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on Business Economics |
| By: | Emanuele Bajo (University of Bologna); Aleksi Pitkäjärvi (Vrije Universiteit Amsterdam); Matteo Vacca (Hanken School of Economics) |
| Abstract: | Using population-wide Finnish registry data linking an administrative measure of work from home (WFH) to matched employer-employee records, we study how the allocation of WFH across the corporate hierarchy relates to wages and firm performance. Although remote workers on average earn higher wages, job-to-job transitions into WFH show that this premium largely reflects selection and heterogeneity: managers experience wage declines of approximately 3%, while middle- and lower-layer workers experience no comparable declines. Firm-level evidence shows that the performance consequences of WFH depend on its hierarchical location. Greater lower-layer WFH penetration is associated with weaker performance, whereas managerial WFH is not associated with worse firm performance. Since managerial WFH is associated with wage declines without evidence of lower firm performance, we interpret the decline as a conservative lower bound on managers’ valuation of WFH. Our results suggest that the value of WFH depends on where it is located inside the firm. |
| Keywords: | firm performance, remote work, work from home |
| JEL: | G30 G32 J31 L23 M51 |
| Date: | 2026–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260039 |
| By: | Flora Bellone (Université Côte d'Azur, CNRS, GREDEG, France); Edwin Fourrier-Nicolaï (Université Côte d'Azur, CNRS, GREDEG, France); Simone Vannuccini (Université Côte d'Azur, CNRS, GREDEG, France) |
| Abstract: | We study how imported input price shocks affect both the intensity and direction of innovation. Using comprehensive French firm-level data combining accounting records, ownership structures, customs transactions and patents over the period 2014-2023, we construct firm-level exposure to input price shocks based on structural breaks in product-level import unit values from non-EU countries, aggregated using a shift-share design. Innovation intensity is measured using priority patent applications, while the direction of innovation is characterized by mapping patents to products and embedding them in a production network to distinguish innovations directly related to affected inputs from those connected through upstream, downstream, or technologically adjacent linkages. We find that input price shocks primarily affect the direction rather than the level of innovation. Exposed firms reallocate innovative activity toward connected technological domains, consistent with network-based directed technological change. This reallocation is strongest among firms at the technological frontier, while smaller and less productive firms adjust more through overall innovation intensity. We provide evidence for specific industries, showing that the shock-innovation impact-response is heterogeneous. We interpret our results as firms' resorting to what we label defensive innovation. Our findings can inform policy making and firm strategy in a context of increasing trade fragmentation and geopolitical risk. |
| Keywords: | input trade shocks; directed innovation; trade fragmentation; patents |
| JEL: | F14 O31 O33 F18 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-17 |
| By: | Udo Kreickemeier; Zhan Qu; Florian Unger |
| Abstract: | We develop a two-country general equilibrium model in which heterogeneous firms have access to offshoring and innovation as two alternative ways of reducing production costs. We use our model to answer the question whether better offshoring opportunities lead to more or less innovation at the firm level. We show that switching into offshoring increases firm-level innovation activities when the level of openness of the economy is high, and reduces them if the economy is less open. Via general equilibrium effects, a reduction in offshoring costs unambiguously reduces the innovation activities of non-offshoring firms, whereas innovation in infra-marginal offshoring firms may go up or down. Our paper provides a rationale for contrasting evidence on the relation between offshoring and innovation found in the empirical literature. |
| Keywords: | offshoring, innovation, productivity effect |
| JEL: | F12 O31 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12789 |
| By: | De Jonghe, Olivier; Mulier, Klaas; Schepens, Glenn; Stimpfle, Leonard |
| Abstract: | We show that an unexpected tightening of the EU Emissions Trading System led high-emission-intensity firms to cut emissions relative to low-intensity peers within the same industry, without reducing output, thereby improving emission efficiency. Effects are stronger for power producers than for manufacturing firms. Examining mergers and acquisitions (M&As), we find that high-intensity manufacturing firms acquire more green targets after the tightening than low-intensity firms, with no change in the overall number of acquisitions, indicating a shift in focus rather than activity. Finally, we show that these green M&As contributed to the observed emission reductions over the study period. JEL Classification: D22, G34, G38, Q53, Q54 |
| Keywords: | climate regulation, emission trading, firm behavior, M&A |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263253 |
| By: | Joel P. Flynn; George Nikolakoudis; Karthik Sastry |
| Abstract: | Modern theories of the business cycle do not allow for the simultaneous rational choice of both prices and quantities, instead assuming that an “invisible hand” determines one of these variables to clear markets. In this paper, we develop a macroeconomic model in which both prices and quantities are chosen optimally by firms and exchange is both voluntary and efficient. As a consequence, individual markets will generically be in Walrasian disequilibrium: either slack (over-supplied) or rationed (under-supplied). The absence of market clearing changes pricing and production in qualitatively important ways: markups are governed by the probability of rationing rather than the elasticity of demand, and higher uncertainty reduces production and increases markups. Marrying the Old and New Keynesian traditions, we study general Walrasian disequilibrium with rational expectations and optimal firm decisions. On a technical level, we characterize cross-market spillovers arising from rationed demand with differentiated goods, overcoming the standard combinatorial problem that arises when studying multi-market disequilibrium. Unlike in New Keynesian economies, monetary shocks propagate by reducing product-market slack, raising aggregate labor productivity and consumption with muted effects on employment, while uncertainty shocks act as stagflationary cost-push shocks. |
| JEL: | E23 E32 E40 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35390 |
| By: | Kathryn McDonald; Noémie Pinardon-Touati; Conor Walsh |
| Abstract: | We uncover a new mechanism that links growth and a decline in the energy intensity of production, observed globally since 1990. Using microdata from India and a causal research design, we demonstrate that the expenditure share of energy declines steeply with firm scale, due both to physical scaling laws and technology investment. Given that average firm size increases with growth, this scale dependence implies that production endogenously becomes less energy-intensive along the growth path. We develop a model of this mechanism in general equilibrium, and quantify significant reductions in aggregate energy intensity as low-income countries like India grow. We conclude with a discussion of the future path of emissions in India. |
| JEL: | D24 L25 O43 O44 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35405 |
| By: | Ilse Lindenlaub (Department of Economics, Yale University); Ryungha Oh (Department of Economics, Yale University); Mar’a Alejandra Rodr’guez Vega (Department of Economics, Yale University); Laura Veldkamp (Columbia Business School, Columbia University) |
| Abstract: | We document and explain the gap between measures of AI exposure and measures of AI adoption in the workplace. This leads us to propose a new AI adoption index based on comparative advantage. Using the representative German DiWaBe employee survey linked to worker and establishment information, we compare worker-reported AI use to prominent exposure measures and find that the relationship is weak. Motivated by this gap, we develop a framework in which adoption depends not only on technical feasibilityÑAIÕs absolute advantage measured by exposureÑbut on profitabilityÑAIÕs comparative (dis)advantage relative to a specific workerÑbalancing AI productivity against AI user costs and worker productivity against wages. We operationalize this framework at the task level by (i) estimating worker productivity relative to pay, (ii) mapping exposure indices into AI productivity, and (iii) inferring task-specific AI user costs from revealed-preference adoption. The resulting occupation-level index accounts for 60% of cross-occupation variation in observed AI adoption, compared to 14% for an exposure-only model. The two approaches diverge substantially for approximately 30% of workers, highlighting that comparative advantageÑnot exposure aloneÑis crucial for assessing AIÕs labor-market impact. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2532 |
| By: | Cantarella, Michele (Technical University of Denmark - DTU); Molinari, Giuseppe (University of Modena and Reggio Emilia); Strozzi, Chiara (University of Modena and Reggio Emilia) |
| Abstract: | This paper investigates how Artificial Intelligence reshapes the human capabilities that jobs require. Using longitudinal O*NET data for the U.S. labour market over 2011–2025, we distinguish among three types of human capabilities - abilities, skills, and knowledge - and construct two measures of human capabilities’ exposure to AI: one based on observed progress in Generative AI benchmark performance and one based on the broader evolution of AI-related scientific and public attention. We document a dual pattern. Within occupations, greater AI exposure is associated with higher proficiency requirements for selected capabilities. At the occupational level, more exposed occupations exhibit a compression in the overall breadth of capabilities required. Together, these findings suggest that AI is driving a process of occupational restructuring, leading to more specialized and less diverse capability profiles embedded in jobs. |
| Keywords: | artificial intelligence, AI exposure, skill reallocation, task content, deskilling |
| JEL: | J24 J21 O33 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18751 |
| By: | Sergio Petralia; Ron Boschma |
| Abstract: | The patent system rests on a fundamental bargain: temporary monopoly rights in exchange for the disclosure of technical knowledge. Yet, the complexity of transferring technical know-how often limits the effectiveness of disclosure, keeping innovation highly localized. We study whether actionable disclosure in the form of publicly available executable code can overcome these frictions. We rely on a novel dataset linking two decades of patenting activity in the United States to contributions in public code repositories by 1, 556 organizations. Using neural language models, we measure the semantic similarity between patent descriptions and public code contributions by these firms to identify patents with high digital disclosure. We find that these patents attract citations from inventors located approximately 17% farther away than those citing a group of control patents, suggesting that actionable disclosure in the form of executable code reduces spatial barriers to knowledge diffusion. |
| Keywords: | patent disclosure, knowledge diffusion, open-source software, geography of innovation, spatial spillovers |
| JEL: | O31 O33 O34 R12 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2611 |
| By: | Fang, Tony (Memorial University of Newfoundland, NL, Canada); Lin, Carl (Bucknell University Lewisburg, PA, USA); Liu, Qing (Hefei University of Technology, Anhui, China) |
| Abstract: | We construct city–year measures of AI labor demand from 1.6 million online job postings between 2016 and 2024, and merge them with nationally representative microdata from the China Family Panel Studies (2016–2022). Fixed-effects estimates show that local AI labor demand has positive impacts on individual wages: a one-unit increase in AI demand (1, 000 postings, firms, or job titles) raises wages by about 0.2–0.3 percent. Women experience stronger gains—about 0.5–0.7 percent per unit increase—while men show no measurable effect. Wage effects are largest in Western provinces, and in China’s major AI-cluster cities where complementary production factors and digital infrastructure are most developed. Occupational analyses further show that women’s gains are concentrated in service-oriented, less skill-intensive jobs where AI complements interpersonal and coordination tasks rather than substituting them. Overall, AI diffusion generates meaningful but unequal labor market spillovers, with wage gains concentrated among women, dynamic regions, and human–AI complementary occupations, underscoring both the opportunities of technological transformation and the challenges of achieving inclusive growth. |
| Keywords: | artificial intelligence (AI), labor market, wages, productivity, China |
| JEL: | I23 J24 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18740 |
| By: | Reka Juhasz; Dávid Krisztián Nagy; Claudia Steinwender; Woan Foong Wong |
| Abstract: | Maritime transport remains the backbone of global trade, yet the port and shipping network that carries it has been transformed by containerization and related technological advances. Drawing on newly available granular data — digitized historical shipping records, georeferenced ship movements, and shipment-level routing information — we present five stylized facts on the structure and evolution of the maritime network. Global shipping activity is highly concentrated among a changing lineup of dominant top ports even as lower-ranked ports disperse, while state-owned Chinese port terminal operators increasingly account for these global volumes, boosting overall port operations while delivering efficiency gains mostly to Chinese vessels. We use these facts to organize a synthesis of a fast-growing literature: containerization reshaped which port cities could expand, reinforced hub-and-spoke concentration that yields large but localized welfare gains, embedded ports in multimodal networks that amplify the returns to infrastructure, and generated market power, congestion, and environmental costs. Together, this evidence shows how evolving maritime technologies simultaneously deepen global integration and heighten the economic and geopolitical importance of critical nodes in the transport network — and of who controls them. |
| Keywords: | transport networks, ports, international trade, trade costs, containerization, geoeconomics |
| JEL: | F13 F14 R41 R42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12793 |
| By: | Jaison R. Abel; Mary Amiti; Richard Deitz; Sebastian Heise; Nick Montalbano |
| Abstract: | The past year brought dramatic changes to U.S. trade policy, including sweeping new tariffs, as well as a Supreme Court decision that further reshaped the tariff landscape. Many businesses saw their costs increase significantly and faced complex decisions about whether to absorb the tariffs through lower profit margins, raise their prices to recover the higher costs, or some combination of the two. Last year, we found that most businesses had passed on at least some of these higher costs to their customers through higher prices. Now, over a year later, have businesses finished adjusting prices, or do further tariff-induced price increases lie ahead? Our latest regional business surveys reveal that nearly half of firms that have paid tariffs still plan additional price increases to offset these costs, with some expecting to raise prices six months or more in the future. |
| Keywords: | tariffs; pass-through; imports; prices |
| JEL: | F13 E31 |
| Date: | 2026–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103505 |