|
on Business Economics |
| By: | Alam, Afroza; Diegmann, André |
| Abstract: | This paper provides new causal evidence on how patent allowances affect firms and their employees based on quasi-random assignment of patent applications to examiners. Exploiting employer-employee records with newly linked German firm data and web-scraped patent documents, it shows that patent-induced shocks reduce firm exit, improve productivity, and increase wages, with rent-sharing elasticities between 0.10 and 0.21. Wage gains are broadly observed across occupational tasks, with substantial heterogeneity: managers benefit dispro portionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. The findings highlight the role of institutional features and firm organiza tion in shaping how rents are shared. |
| Keywords: | Innovation, Firm Performance, Worker Compensation, Rent Sharing |
| JEL: | O31 O34 J31 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:341411 |
| By: | Kuosmanen, Natalia; Kuosmanen, Timo; Maczulskij, Terhi |
| Abstract: | Abstract A substantial share of firm entry and exit observed in register-based data reflects mergers, acquisitions, spin-offs, and other forms of corporate restructuring, instead of genuinely new firms or firm closures. This distinction is important for productivity decompositions, which typically interpret market entry and exit as manifestations of the Schumpeterian creative destruction. Using linked register-based data on Finnish manufacturing firms and employees for the period 2010–2022, we identify restructuring events through clustered worker flows, and incorporate this classification into a structural productivity decomposition framework. The results show that firms involved in restructuring events exhibit significantly higher productivity levels than genuinely entering or exiting firms. Nevertheless, the contribution of restructuring-related entry and exit to aggregate productivity growth remains modest, whereas genuine creative destruction by newly established firms and closing down make a larger positive contribution to productivity growth. Firms undertaking acquisitions exhibit a temporary decline in labor productivity around the time of acquisition, followed by a gradual recovery. These findings highlight the need to distinguish restructuring events from genuine market entry and exit when analyzing productivity dynamics. |
| Keywords: | Labor productivity, Mergers and acquisitions, Corporate restructuring, Worker flows, Productivity decomposition |
| JEL: | D24 L25 L60 O47 |
| Date: | 2026–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:142 |
| By: | Hutschenreiter, Dennis; Liu, Qianshuo |
| Abstract: | This paper examines whether common institutional ownership is associated with CEO connectedness across firms. We document that higher common ownership between two same-industry firms predicts a greater likelihood that a newly appointed CEO has preexisting social ties to the incumbent CEO of the peer firm. To address endogeneity, we use mergers among institutional investors in a stacked difference-in-differences design. In a hiring-firm-peer panel that carries connection status forward from the most recent appointment, exposure to a merger-induced common blockholder approximately doubles the probability that the pair is observed in a connected-CEO state. In a broader firm-pair panel, it increases the probability of CEO connections by 48.7%. We further document that gaining CEO connections through another firm's CEO appointment is associated with improvements in peer firms' returns on assets and Tobin's Q, in both OLS and IV specifications. Peer firms that gain such a connection also experience positive abnormal returns around other firms' CEO hiring announcements, corresponding to an average increase of $112.5 million in shareholder value. These performance patterns suggest that CEO connections may be valuable from a portfolio-level perspective. Consistent with this interpretation, the association between common ownership and CEO connections is concentrated among product-similar and organizationally complex firms and strengthens after the 2008-2009 financial crisis, when connections appear more valuable. Our findings point to CEO connection as a potential governance channel through which common institutional ownership is linked to firm outcomes, complementing prior work on executive compensation, shareholder voting, and board interlocks. |
| Keywords: | CEO connections, CEO selection, common ownership, corporate governance, firm performance |
| JEL: | G23 G32 G34 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:341627 |
| By: | Wei Cai; Dennis Campbell; Yaxuan Chen; Yufei Chen; Andrea Prat |
| Abstract: | Product and service quality is fundamental to firm value creation, yet it is well recognized as difficult to observe ex ante. Existing quality proxies are limited in coverage, lack cross-firm comparability, and primarily rely on lagging indicators that capture product or service failures only after they materialize. Exploiting employees’ informational advantage as informed insiders and firsthand observers of firms’ internal operations, we develop and validate a novel, forward-looking measure of firm-year-level product and service quality using over 4.3 million employee reviews on Glassdoor. Leveraging machine learning models trained on a subset of firms with third-party customer satisfaction data, we construct quality indices for S&P 1500 firms spanning 2008 to 2023. The resulting quality measures exhibit meaningful variation across firms and within firms over time. In out-of-sample tests, our quality indices demonstrate strong predictive power for future quality provision, emerging as the single most important predictor relative to firm fundamentals and Glassdoor ratings. We validate our measure by examining its association with alternative quality metrics. We show that our quality measures are useful in predicting important quality-related firm outcomes such as product recalls, brand value, and profitability. We also construct an alternative set of quality measures using a zero-shot prompt-based approach and a supervised fine-tuning approach with GPT models to assess the potential of LLMs and generative AI in capturing firm-level quality provision. Our paper shows the value of employee voices as a powerful, forward-looking, and scalable signal of firm quality provision. The paper offers implications for stakeholders seeking to identify quality-related risks and opportunities before they become externally visible. |
| JEL: | D83 M14 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35348 |
| By: | Francesco Bianchi; Renato Faccini; Leonardo Melosi; Nils Wehrhöfer |
| Abstract: | We study how debt news shapes firms’ inflation expectations in a monetary union. In an active-control experiment, German firms receive optimistic or pessimistic projections of France, Italy, and Spain’s debt-to-GDP ratios. Pessimistic news raises debt beliefs and increases one- and three-year inflation expectations, with no detectable effect at five years. The response is driven by low-trust firms and by firms expecting relatively low ECB policy rates. A salient German debt-financed fiscal shock generates no comparable response. Within a Fisherian framework, the evidence suggests that debt news becomes inflationary when firms perceive incomplete fiscal backing and expect monetary accommodation. |
| JEL: | C93 D84 E31 E32 E62 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35341 |
| By: | Taiyo FUKAI; Hiromi HARA |
| Abstract: | This paper provides causal evidence that firms act as important intermediaries in the implementation of social policy. In 2005, Japan introduced a policy requiring large firms to develop action plans to establish or expand their company-specific childcare programs. Using pooled repeated cross-sectional survey data with retrospective fertility and employment histories and a Difference-in-Differences (DD) framework, we estimate the policy's impact on working mothers. The results show significant increases in the uptake of maternity and parental leave and improvements in post-birth employment outcomes, with mothers more likely to remain employed and to return as regular employees after the birth of their first child. However, we do not find robust evidence that the policy affected higher-order fertility. These results highlight the importance of firms as institutional channels for implementing family-friendly policies, while also suggesting that workplace-based measures alone may be insufficient to influence fertility behavior and address Japan’s broader demographic challenges. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26050 |
| By: | Dennis Facius; Roberto Iacono |
| Abstract: | Does Generative AI displace early-career workers? We provide population-wide evidence from Norwegian administrative registers, 2015 through March 2025, exploiting the November 2022 release of ChatGPT as an availability shock. Using the within-firm composition difference-in-differences employed in recent work, supplemented with a synthetic difference-in-differences at the occupation level and a firm-level shift-share design, we find no robust evidence of employment displacement among young workers in highly AI-exposed occupations, nor any robust response across other age cohorts or on incumbent labor-market outcomes. While estimated coefficients for young workers are negative, in line with the existing literature, they are small and statistically insignificant. A backdating exercise on the synthetic difference-in-differences yields larger absolute estimates than the actual treatment date across most age bands. This suggests the apparent post-2022 decline reflects, at least in part, pre-existing secular trends rather than a clean AI-period break. |
| Keywords: | generative artificial intelligence, large language models, automation, labor demand |
| JEL: | J23 J24 J31 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12752 |
| By: | de Nicola, Francesca; Ragoussis, Alexandros; Schmidt-Eisenlohr, Tim; Tran, Trang Thu |
| Abstract: | Letters of credit are a key trade finance instrument that covers more than 10 percent of global trade, with a notably larger role in low- and middle-income economies. Studying detailed trade data from Viet Nam, this paper documents how the use of letters of credit varies with firm characteristics. The paper shows that the probability of using a letter of credit is systematically lower for younger, smaller, and foreign-owned trading firms. Importers that are less diversified or have less trading experience are more likely to use letters of credit. Firm characteristics have the strongest effects in markets where information is scarce and enforcement is weak. These patterns are consistent with a model in which the ability to screen trading partners and the cost of bank intermediation vary with firm characteristics, and where a firm’s screening ability and country institutions are substitutes. Any policy or intervention that aims at increasing the use of bank-intermediated trade finance will therefore need to take firm heterogeneity into account. |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11404 |
| By: | Cevat Giray Aksoy; Nicholas Bloom; Steven J. Davis; Victoria Marino; Cem Ozguzel |
| Abstract: | Remote work has expanded rapidly, but the value of regular in-person contact remains unclear. We report a randomized controlled trial in which a large multinational randomly assigned 248 customer-service employees to remain fully remote or to work at the office together one day a month. Monthly office days gradually increased productivity, with treated employees handling 7.8% more calls per hour in the post-intervention period. Office days also strengthened workplace communication: treated employees spent 36 additional minutes communicating with colleagues in the week after an office visit, were more likely to report receiving manager feedback, and employee pairs randomly assigned as desk neighbors were 11 percentage points more likely to communicate afterward. In addition, monthly office days reduced attrition by a third. The resulting gains in productivity and retention generated a benefit–cost ratio of about 5:1. These findings show that limited, coordinated in-person contact can improve communication, performance, and retention in remote teams. |
| JEL: | J0 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35331 |
| By: | Lukas Althoff; Hugo Reichardt |
| Abstract: | Artificial intelligence (AI) reshapes workers’ comparative advantage by altering the tasks they perform and the skills those tasks require. We develop a dynamic task-based model to quantify the general-equilibrium effects of task-specific technical change. Workers have multidimensional skills, choose occupations, and accumulate skills on the job; occupations combine tasks, and productivity depends on how workers’ skills match task requirements. We develop a computationally efficient procedure to estimate the model using panel data and a new database of task-level skill requirements. We apply the model to AI, allowing it to augment, automate, and simplify tasks. We find that AI narrows wage inequality and raises average wages across scenarios ranging from slow to rapid AI progress. The key equalizing force is simplification: by lowering tasks’ skill requirements, AI lets lower-skill workers compete for previously inaccessible jobs. Adoption costs, highest for lower-skill workers, dampen but do not eliminate the decline in inequality. |
| JEL: | C6 C8 D2 D58 E20 J20 J3 J6 O3 O4 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35353 |
| By: | Strömberg, David; Lei, Victor; Wu, Yanhui |
| Abstract: | Using 30 months of panel data on 26, 811 Chinese students in grades 7--12, we study how generative AI affects homework productivity and learning. The data combine monthly closed-book exams, high-school and college entrance exams, and homework scores and completion time across nine subjects. We exploit staggered AI adoption in a difference-in-differences design. AI adoption raises homework scores by 18% and reduces completion time by 30%, but lowers monthly exam scores by 20% within six months. High-stakes entrance-exam scores fall by 18 and 24%, with the full penalty emerging only after about two years. The losses are largest in social science subjects, followed by STEM and languages, and are especially large for junior students, high-achieving students, and boys. The learning losses are concentrated among roughly 80% of AI users whose behavior is consistent with homework outsourcing, as indicated by exceptionally short homework completion time coupled with high homework scores. AI users who maintain similar homework completion time as non-AI users experience small learning losses. |
| Keywords: | Generative AI; Education; Human capital accumulation; China shock |
| JEL: | O15 I20 O33 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21577 |
| By: | Volker Nocke; Martin Peitz; Nicolas Schutz |
| Abstract: | How should merger control account for future changes in market conditions? We study horizontal merger policy in the presence of industry-wide cost or demand shocks, using both a homogeneous-goods Cournot model and a multiproduct-firm model of price competition with constant elasticity of substitution (CES) or multinomial logit (MNL) demand. We derive two main sets of results. First, regarding deterministic shocks: under both Cournot competition with incomplete pass-through and multiproduct firm price competition, an adverse shock increases industry concentration but calls for softer merger control. Second, regarding cost or demand uncertainty: under a cautious maxmin approach, aggregate cost uncertainty calls for softer merger control under the same assumptions. By contrast, under a risk-neutral expected-consumer-surplus stan dard, greater cost uncertainty demands tougher merger control in the Cournot model with log-concave demand, and in the multiproduct-firm price competition model when the outside option is sufficiently attractive. |
| Keywords: | merger control, market concentration, cost shocks, demand shocks, pass through, resilience |
| JEL: | L13 L40 L41 K21 D43 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_754 |