects wages, working conditions, and job satisfaction. We frame our empirical investigation with a model in which ICT can improve both wages and working conditions by increasing firms' output. Using French matched employer-employee data and an instrumental variable approach that is motivated by the model, we find that ICT diffusion in 2013-2019 has been beneficial to workers, who experienced both higher wages and better working conditions, particularly through greater flexibility, physical comfort, and safety. In contrast, ICT use has also increased psychological stress and work intensity. These effects vary across workers, firms, occupations and sectors, depending on their characteristics. Despite overall improvements in wages and working conditions, we estimate only modest positive effects of ICT use on job satisfaction. We discuss potential explanations for this finding. |
| Keywords: | ICT diffusion, Wages, Working conditions, Job satisfaction |
| Date: | 2026–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2143 |
| By: | Song, Xi (University of Pennsylvania); Brand, Jennie E. (UCLA); Yang, Xiuqi; Lachanski, Michael |
| Abstract: | The U.S. has undergone substantial changes in jobs, occupations, and mobility over the last two decades. Using administrative data from the U.S. Occupational Outlook Handbook (2000–2020), we examine how immediate and projected occupational restructuring affects workers’ mobility. In an update to prior research, we find that workers in both growing and declining occupations experience greater mobility than those in stable occupations. However, the direction of movement varies. Workers in declining occupations often move laterally into other declining occupations, with nearly 60% experiencing downward mobility. In contrast, growing occupations offer better prospects for upward mobility, particularly for workers transitioning from declining to growing occupations, where almost 50% enter higher-paying occupations. Yet, such moves to emerging jobs are relatively rare, accounting for only 5% of all occupational movements. These results highlight how recent shifts in the occupational structure exacerbate existing disadvantages for workers facing declining job opportunities. |
| Date: | 2026–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:gpnm5_v1 |
| By: | Nicoletta Berardi; Benjamin Bureau |
| Abstract: | This paper documents the existence and evolution of a gender gap in bank financing among non-financial firms, disentangling demand- and supply-side effects. Using quarterly panel data for French firms from 2012 to 2023, we find that this gap is driven by the demand side: women-led firms are between 12% and 26% less likely to apply for bank credit, depending on the type of loan. However, conditional on applying, the probability of rejection for women-led firms does not differ significantly from that of men-led firms. Moreover, we find no evidence that the gender gap in credit demand is closing over time. |
| Keywords: | Finance Gender Gap; Bank Credit; Gender Ask Gap |
| JEL: | E51 G30 J16 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1024 |
| By: | Seth Gordon Benzell; Kyle R. Myers |
| Abstract: | Many experiments study the productivity effects of automation technologies such as generative algorithms. A key test in these experiments relates to inequality: does the technology increase output more for high- or low-skill workers? However, the theoretical content of this empirical test has been unclear. Here, we formalize a theory that describes the experimental effect of automation technologies on worker-level output and, therefore, inequality. Worker-level output depends on a task-level production function, and workers are heterogeneous in their task-level skills. Workers perform a task themselves or delegate it to the automation technology. The inequality effect of improved automation depends on the interaction of two factors: (i) the correlation in task-level skills across workers, and (ii) workers' skills relative to the technology's effective skill. In many cases we study, the inequality effect is non-monotonic --- as technologies improve, inequality decreases then increases. The model and descriptive statistics of skill correlations generally suggest that the diversity of automation technologies will play an important role in the evolution of inequality. |
| JEL: | D20 D31 J24 O33 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34668 |
| By: | Kartiki Verma (Department of Economics, Delhi School of Economics, University of Delhi); Sunil Kanwar (Department of Economics, Delhi School of Economics, University of Delhi) |
| Abstract: | This paper examines the impact of the strengthening of intellectual property rights (IPR) on industry-level outcomes such as sales, innovation, and profitability in India, for the period 1990-2020. We first construct a novel industry-specific IPR implementation index that reflects de facto enforcement across 27 two-digit industries. Industry outcomes are then modelled using industry data at the two-digit level. The empirical results reveal significant heterogeneity in the effects of IPR regimes. Stronger IPR protection disproportionately benefits firms with higher R&D intensity, amplifying both R&D investment and profitability, with robustness checks confirming consistency across alternative specifications. However, the gains from IPR protection are less pronounced for firms heavily engaged in innovation. This interaction may also reflect a strategic shift in firm behavior rather than a decline in performance. IPR reform positively affect R&D and profitability, particularly in pharmaceuticals and advanced manufacturing. The strengthening of IPR is a powerful driver of performance when paired with internal innovation capacity, highlighting the critical role of absorptive capacity |
| Keywords: | Intellectual property rights, enforcement, de facto index, industry JEL codes: O34, C43, K11, L16 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cde:cdewps:360 |
| By: | Nuno Silva |
| Abstract: | This paper asks how best to estimate and forecast firms’ residualized sales growth volatility, a standard measure of idiosyncratic uncertainty. Using a comprehensive dataset of Portuguese firms from 2006 to 2022, I compare the most common approaches used in the literature with a novel quantile-based method that exploits past cross-sectional information and contemporaneous macroeconomic variables and adjusts for the predictability in sales growth rates. I then estimate forecasting models and conduct a simulation exercise to assess the in-sample and out-of-sample performance of all approaches. The paper contributes to the literature by showing that quantile-based estimates and forecasts outperform traditional methods and that sales growth volatility can be measured with reasonable precision, making it suitable for wider application in empirical work. These findings support the application of quantile-based volatility measures to other low-frequency economic variables, especially those characterized by fat-tailed distributions. |
| JEL: | C53 D22 G30 L25 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202525 |
| By: | Gil Nogueira; Geraldo Cerqueiro |
| Abstract: | We show that weak judicial enforcement and credit frictions jointly govern the transmission of corporate distress through trade-credit networks. Weak judicial enforcement increases the losses associated with defaulted trade credit, while credit frictions limit trade creditors' ability to absorb those losses. We exploit variation in court congestion generated by a nationwide reform that reassigned pending bankruptcy cases across courts. Trade creditors are more likely to go bankrupt when their trade debtor's case is handled by a congested court and when they face binding credit frictions. Bank relationships mitigate these frictions and insulate trade creditors from distress transmission. A counterfactual exercise shows that moving from the least tothe most efficient courts would reduce bankruptcy propagation by 40% and increase aggregate sales by 2%. |
| JEL: | D85 G21 G32 G33 K41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202529 |
| By: | McLaughlin, Patrick W.; Okrent, Abigail M. |
| Abstract: | Have consumers become more price sensitive in light of elevated food inflation in the post-pandemic era? This study uses beverages, a large category of food expenditure in the United States, as a case study to examine whether consumers shifted consumption from national brands to cheaper PLs or had higher price elasticities of demand for these products. We draw on near “real-time” brand-level beverage sales data from Circana’s Liquid Data Unify platform for retail scanner data. We find little evidence that consumers' price sensitivity increased in the post-pandemic era. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360837 |
| By: | Javier Garcia-Bernardo (Charles University, Utrecht University); Petr Janský (Charles University); Gabriel Zucman (Paris School of Economics, Berkeley) |
| Abstract: | The 2017 Tax Cut and Jobs Act lowered the US corporate tax rate and introduced provisions to curb profit shifting. We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms’ profits after the reform. Between 2017 and 2020, the share of profits booked abroad declined by 1–5 percentage points, in part related to repatriations of intellectual property to the US. However, the share of foreign profits booked in tax havens remained stable at around 50%. While aggregated changes in profit allocation are small, a number of firms responded strongly. |
| Keywords: | Multinational corporation; corporate taxation; profit shifting; effective tax rate; country-by-country reporting; Tax Cuts and Jobs Act |
| JEL: | F23 H25 H26 H32 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:042 |