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on Business Economics |
| By: | Shi Hu; Simone Lenzu; David A. Rivers; Joris Tielens |
| Abstract: | We study the interconnection between the productivity and pricing effects of financial shocks. Combining administrative records on firm-level output prices and quantities with quasi-experimental variation in credit supply, we show that a tightening of credit conditions has a persistent, yet delayed, negative effect on firms’ long-run physical productivity growth (TFPQ) but also induces firms to change their pricing policies. Commonly used revenue-based productivity measures (TFPR)—which conflate price and productivity—offer biased predictions regarding the consequences of financial shocks for firms’ productivity growth, underestimating the long-run elasticity of physical productivity to credit supply by half. We also show that the pricing adjustments themselves have productivity implications. Firms use low pricing as a source of internal financing, allowing them to avoid cutting expenditures on productivity-enhancing activities, thereby softening the impact of financial shocks. We incorporate these forces into a quantitative model of firm dynamics to quantify the importance of productivity and pricing dynamics (and their interplay) in driving the scarring effects of financial crises on aggregate productivity and welfare. |
| Keywords: | productivity; pricing; financial constraints; innovation |
| JEL: | D22 D24 E31 E44 G01 |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:103064 |
| By: | Valentin Kecht; Alessandro Lizzeri; Farzad Saidi |
| Abstract: | This paper documents that the age at which CEOs are appointed has risen sharply over the past several decades. Using newly assembled data covering a wide set of firms, we show that this increase is concentrated outside the largest listed firms and driven primarily by longer and more diverse external career paths prior to CEO appointment. These patterns are difficult to reconcile with explanations based on demographics, schooling, or tenure, and are instead consistent with a matching framework in which rising demand for generalist human capital leads firms to trade off peak ability for accumulated experience. We investigate the forces behind this shift. Using variation in consulting networks, we establish that firms place greater weight on diversified managerial experience as operating environments have become increasingly uncertain and complex. We also provide evidence for a supply-side response in which prospective CEOs broaden their skill portfolio as demand for generalist skills rises. |
| JEL: | J10 J21 J24 M12 M51 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35089 |
| By: | Duha T. Altindag; Nabamita Dutta; John M. Nunley; R. Alan Seals; Adam Stivers |
| Abstract: | Between 2005 and 2019, U.S. business applications rose 40 percent while conversion to employer firms fell by nearly half. We study whether boundary redrawing helps explain this pattern. Structured routine-cognitive work can be governed through deliverables and thinner buyer and supplier interfaces. When such work remains place-bound, outsourcing creates demand for domestic specialist suppliers. Across 722 commuting zones, a one percentage-point higher baseline routine employment share raises applications by 27.8 per 100, 000 residents. Realized entry concentrates in micro-establishments, with no startup quality gains. Contract and industry evidence point to local supplier entry, not routine-manual displacement. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.19987 |
| By: | Kumar Rishabh; Vatsala Shreeti |
| Abstract: | In this paper, we trace the geography and economic characteristics of firms that produce artificial intelligence (AI) products and services. Many economies around the world are evaluating their strategic priorities in AI, yet relatively little is documented about the global distribution of AI production. We construct a new database that identifies 1, 246 AI-producing firms across 32 economies. We map these firms in each economy into the five layers of the AI supply chain: compute, cloud and related infrastructure, data tools, AI models and AI applications. The biggest markets for AI production are China and the US. Most economies specialise only in a few supply chain layers and many focus largely on compute. AI firms in all economies exhibit strong home bias in investment activity, with a focus on downstream applications. Finally, we find that venture capital inflows are strongly correlated with the presence and density of AI firms in a given economy. |
| Keywords: | artificial intelligence, AI supply chain, firm geography, AI measurement |
| JEL: | O33 C81 L86 F23 L16 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1343 |
| By: | Jullien, Bruno; Bedre Defolie, Özlem; Biglaiser, Gary |
| Abstract: | We study a startup’s choice of its “direction of innovation, ” how well the technology fits alternative acquirers, and the effects on acquisition outcomes and market dominance. Two horizontally differentiated firms bid to acquire the innovation and then compete in the product market. Firms differ in initial quality stock and in “absorption capabilities, ” how effectively the acquired innovation is integrated into their stock. The innovator designs the innovation to intensify bidding by putting firms on a more equal footing, thereby favoring the initially lower-quality firm. As a result, “increasing dominance” is less likely than under exogenous fit. The winner of the innovation is driven primarily by relative absorption capabilities rather than initial quality: the f irm with higher absorption capability is more likely to win. The equilibrium innovation direction minimizes industry profit and consumer surplus. In a two-period model, decreasing dominance becomes more likely when the low-quality firm has stronger absorption capabilities. |
| Date: | 2026–04–20 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131684 |
| By: | Toshihiro OKUBO; Alexander F. WAGNER; Kazuo YAMADA |
| Abstract: | Innovation is central to productivity growth, yet firms facing similar technological and policy environments differ in their R&D investment behavior. We examine whether persistent regional social norms help explain this variation. Using prefecture-level data from Japan, we measure regional conformism based on a 1941 military conscription examination and contemporary school education surveys, demonstrating that regional differences have persisted over time. Linking them to data on all Japanese manufacturing firms from 1995 to 2022, we find that firms in more conformist regions exhibit significantly lower R&D intensity even after controlling for cognitive ability, firm characteristics, and fixed effects. The relationship with patenting is weaker and less robust. To isolate the historical component of conformity, we instrument pre-war conformism using differences in domain-level educational curricula during the Edo-period (1603–1868). The IV results similarly indicate a significant negative effect on firms’ R&D intensity. Overall, the findings suggest that persistent regional social norms are most strongly related to firms’ innovation investment rather than realized innovation output. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26033 |
| By: | Briana Chang; Harrison Hong |
| Abstract: | How do purpose-driven stakeholders induce reform? Using a multi-sided matching equilibrium, we show that whether they exit or engage depends on whether social harm scales with productivity. When harm is uncorrelated—an implicit assumption in most literature—purpose-driven stakeholders engage and compensating differentials adjust. But when harm scales with production, high-productivity firms outbid others for profit-driven stakeholders to avoid mitigation. Purpose-driven stakeholders exit—a seemingly ineffective action at the firm level but whose impact trickles down the productivity ladder and across stakeholder types. This necessitates a multi-sided framework, rationalizes puzzling findings, and explains why studies underestimate the aggregate impact of exit. |
| JEL: | G0 G19 G20 G3 G35 G39 H4 H40 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35081 |
| By: | Miguel Faria-e-Castro; Pascal Paul; Juan M. Sanchez |
| Abstract: | Should firms in financial distress be saved to stabilize an economy, even if less productive ones are kept alive, possibly reducing economic growth? To assess this fundamental stabilization-vs.-growth trade-off, we develop a new dynamic general equilibrium model with business cycles, endogenous growth, and innovation externalities. We discipline key parameters using microeconomic data and an instrumental-variable approach that links firm productivity growth to R&D expenditure. Based on the calibrated model, we find that economies that save distressed firms with credit guarantees, debt restructuring, or loan evergreening experience lower volatility but also slower growth. Even though welfare is higher in an economy without such interventions, the various "soft credit" regimes can still arise as equilibrium outcomes when a benevolent government intervenes in credit markets under discretion. |
| Keywords: | business cycles; endogenous growth; financial frictions |
| JEL: | E43 E44 E60 G21 G32 |
| Date: | 2026–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:103046 |
| By: | Hutschenreiter, Dennis |
| Abstract: | Firms increasingly rely on markets for technology to acquire innovations developed outside their boundaries, yet acquiring intellectual property rights alone often does not guarantee successful implementation. Many technologies depend on tacit know- how that must be supplied by the provider after the transaction is completed. This paper examines whether common ownership between a technology provider and a potential adopter mitigates this implementation problem. I develop a model in which overlapping institutional investors cause the provider to partially internalize the adopter's gains from successful implementation, strengthening incentives to transfer tacit know-how. This mechanism operates only when know-how is unverifiable - absent this friction, common ownership leaves matching and outcomes unchanged. Under moral hazard, the model predicts that common ownership increases the likelihood of technology transfer to a given adopter, that this effect is stronger when tacit know-how is more important, and that common ownership improves post-transfer outcomes conditional on adoption. I test these predictions using U.S. patent reassignments between publicly traded firms. Using within-deal variation across competing potential adopters and plausibly exogenous variation from passive index-fund holdings, I show that common ownership increases the likelihood that a firm acquires a technology, particularly when the transferred bundle is more tacit. Common ownership predicts stronger subsequent innovation and higher future firm value, especially when ownership overlap is concentrated among investors with stronger incentives to monitor the provider. These findings show how ownership structure shapes interfirm technology transfer by affecting not only who acquires a technology, but also how much value is created. |
| Keywords: | common ownership, institutional investors, moral hazard, patent reassignments |
| JEL: | C78 D82 G23 L24 O34 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:340107 |
| By: | Hottenrott, Hanna; Schaper, Thomas; Schwierzy, Julian |
| Abstract: | Competitive public research funding is an important policy instrument to foster scientific progress. The effective design of such funding schemes and whether they generate knowledge spillovers to industrial inventions, however, remains debated. In this paper, we investigate the impacts of geographically localized forum grants - Clusters of Excellence - awarded for additive manufacturing research under Germany's Excellence Initiative from 2006-2012. Using synthetic difference-in-differences estimation, we find that Clusters increased local scientific output in funding-related domains in the right tail of the scientific impact distribution - as measured by article citations - compared to non-funded applicant groups in similar locations. While patenting by nearby firms remained unaffected at the extensive margin, we find evidence for significant knowledge spillovers to local industry. These manifested as a rise in the number of high-impact firm patents confined to related technical areas, and Clusters receiving a significantly larger number of prior art citations from industry patents, compared to the control group, which were geographically localized and confined to top publications. Our findings support the effectiveness of forum-based funding programs for top science and provide dual implications for research and industrial policy. |
| Keywords: | Frontier science, research funding, knowledge spillovers, industry-science linkages |
| JEL: | I23 O31 O38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:340105 |
| By: | Pawel, Adrjan (Indeed Hiring Lab and Regent's Park College, University of Oxford); Jessen, Jonas (WZB and IAB); Victoria Lanzón, Carlos (Universidad Complutense de Madrid) |
| Abstract: | We examine whether restricting temporary contracts increases firms' investment in worker training, exploiting Spain's 2022 labour market reform. Using 3.1 million online job postings from 2018 to 2024, we implement a difference-in-differences design that leverages pre-reform variation in reliance on temporary contracts across occupations. More exposed occupations shifted toward permanent hiring and increased advertised training relative to less exposed occupations. Training rose by 4.3 percentage points, fully closing the pre-reform gap by 2024. These results provide evidence that longer expected employment duration increases firms' investment in training, identifying a channel through which labour market regulation can shape human capital formation. |
| Keywords: | temporary employment, on-the-job training, human capital investment, employment contracts |
| JEL: | J24 J41 J63 J68 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18539 |
| By: | Minjae Kim; J. Daniel Kim |
| Abstract: | Founders are known to attract prospective employees by signaling their startup’s mission, culture, and potential. But do they also shape who stays? And if so, does the founder’s influence diminish as the startup matures? Using matched employer-employee data from the U.S. Census, we address these questions, especially focusing on cases of founder premature death to identify plausibly exogenous exits. We find that founder departures significantly increase employee turnover. These effects are stronger in older and larger startups. Further analyses show that the impact of founder departure is more salient among employees who had longer shared tenure or have the same sex as the founder. These patterns suggest that employees develop complementarities with founders over time—an alignment in skills, relationships, or culture—that reinforce founders’ influence as startups mature. |
| Keywords: | Entrepreneurship, Employee Retention, Founders |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-21 |
| By: | Lindner, Attila (University College London); Muraközy, Balázs (University of Liverpool); Reizer, Balázs (ELTE - Centre for Economic and Regional Studies); Schreiner, Ragnhild (University of Oslo) |
| Abstract: | We quantify the contribution of firm-level technological change to skill demand and aggregate inequality in the presence of imperfect competition in the labor market. We show that skill-biased technological change increases both the firm-level skill ratio and the skill premium, while other shocks (e.g. firm-specific output demand shocks) cannot explain the increase in both outcomes. We exploit administrative data and a large survey measuring a broad class of firm-level technological changes from Hungary and Norway. We estimate that the aggregate college premium increases by 3.4% in Norway and by 4.9% in Hungary as a result of the skill bias in technological change. |
| Keywords: | skill-biased technological change, innovation, skill premiums, imperfect competition |
| JEL: | J31 J24 O30 O33 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18516 |
| By: | David Argente; Esteban Méndez; Diana Van Patten |
| Abstract: | This paper studies how new varieties enter markets and become locally available. We provide causal evidence of demand externalities that operate in two steps. First, information about new varieties diffuses directly through real-world social ties among consumers. Second, early purchases generate an indirect spillover to firms: local retailers learn from "pioneer'' consumers which new varieties are most likely to succeed and adjust their product offerings accordingly. We study this process in the context of direct-to-consumer imports. Using customs records on individuals' purchases matched to population-wide social networks, international migrant links, and retailer catchment areas, we document economically meaningful demand externalities. Product-specific demand shocks abroad transmit through migrant networks and shift which varieties consumers purchase. Leveraging these shocks as a plausibly exogenous source of local demand variation, we show strong peer effects: prior purchases by close neighbors, coworkers, or friends increase an individual’s likelihood of purchasing the same variety, especially for premium and visible goods. We leverage this result to identify an indirect spillover from consumers to firms: retailers are more likely to add a variety when it becomes popular among consumers in their catchment area. Combining the instrument with linked consumer--retailer data and a self-conducted retailer survey, we show that this response reflects learning about latent demand for varieties not yet stocked locally. Together, social diffusion and retailer learning generate demand multipliers that reshape local product availability and expand access to global variety. |
| JEL: | D22 D8 E02 F1 F14 F15 F6 L2 O1 O12 O3 O30 O47 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35104 |
| By: | Shilei Luo; Zhiqi Zhang; Hengchen Dai; Dennis Zhang |
| Abstract: | AI agents powered by large language models are increasingly acting on behalf of humans in social and economic environments. Prior research has focused on their task performance and effects on human outcomes, but less is known about the relationship between agents and the specific individuals who deploy them. We ask whether agents systematically reflect the behavioral characteristics of their human owners, functioning as behavioral extensions rather than producing generic outputs. We study this question using 10, 659 matched human-agent pairs from Moltbook, a social media platform where each autonomous agent is publicly linked to its owner's Twitter/X account. By comparing agents' posts on Moltbook with their owners' Twitter/X activity across features spanning topics, values, affect, and linguistic style, we find systematic transfer between agents and their specific owners. This transfer persists among agents without explicit configuration, and pairs that align on one behavioral dimension tend to align on others. These patterns are consistent with transfer emerging through accumulated interaction between owners (or owners' computer environments) and their agents in everyday use. We further show that agents with stronger behavioral transfer are more likely to disclose owner-related personal information in public discourse, suggesting that the same owner-specific context that drives behavioral transfer may also create privacy risk during ordinary use. Taken together, our results indicate that AI agents do not simply generate content, but reflect owner-related context in ways that can propagate human behavioral heterogeneity into digital environments, with implications for privacy, platform design, and the governance of agentic systems. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.19925 |
| By: | Gabriel Burdin; Ryo Kambayashi; Takao Kato |
| Abstract: | How do limits on working hours affect firms, workers, and households? This paper answers this question by analyzing Japan's 2018Work Style Reform (WSR), which introduced the first binding cap on overtime hours. Using establishment payroll data and worker surveys in a difference-in-differences design, we show that the reform reduced monthly overtime by 5 hours (25%) and compressed the distribution of overtime within firms. Total earnings fell by 1.4% due to the effect of lower overtime pay. The reform also narrowed overtime gaps between standard and nonstandard jobs and reduced gender differences in long hours. Consistent with a reduction in the importance of extreme overtime as a screening device, women gained increased access to standard, career-track positions. We further document improvements in life and leisure satisfaction among female workers, but not among men. These gender differences are not explained by changes in perceived work intensification or time use. Instead, men partially substituted unpaid for paid overtime, consistent with the absence of well-being gains among male workers. Finally, exploiting information on spouses’ working hours, we find suggestive evidence of cross-spousal spillovers on women’s well-being, consistent with household-level complementarities. |
| Keywords: | Working Time Regulations, Overtime, Wages, Employment, Subjective Well-being, Gender, Japan, Work Style Reform Jel Classification: J16, J22, J23, J41 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:usi:wpaper:942 |