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on Business Economics |
| By: | Manisha Jain; Corina Mommaerts; Jeffrey Weaver |
| Abstract: | Employer-side wage subsidies are widely used to promote employment among disadvantaged workers. We study how such subsidies translate into firm hiring behavior using the federal Work Opportunity Tax Credit, which subsidizes up to 40% of first-year wages and covers over two million hires annually. Using linked administrative data from Wisconsin and multiple quasi-experimental designs, we find consistent and precise null effects on hiring, earnings, retention, and related outcomes across designs and firm types. Original data on firm hiring practices suggest two mechanisms that can limit employer-side subsidy efficacy: perceived legal risks discourage eligibility screening and organizational frictions attenuate decision-makers’ responsiveness. |
| JEL: | H25 J38 M51 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35229 |
| By: | Cauê Dobbin; Daniel Fernandez; Tom Zohar |
| Abstract: | We challenge the view that the negative correlation between firm quality and separation rates reflects efficient separations. Using Brazilian administrative data, we show that this correlation is driven by lower layoff rates at high-quality firms, not differences in quits. We develop a job search model where wage rigidity and productivity uncertainty generate inefficient layoffs. The model predicts that higher-quality firms have larger markdowns and, consequently, fewer layoffs. Empirically, we validate this by showing that firms facing stronger wage rigidity have higher layoffs and a steeper quality-layoff correlation, and that markdowns are higher in better firms and negatively correlated with layoffs. |
| Keywords: | layoffs, quits, separations, firm quality, wage rigidity, monopsony, markdowns, job search, Brazil |
| JEL: | J63 J31 J41 E24 J64 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26146 |
| By: | Julián Costas-Fernández; Sebastian Findeisen; Anna Raute; Uta Schönberg |
| Abstract: | This paper examines firms' incentives to provide workplace amenities, focusing on employer-provided childcare, and the implications for gender inequality. Using rich matched employer-employee data linked to a comprehensive firm survey in Germany, we document substantial and persistent effects of employer-provided childcare on mothers' labor market trajectories. Firms that offer childcare experience higher retention rates and notably shorter career interruptions among first-time mothers, especially those with high pre-birth wages, resulting in meaningful reductions in child penalties of 4.7 percentage points for high-wage mothers. The adoption of firm provided childcare is also associated with stronger employment growth -particularly among mothers and female talent in high-wage occupations-without systematic adverse wage effects for women or mothers. Our findings align with models of imperfect competition, indicating that firms with greater monopsony power have stronger incentives to provide valuable workplace amenities. While firm-provided childcare plays a critical role in reducing gender gaps within firms, our findings also show that access to these benefits is uneven, widening disparities among women and mothers across firms. |
| Keywords: | gender gaps; childcare; workplace amenities; child penalty; monopsony |
| JEL: | J16 J32 J42 J13 J23 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26141 |
| By: | Cian Ruane; Alessandra Peter |
| Abstract: | We provide the first direct estimates of distribution expenses incurred by manufacturing plants and quantify their importance for aggregate consumption and measured misallocation. Using a novel measure from the Indian Annual Survey of Industries, we document three facts: distribution expenses amount to over half of labor costs, are over three times larger as a share of sales for plants in the largest decile relative to the smallest, and declined by one third from 2000 to 2010. We develop a model of heterogeneous manufacturing firms that rely on distribution services to sell across space. The improvements in distribution over that time period raised manufacturing consumption by 24.5%. The gains materialize quickly, but unevenly: large firms expand while many small local firms shrink or exit. Distribution costs also matter for measured misallocation: standard TFPR measures generate spurious dispersion and a positive relationship with size. In the ASI, accounting for distribution costs lowers measured TFPR dispersion by 5.1% and the elasticity of TFPR with respect to plant size by 7.0%. |
| JEL: | O11 R40 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35252 |
| By: | Luca Fornaro; Veronica Guerrieri; Will Hotten; Lucrezia Reichlin |
| Abstract: | This paper studies how financial conditions affect research and development (R&D) by firms specialized in green innovation. Using U.S. patent data matched with Compustat, we identify “green innovators” as firms with a high cumulative share of green patents. Although they account for a small share of total green patenting, these firms occupy central positions in the green-innovation ecosystem. Estimating firm-level impulse responses to exogenous changes in broad financial conditions, we find that tightening has a disproportionately large and persistent negative effect on the R&D of specialized green innovators. In contrast, R&D by diversified innovators and non-innovators responds only weakly. Green innovators are younger, smaller, and more dependent on external finance, suggesting that financial tightening introduces a systematic bias against upstream green technological development. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:upf:upfgen:1946 |
| By: | Askenazy, Philippe (Centre Maurice Halbwachs (ENS-PSL, EHESS, INRAE, CNRS), Insee and IZA); Di Nallo, Ugo (Insee); Ramajo, Ismaël (Dares) |
| Abstract: | This paper studies the causal impact of post-Covid telework on firm productivity in France, where hybrid work has become the dominant form of telework. Using matched survey and administrative data on over 6, 500 firms employing three million workers, we test whether telework in 2022 relates to productivity growth from 2019 to 2022 excluding agriculture, finance and insurance, and real estate. OLS estimates show a modest positive link: a 10-percentage-point rise in telework share correlates with a 0.7-1.0 percentage-point productivity gain. To address endogeneity, we use an instrumental variable based on pre-pandemic office surface per employee in rented separate office spaces, which likely facilitated telework adoption and cost reductions. The instrument is strong, and 2SLS results indicate a sizeable LATE: a 10-point increase in telework raises productivity by about 2.7 points. Firms with separate offices also reduce obsolete space and slightly increase office equipment, suggesting additional productivity channels beyond real-estate adjustments. |
| Keywords: | telework, productivity, office |
| JEL: | L23 J52 J81 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18655 |
| By: | Enrico Miglino (Bank of Italy); Giacomo Roma (Bank of Italy) |
| Abstract: | Regulation often relies on size thresholds to determine the applicable legal and tax regime. Using data on the universe of Italian firms, this paper estimates the costs of firm growth by measuring the extent to which firms bunch just below such thresholds in order to avoid more burdensome rules. We first identify all the rules, defined in terms of revenues, assets and employment, which generate bunching. We then embed the estimated bunching in a profit maximization model and estimate a behavioural elasticity specific to each underlying variable, leveraging directly observable costs to calibrate the model. Finally, we combine the estimated elasticities with the observed bunching at each threshold to quantify the costs of all regulations. The largest costs, relative to the average value added for firms located near the threshold, are associated with the loss of a flat-tax regime for the self-employed, followed by the loss of simplified bookkeeping and quarterly VAT settlement, the mandatory appointment of a board of statutory auditors, and the increase in worker protection in the event of dismissal. |
| Keywords: | regulatory costs, firm growth, size thresholds, bunching |
| JEL: | D22 L51 H25 H32 K22 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1018_26 |
| By: | Benoit Cornet; Marc-André Chavy-Macdonald; Dominique Foray |
| Abstract: | The space sector has become far more dynamic and innovative, with new actors (e.g., start-ups, venture capital) entering and the ever-growing importance of private firms. In this paper we introduce a novel concept, innovatisation, to understand this phenomenon. Innovatisation describes the transformation of a sector between two modes. In a mode of technological achievements (TA), only technological (not economic) performance matters, primarily for prestige purposes; in innovation, customer preferences, commercial opportunities, and costs become essential. Studying the economics of Apollo and the commercialization attempts of the 1980s, we show how the space sector has long featured a logic of TA. Then, analyzing recent trends, we provide quantitative empirical evidence (e.g., costs) that innovation now shapes the sector, thanks to various driving forces. The driving forces behind the innovatisation process are identified building on Jones (2022) and the disruptive innovation theory. |
| JEL: | O38 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35254 |
| By: | Dogan Gülümser |
| Abstract: | This paper studies hiring and wage setting in new jobs. Using Swedish matched employer-employee data covering 1.7 million new hires, I show that entrants into occupations new to the firm have more labor market experience and are more likely to be hired from other employers. Conditional on entrant characteristics, new jobs have a 3 percent entry-wage premium and exhibit lower turnover than old jobs. The premium declines as firms accumulate occupation-specific employment experience, consistent with hiring uncertainty that resolves as the firm gains experience in the occupation. The new job wage premium is a previously undocumented source of wage dispersion among similar workers. |
| Keywords: | Hiring uncertainty, information frictions, wage setting, match quality |
| JEL: | J31 J23 J63 D83 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26155 |
| By: | David Green; Ben M. Sand; Iain Snoddy; Jeanne Tschopp |
| Abstract: | In this paper, we provide new estimates of the impact of unions on non-union wage setting. We allow the presence of unions to affect non-union wages both through the typically discussed channel of non-union firms emulating union wages in order to fend off the threat of unionisation and through a bargaining channel in which non-union workers use the presence of union jobs as part of their outside option. We specify these channels in a search and bargaining framework that includes union formation and the possibility of non-union firm responses to the threat of unionisation. Our results indicate an important role played by union wage spillovers in lowering wages over the 1980-2010 period. We find that de-unionisation can account for nearly a third of the decline in the mean hourly wage between 1980 and 2010 in the US, with half of that effect being due to spillovers. Both the traditional threat and bargaining channels are operational, with the bargaining channel being more important. |
| Keywords: | union; spillovers |
| JEL: | J31 J51 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26156 |
| By: | Gabor Bekes; Matyas Molnar; Claudia Steinwender |
| Abstract: | Search and matching frictions prevent firms from forming international trade linkages. Despite trade fairs being a common and often subsidized tool to overcome these frictions, we lack causal evidence on how they facilitate link formation. We exploit a unique feature of Hungarian firms' participation in the 1900 Paris World Exhibition, where a trial exhibition revealed firms' ex-ante export potential category to develop a novel bounding strategy that compares treated firms to control groups from "above" and "below" in export potential. To implement our empirical strategy, we constructed a novel panel dataset of approximately 3, 600 Hungarian manufacturing firms for the 1896-1906 period by digitizing, parsing and linking over 12, 000 records across eleven historical sources, including exhibition catalogs, government surveys, commercial directories, official gazettes and patenting directories. We find that participation increases export probability by 4-10 percentage points, patenting probability by 4-6 percentage points and employment by 16-23% over eight years. Effects are larger when firms face fewer domestic competitors and more potential international buyers. This highlights both matching benefits and congestion effects when search and matching frictions are reduced. |
| Keywords: | buyer-supplier links, export promotion, trade fairs, search frictions, industrial policy, economic history |
| Date: | 2026–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2192 |
| By: | Katariina Nilsson Hakkala (Asian Development Bank); Abhishek Kumar (University of Southampton) |
| Abstract: | Distressed and zombie firms are widespread in economies with weak insolvency regimes. This study investigates whether reforming insolvency laws can reduce capital misallocation. We introduce a framework for decomposing financial misallocation and derive metrics adequate to capture two conceptually distinct sources of inefficiency. The first refers to composition misallocation from inefficient leverage distribution, while the second refers to scale misallocation from suboptimal capital allocation among firms. Using firm-level data from 22 economies between 2003 and 2024, we find that effective reforms significantly reduce scale misallocation, especially in sectors with a high concentration of distressed and zombie firms. Event studies reveal a steady decline in scale misallocation following reform, mirroring higher recovery rates and shorter insolvency durations, leading to a 3.5% productivity gain over 5 years. We present additional firm-level evidence substantiating these gains: reforms reduce debt among distressed and zombie firms, increase their borrowing costs, and enable previously credit-constrained firms to access greater funding for investment, thereby improving overall capital allocation. |
| Keywords: | distressed firms;zombie lending;insolvency reform;capital allocation;event studies |
| JEL: | D21 D22 G21 G32 G33 |
| Date: | 2026–06–02 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:022616 |
| By: | Filippo, Agustín; Guaipatín, Carlos; Navarro, Lucas; Willington, Ignacio; Wyss, Federico |
| Abstract: | This paper examines the employment effects of multinational enterprises (MNEs) in Mexico, focusing on the labor market impacts of foreign tariff increases during 2018-2019. Using data from Mexicos National Survey of Occupations and Employment (ENOE) for 2014-2023 combined with sector-level tariff exposure measures based on Fajgelbaum et al. (2024), we construct a quarterly city-sector panel distinguishing employment in MNEs and domestic firms. We analyze employment outcomes across worker characteristics (education, age, gender) and firm attributes (size and location). Results indicate a positive employment effect in MNEs within the sectors most affected by the tariff increases, particularly for highly educated workers and small establishments. In contrast, there is no clear evidence of significant effects on wages. |
| Keywords: | Trade and Labor Market Interactions;Multinational Firms;International Business |
| JEL: | F16 F23 O54 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14619 |
| By: | Bond, Steve; Norris Keiller, Agnes; de Paula, Áureo; Van Reenen, John |
| Abstract: | Norris Keiller, de Paula, and Van Reenen (2024) (NPR) propose estimating production functions using firms' subjective expectations of future output and inputs, data which are becoming increasingly available in surveys. This note compares their proposed estimator to traditional dynamic panel data (e.g., Blundell and Bond 2000) and proxy variable methods (e.g., Olley and Pakes 1996). While NPR allows for nonlinear productivity processes, we discuss commonalities with the former when those processes are linear. We note that NPR may be more robust to oligopolistic competition than the latter since it does not employ input demand relations to proxy for productivity. |
| JEL: | C23 C51 D21 D24 D43 D84 |
| Date: | 2026–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138667 |
| By: | Jasper Boll; Emmanuel Saez; Gabriel Zucman |
| Abstract: | This paper documents the wealth of California’s billionaires and the taxes they pay. California billionaires’ wealth exceeds $2 trillion today, the equivalent of 50% of California’s GDP. It has grown 144% from 2023 to 2025, fueled by the AI boom. Over the longer run, the real wealth of California’s billionaire class—the 0.0002% richest households—has been multiplied by 30 from 1982 to 2025, while average real family income in California has about doubled. California billionaires pay about 0.2% of their wealth in California income tax ($3.2 billion/year), representing 2.4% of total California income tax revenue on average over 2023-2025. Using Securities and Exchange Commission data from Alphabet, Meta, Oracle, and Nvidia since 2004, we estimate the trajectory of wealth, income, and taxes paid by the top 4 California billionaires—Page, Brin, Zuckerberg, Ellison (through 2020), and Huang (since 2021)—focusing on their business wealth. This group alone holds nearly $1 trillion in business wealth, almost half of total California billionaire wealth. For this group, wealth growth (+322% over 2023-2025) and low taxation (0.04% of wealth in annual California income tax) are more pronounced. The proposed one-off California billionaire tax of 5%, payable over 5 years, is both small relative to California billionaires’ wealth gains and large relative to the taxes they currently pay. We estimate that it could raise about $100 billion, with comparatively minor impacts on income tax revenue. Using empirical estimates of mobility responses to wealth taxation, we find that an annual wealth tax on California billionaires could raise substantial additional revenue even after accounting for income tax losses due to mobility. |
| JEL: | H20 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35218 |
| By: | Jessica Wachter; Jonathan Wachter |
| Abstract: | The five largest U.S. technology firms spent $380 billion on capital expenditure in 2025 and are forecast to spend roughly double that in 2026. These firms risk bankruptcy unless expected profits grow commensurately. We embed this observation in a two-sector open-economy model with rare productivity booms. We calibrate the boom size to match the observed increase in investment projected through 2027, implying that a boom raises AI-sector productivity by a factor of roughly 2.7. We then calibrate a two-year window of a 50% annual probability of an increase of the same magnitude, generating a range of scenarios consistent with the wide variety of industry forecasts, along with an elevated permanent probability tied to the valuation of the aggregate market. The implied additional cumulative GDP growth ranges from 5 to 58 percentage points by 2030, with AI shares of the economy ranging from 8% to 39%. Long-term annual growth is in expectation approximately 7% but with substantial risk. With risk aversion of 3, and an elasticity of intertemporal substitution equal to 1, the risk-free rate increases by approximately half a percentage point, and the equity premium rises by approximately 3 percentage points. |
| JEL: | E22 G12 O33 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35290 |
| By: | Christian Moser; Farzad Saidi; Benjamin Wirth; Stefanie Wolter |
| Abstract: | We study the distributional consequences of monetary policy-induced credit supply in the German labor market. Firms in relationships with banks that are more exposed to the introduction of negative interest rates in 2014 experience a relative contraction in credit supply, associated with lower average wages. Within firms, initially lower-paid workers are more likely to leave employment, while initially higher-paid workers see a relative decline in wages. Between firms, wages fall by more at initially higher-paying employers. Our results suggest that credit affects the distribution of wages and employment both within and between firms. |
| JEL: | E24 E51 J23 J31 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35224 |