nep-bec New Economics Papers
on Business Economics
Issue of 2026–08–31
23 papers chosen by
Shuichiro Nishioka, West Virginia University


  1. Firm Interactions and Potential Ecosystems: A Bottom-Up Approach to Territorial Network Analysis By Zoltan Elekes; Sandor Juhasz; Gergely Magyar; Balazs Lengyel; Gergo Toth
  2. Idea Rents and Firm Growth By Timo Boppart; Peter J. Klenow; Reiko Laski; Huiyu Li
  3. Personality Traits of Entrepreneurs and the Size of their Firms By Berfin Kardaslar; Alexander S. Kritikos; Lukas Menkhoff
  4. The Equilibrium Impact of Credit Frictions: Evidence from Default Risk Using Firm-Level Data By Besley, Timothy; Lambert, Peter John; Michalski-Roland, Isabelle; Van Reenen, John
  5. Female-Targeted Hiring Subsidies, Firm Learning, and Women’s Employment By Mimosa Distefano; Lorenzo Incoronato; Anna Raute
  6. Geopolitics and Export Miracles: Firm-Level Evidence from U.S. War Procurement in Korea By Philipp Barteska; Oliver Kim; Nathan Lane; Seung Joo Lee
  7. Carbon Taxation and Firm Behavior in Emerging Economies: Evidence from South Africa By Johannes Gallé; Rodrigo Oliveira; Daniel Overbeck; Nadine Riedel; Edson R. Severnini
  8. Income and Tax Consequences of Selling Ownership Stakes: Evidence from Major Shareholders of Private Firms in Canada By Terry Moon; Linda Wu
  9. More Frequent Than You Think: Revisiting Capital Structure Adjustment By Zhiguo He; Peter M. DeMarzo; Qiping Xu
  10. Do Children Derail Women from the CEO Track? By Santiago Campos-Rodríguez; David Neumark
  11. Wage-Setting Constraints and Firm Responses to Demand Shocks By Lukas Delgado-Prieto; Manudeep Bhuller; Linnea Lorentzen; Santiago Hermo
  12. Political Entrepreneurs By Aaron Chatterji; Jorge Guzman; Joyce Ma; Ryan C. McDevitt
  13. Price Discovery in Labor Markets: Why Do Firms Say They Cannot Find Workers? By Benjamin Friedrich; Michal Zator; Alison Zhao
  14. Geopolitical conflicts and European MNE strategy: The outcomes of staying or leaving Russia By Ahmed, Shaker; Davydov, Denis; Solanko, Laura
  15. Labor Market Power with Worker and Firm Heterogeneity By David W. Berger; Kyle F. Herkenhoff; Jaehun Jeong; Simon Mongey
  16. Linkages of Firm Spending Behavior through Supply Chains By Ko Adachi; Kosuke Aoki; Yoshiyuki Kurachi; Taiki Ono; Akitoshi Toyoda
  17. Declining Occupations and Career Outcomes in the United States By Erling Barth; Maria Forthun Hoen; Sari Pekkala Kerr; William R. Kerr
  18. Mapping Japan's Manufacturing Supply Chains Through Firm-to-Firm Transaction Data By Ko Adachi; Kosuke Aoki; Yoshiyuki Kurachi; Taiki Ono; Akitoshi Toyoda
  19. Perceived Protection: Tariff Spillovers to Product Substitutes in the Used Car Market By Sebastien Bradley; Mian Dai; Blaize Giangiulio; Yoto V. Yotov
  20. Is the AI Boom Volatility-Biased Technological Change? By Juan David Munoz Henao; Nicholas Sly
  21. How Firms Form Beliefs and the Implications for Inflation By Robert Minton; Hugo Monnery
  22. Has AI Widened Employment Gaps? Tracking Early-Career Employment by Occupational Exposure in Norway By Øystein Hernæs; Andreas Ravndal Kostøl
  23. Google's AI & Economy ATLAS v1.0: Mapping Gemini Usage in the Economy By Zanna Iscenko; Scott Strand; Yiyuan Chen; Guillaume Aimard; Mihai Codreanu; Vivek Sampathkumar; Alex Imas; Julian Jacobs; Evalyne Muiruri; Juan Mateos-Garcia; Jia Jen Ng; Samirah Javed; Josh Martin; Omar Ajmeri; Denis Calin; Andrew Kim; Fabien Curto Millet; James Manyika

  1. By: Zoltan Elekes; Sandor Juhasz; Gergely Magyar; Balazs Lengyel; Gergo Toth
    Abstract: Regional industry clusters enhance firm performance, yet the geography of firm-to-firm transactions underlying this advantage remains unclear. Using nationwide supplier-buyer and labour-flow networks constructed from Hungarian administrative data, we examine how the spatial reach of cluster and non-cluster firms’ supplier, customer, and labour connections relates to firm performance. We find that greater geographic reach in both networks is associated with better firm performance. Among cluster firms, better-performing firms reach more distant customers while drawing from more geographically proximate labour markets. Our findings reveal that the spatial structure of inter-firm networks is a key source of the cluster premium.
    Keywords: supply chains, production networks, labour flows, regional clusters, firm performance
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:egu:wpaper:2613
  2. By: Timo Boppart; Peter J. Klenow; Reiko Laski; Huiyu Li
    Abstract: Which firms drive aggregate productivity growth? We document that firms with high price-earnings ratios tend to see increases in their subsequent earnings relative to sales, which we interpret as rents from ideas (innovation). We construct an endogenous growth model with shocks to firm innovation step-sizes and R&D efficiency and calibrate it to match patterns in the data. The model implies that growth would be much lower, even with the same innovative effort, if firms had the same step sizes. The model can be used to infer expected growth contributions of individual firms (such as members of the Magnificent Seven). We find that the share of growth coming from smaller listed firms substantially exceeds their sales share, whereas the largest listed firms account for less than their sales share.
    JEL: L11 O31 O41
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:35594
  3. By: Berfin Kardaslar (Humboldt-Universität zu Berlin, DIW Berlin); Alexander S. Kritikos (DIW Berlin, University of Potsdam, GLO Essen, CEPA); Lukas Menkhoff (DIW Berlin, Humboldt-Universität zu Berlin, IfW Kiel)
    Abstract: In this study, we examine the relationship between personality traits, captured by risk tolerance and the Big Five traits, and firm size, as measured by the number of employees. We show that the personality of entrepreneurs matters for the size of their firm they operate. We use a novel add-on to the German Socio-Economic Panel that includes a sub-sample of owner-managers running larger firms. High levels of risk tolerance – associated with an increased likelihood of firm exit in existing research – is positively associated with firm size for entrepreneurs in the market. High scores in extraversion are also associated with larger firms. However, a high level of openness for experience, a main driver of founding ventures, is negatively related to firm size. Overall, we show that running larger firms is associated with traits that are partially different from those that increase the likelihood of entrepreneurial entry or survival.
    Keywords: entrepreneurship, risk tolerance, personality traits, firm size
    JEL: L26 D81 J24
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:pot:cepadp:106
  4. By: Besley, Timothy (London School of Economics); Lambert, Peter John (London School of Economics and University of Warwick and CAGE); Michalski-Roland, Isabelle (Bank of England); Van Reenen, John (London School of Economics)
    Abstract: This paper examines the impact of credit frictions arising from firm-level default risk on aggregate economic performance. We build a micro-to-macro model with heterogeneous firms and sector-specific production functions, showing that perceived default risk is a sufficient statistic for credit frictions. Using UK administrative data (2004-2019) matched to S&P risk measures, counterfactual estimates reveal that relaxing frictions raises output by 25% and wages by 23%. Ignoring equilibrium wage adjustments overstates output gains, while fixed-capital misallocation approaches understate them. Most gains reflect aggregate capital accumulation. Credit frictions remain above pre-crisis levels, reshape firm size dynamics, increase misallocation across firms, and dampen productivity growth over time.
    Keywords: productivity, default risk, credit frictions, misallocation JEL Classification: D24, E32, L11, O47
    Date: 2026
    URL: https://d.repec.org/n?u=RePEc:cge:wacage:818
  5. By: Mimosa Distefano; Lorenzo Incoronato; Anna Raute
    Abstract: Women often struggle to re-enter employment after career breaks, possibly because employers are uncertain about their productivity. We study whether hiring subsidies help firms overcome this uncertainty and hire from this group. Exploiting an Italian policy that temporarily cut payroll taxes for women hired from non-employment, we find that firms persistently hire more women with career breaks, including mothers, following subsidy adoption. Consistent with employer learning about target-group productivity, firms with better initial matches later hire more from this group. Subsidized workers also show stronger labor-market attachment. These findings suggest demand-side interventions can complement supply-side policies in addressing gender gaps.
    Keywords: gender employment gap; mothers; hiring subsidies; employer learning; firm hiring behavior
    JEL: J16 J23 H25 D83
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:crm:wpaper:26211
  6. By: Philipp Barteska; Oliver Kim; Nathan Lane; Seung Joo Lee
    Abstract: How did geopolitics shape East Asia's economic development? We find that U.S. military procurement during the Vietnam War — a shock which peaked at nearly 3% of South Korean GDP, rivaling the Marshall Plan — catalyzed Korea's export-led industrialization. We construct a new firm-level dataset that matches Korean export records with U.S. procurement contracts awarded between 1965 and 1974 to estimate the causal impact of winning a contract on export performance. A firm winning its first contract raises its likelihood of exporting by 14.7 percentage points and its export value by 40%. Treated firms are more likely to expand into third-country markets and export manufacturing products — and these gains are unlikely to come from business stealing. Finally, we find that U.S. procurement and domestic industrial policy were likely complementary. Our findings reveal a neglected channel through which Cold War geopolitics shaped the East Asian economic miracle.
    Keywords: export promotion, firm development, East Asian Miracle, procurement, geoeconomics
    JEL: F14 F35 O14 H56 N45 O25
    Date: 2026
    URL: https://d.repec.org/n?u=RePEc:ces:ceswps:_12926
  7. By: Johannes Gallé; Rodrigo Oliveira; Daniel Overbeck; Nadine Riedel; Edson R. Severnini
    Abstract: This paper provides the first comprehensive evidence on how firms in an emerging economy respond to carbon taxation in the context of an early-phase policy, highlighting how firms adjust when incentives are modest but signals about future regulation are strong. We study the announcement and early implementation of South Africa’s 2019 carbon tax using detailed administrative firm-level data from 2011-2021. Employing a matched difference-in-differences design and event-study models, we trace dynamic firm responses. Contrary to concerns that carbon taxes might hinder growth or employment, we find no negative effects on firm performance or jobs. Leveraging variation in firms’ exposure to the tax through temporary tax-free allowances, we find that firms facing higher effective tax rates increased sales, employment, capital, and capital depreciation in anticipation of the policy, reflecting resolution of regulatory uncertainty and adjustments to mitigate stranded asset risks. While we detect no measurable reduction in emissions — likely due to anticipatory behavior — the results show that early-phase carbon pricing can shape firm behavior without harming economic outcomes, even in low- and middle-income settings.
    Keywords: carbon pricing, carbon tax, firm performance, employment outcomes
    JEL: H23 Q52 Q58 O13 O55
    Date: 2026
    URL: https://d.repec.org/n?u=RePEc:ces:ceswps:_12953
  8. By: Terry Moon; Linda Wu
    Abstract: This paper assesses the income and tax consequences of selling ownership stakes in private companies using linked tax records of business owners in Canada. Comparing major shareholders who sell their entire stakes with matched counterparts who sell at a later time, we find large reductions in their overall income and taxes after selling their company, except for an initial spike in capital gains. Furthermore, they reduce their labor supply and wage income on average. We do not find evidence of serial entrepreneurship across ages or sectors, implying that business owners enjoy a "quiet life" after selling instead of starting new firms or remaining active in the labor market.
    Keywords: Business ownership; Firm sales; Capital gains taxation; Entrepreneurship; Labor supply
    JEL: H24 G34 J22 L26
    Date: 2026–06
    URL: https://d.repec.org/n?u=RePEc:crm:wpaper:26175
  9. By: Zhiguo He; Peter M. DeMarzo; Qiping Xu
    Abstract: This paper revisits the empirical evidence on capital structure adjustment and the prevalence of financing “inaction.” We show that the conclusion of infrequent leverage adjustment is sensitive to two methodological choices: high adjustment thresholds and reliance on net balance-sheet changes. Using lower thresholds and gross flows from cash-flow statements, we find adjustment is far more frequent than previously documented, and the pattern reveals pronounced size-based heterogeneity. Smaller firms exhibit considerable inertia consistent with fixed costs; the largest firms (e.g., top 1% by assets) behave as if frictions are negligible. Frictionless recapitalization models thus better describe large-firm leverage dynamics.
    JEL: G31 G32 G35
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:35593
  10. By: Santiago Campos-Rodríguez; David Neumark
    Abstract: Gender disparities in becoming a CEO are pronounced, and women who become CEOs, especially of large firms, are less likely to have children or be married. We study the effects of children and marriage on becoming a CEO, using longitudinal administrative data covering the universe of tax-registered firms in Costa Rica, matched to universal civil registry records that provide the timing of childbirth and marriage. We find that first childbirth is followed by a persistent decline in women’s probability of becoming a CEO, but no comparable decline for men and some evidence that CEO attainment rises. Marriage displays a different but still divergent pattern: it is associated with higher subsequent CEO attainment for men, but little change for women. Changes around childbirth account for a substantial share of the overall gender difference in CEO rates. Finally, we find evidence consistent with household specialization as a potential mechanism. Around marriage and first childbirth, women’s formal employment, earnings, and share of household earnings decline, while men become more central to household earnings as their partners reduce formal employment.
    JEL: J16 J30 J4
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:35616
  11. By: Lukas Delgado-Prieto; Manudeep Bhuller; Linnea Lorentzen; Santiago Hermo
    Abstract: This paper investigates how institutional wage-setting constraints, such as a national minimum wage or collectively bargained wages, affect firm responses to demand shocks. We develop a framework to interpret heterogeneous shock responses that depend on the constraints firms face, and provide empirical evidence on the relevance of these constraints in shaping firm behavior across three countries with different institutional settings: Portugal, Norway, and Colombia. We discuss the implications of our findings for conventional measures of employer wage-setting power and rent-sharing.
    Keywords: Demand Shocks, Wage Constraints, Firm Heterogeneity, Rent-Sharing, Monopsony Power, Minimum Wages, Wage Floors, Collective Bargaining.
    JEL: D22 J31 J42 J51
    Date: 2026–07
    URL: https://d.repec.org/n?u=RePEc:crm:wpaper:26180
  12. By: Aaron Chatterji; Jorge Guzman; Joyce Ma; Ryan C. McDevitt
    Abstract: Firms shape public policy not only from the outside through lobbying and campaign contributions, but also from the inside when business owners hold public office. We study this channel using a novel dataset that links state legislators’ personal financial disclosures to bill sponsorship records across 26 U.S. states from 2009 to 2023. The disclosures allow us to observe business ownership during legislative service and to distinguish entrepreneurs, defined as legislators who both own and actively manage a firm, from passive shareholders and employees. Applying a large language model to bill text, we classify legislation as pro-business and identify a subset of pro-entry bills that reduce barriers facing new firms. Entrepreneurs are a substantial presence in state legislatures, accounting for over 40 percent of legislators, and their representation varies primarily across states rather than within states over time. Although entrepreneurs do not sponsor more bills overall, they initiate a greater share of bills as first or sole primary sponsor. They also do not appear to be generic advocates for business. Relative to legislators with other business ties, entrepreneurs are no more likely to sponsor pro-business bills or bills endorsed by state Chambers of Commerce. Instead, they selectively advance pro-entry legislation, especially bills related to deregulation and innovation rather than antitrust or access to capital. These findings document an important channel through which entrepreneurs shape the policy environment for entrepreneurship from within political institutions.
    JEL: D72 H7 L26
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:35637
  13. By: Benjamin Friedrich; Michal Zator; Alison Zhao
    Abstract: Why do firms report that they cannot find workers instead of preemptively raising wages? Using German administrative data, we show labor-constrained firms pay lower wages and quasi-exogenous wage increases alleviate constraints, consistent with monopsony. Yet constrained firms' delayed wage increases point beyond this mechanism. We develop a dynamic matching model combining wage-setting power with incomplete information and downward wage rigidity. Consistent with the model, firms raise wages when initial wage plans prove too low, especially for peripheral occupations, and face constraints after wage shocks to adjacent sectors, suggesting that firms' inaccurate beliefs and learning about market wages shape labor constraints.
    Keywords: Hiring difficulties, wage adjustments, outside options, information frictions
    JEL: J23 J31 D83 E24 M51
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:crm:wpaper:26215
  14. By: Ahmed, Shaker; Davydov, Denis; Solanko, Laura
    Abstract: Geopolitical conflicts force multinational enterprises to make difficult choices between protecting their operations in a host country and preserving their standing among stakeholders at home, even when formal sanctions do not require firms to exit. Whether to remain in a conflict-affected market is also often an ethical decision. Using panel data on more than 8, 000 listed European firms from 2010 to 2024, we compare corporate outcomes following Russia's 2014 annexation of Crimea and its 2022 full-scale invasion of Ukraine. We find that the 2014 shock produced little change in operating performance and modest deleveraging among firms with a Russian market presence, compared to those without. After 2022, firms that remained in Russia experienced stronger sales and employment growth than firms that completed their exit, without corresponding improvements in profitability or changes in leverage. Stayers experienced a larger post-2022 increase in media-based ethical scrutiny, whereas firms that completed their exit experienced a larger increase in idiosyncratic volatility. These findings suggest that corporate decisions to withdraw from an aggressor state are not necessarily associated with a consolidated profitability penalty, while decisions to stay may entail greater ethical scrutiny.
    Keywords: Business strategy, Self-sanctions, Reputational risk, European firms, Russia
    JEL: D22 F51 L2 M14
    Date: 2026
    URL: https://d.repec.org/n?u=RePEc:zbw:bofitp:343073
  15. By: David W. Berger; Kyle F. Herkenhoff; Jaehun Jeong; Simon Mongey
    Abstract: How do firms set wages? How should governments set income taxes? If labor supply is inelastic to wages, firms can pay workers less than their marginal products, and governments can increase taxes without eroding the base. However, the structure of labor supply elasticities in the economy is complex. Recent empirics document variation across workers, firms, and margins (which firm to work at versus how many hours to work). To account for this rich structure of labor supply elasticities we extend the neoclassical model to include a discrete choice over which firm to work at, production complementarities and strategic interaction between heterogeneous, granular firms. In terms of wage setting, we find that novel effects of worker heterogeneity account for 78 percent of the variable component of labor supply elasticities and markdowns, and 89 percent of markdown differences between large and small firms. In terms of policy, higher progressivity makes labor supply less elastic, eroding the tax base by widening markdowns and worsening sorting. These channels (i) produce large declines in earnings following increases in marginal tax rates, consistent with empirical studies, and (ii) reduce optimal tax progressivity by one-third and associated welfare gains by two-thirds.
    JEL: E0 E2 J0 J2 L0 L10
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:35640
  16. By: Ko Adachi (Bank of Japan); Kosuke Aoki (Graduate School of Economics, University of Tokyo); Yoshiyuki Kurachi (Bank of Japan); Taiki Ono (Bank of Japan); Akitoshi Toyoda (Bank of Japan)
    Abstract: This paper empirically analyzes the linkages of firm spending behavior along supply chains, with a focus on capital investment and wage-setting, using production network data from Japan's manufacturing sector. The analysis yields the following findings. First, there is evidence of bonus linkages within supply chains, originating from temporary foreign demand shocks. Second, more broadly, the capital investment of firms can be influenced by downstream investment activity in supply chains, whether domestically or internationally. In addition, the determination of regular wages within a firm appears to be influenced by the wage rates set by focal firms within the same supply chains. These results underscore the importance of analyzing firm behavior while taking into account the multilayered supply chain structure centered around large manufacturing firms in order to understand Japan's economic dynamics.
    Keywords: Supply Chain; Firm-to-Firm Transaction Data; Firm Behavior; Linkages
    JEL: D22 E22 J31 L14
    Date: 2026–08–12
    URL: https://d.repec.org/n?u=RePEc:boj:bojwps:wp26e14
  17. By: Erling Barth; Maria Forthun Hoen; Sari Pekkala Kerr; William R. Kerr
    Abstract: We study long-run career consequences of initial employment in an occupation that subsequently declines. Linking the 2000 Decennial Census to US administrative employment and earnings records through 2020, we follow more than 2.4 million workers. Employment in an occupation that contracts by at least 25 percent is associated with about 5 percent lower cumulative earnings despite slightly more quarters worked. The earnings differential closely matches evidence from Sweden and Norway, although employment adjustment differs. Occupational mobility is substantial but incomplete, while children’s later occupational destinations are much less tied to their household heads’ 2000 occupational-growth categories.
    JEL: J24 J31 J62 O33
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:35614
  18. By: Ko Adachi (Bank of Japan); Kosuke Aoki (Graduate School of Economics, University of Tokyo); Yoshiyuki Kurachi (Bank of Japan); Taiki Ono (Bank of Japan); Akitoshi Toyoda (Bank of Japan)
    Abstract: This study employs firm-to-firm transaction data to identify the multilayered and extensive supply chain structures in Japan's manufacturing sector and quantitatively analyze the characteristics of these supply chain structures. It also investigates the impacts of firm-level shocks, arising from both the supply and demand sides, on the overall manufacturing sector. The analysis reveals that automobile supply chains are exceptionally long and large-scale, with firms at the center of these chains exerting a larger influence on individual suppliers' production activities than in other industries. Furthermore, the findings indicate that supply constraints in products identified as potential bottlenecks can significantly dampen macroeconomic production. The results also highlight that holding inventory can serve as an effective measure to mitigate these impacts to a certain extent.
    Keywords: Supply Chain; Firm-to-Firm Transaction Data; Network Centrality; Supply Constraints
    JEL: C67 L14 L16
    Date: 2026–08–12
    URL: https://d.repec.org/n?u=RePEc:boj:bojwps:wp26e13
  19. By: Sebastien Bradley (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA)); Mian Dai (School of Economics, Drexel University); Blaize Giangiulio (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA)); Yoto V. Yotov (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA))
    Abstract: We study the spillover effects of the 2025 "Liberation Day" automotive tariffs on the untaxed U.S. used-car market. Using over eight million weekly listings and a VIN-based crosswalk identifying each vehicle's country of assembly, we document an immediate and persistent 0.2-0.6% increase in the prices of foreign-brand used vehicles relative to domestic-brand vehicles. The effect is concentrated among the newest vehicles - the closest substitutes for new cars - consistent with demand-side substitution. We also find that foreign-brand vehicles produced in the U.S. appreciate as much as those assembled abroad, suggesting that the perceived foreignness of used vehicles may be largely independent of true production location. Neglecting tariff pass-through to untaxed product substitutes understates overall consumer incidence.
    Keywords: Tariffs; Tariff incidence; Spillover effects; Used cars; Trade policy
    JEL: F13 F14 L62
    Date: 2026–08
    URL: https://d.repec.org/n?u=RePEc:drx:wpaper:202616
  20. By: Juan David Munoz Henao; Nicholas Sly
    Abstract: We show that AI technologies are oriented toward jobs and workers that typically exhibit greater volatility in labor market outcomes over the business cycle. Occupations currently most exposed to AI are those that have historically exhibited (i) greater volatility in employment levels over business cycles, (ii) higher job-switching rates by workers, (iii) higher job-finding rates, and (iv) a lower likelihood for workers to exit the labor force following a job loss. The sectors of the U.S. economy that produce AI technologies have also historically exhibited high volatility in productivity. We then quantify how technology-led structural changes in economic activities contribute to aggregate business cycle volatility. Growth in the production of AI-based technologies in recent years increased the volatility of U.S. output by 2.8 percent, roughly 3.5 times what resulted from the late 1990s’ IT boom. If the orientation of AI toward occupations that exhibit higher variability in labor market outcomes results in a higher aggregate labor supply elasticity, the effects on aggregate volatility are even greater.
    Keywords: technological change; volatility; artificial intelligence
    JEL: E32 E37 J62 J63 O33
    Date: 2026–08–13
    URL: https://d.repec.org/n?u=RePEc:fip:fedkrw:103640
  21. By: Robert Minton; Hugo Monnery
    Abstract: Using survey data from U.S. firms, we study the primitive beliefs for pricesetting: firms’ forecasts of their own marginal costs. These forecasts are disconnected from CPI expectations, (over)react to current and past costs systematically, and underreact to aggregate shocks until costs move. We show that under empirically realistic cost beliefs the New Keynesian Phillips curve is steeper and less forward-looking. Supply shocks are more inflationary because they hit costs quickly. Demand shocks are less inflationary because firms fail to anticipate future wage pressure. Forward guidance weakens at long horizons but strengthens in the near term.
    Date: 2026–07–31
    URL: https://d.repec.org/n?u=RePEc:fip:fedgfe:103588
  22. By: Øystein Hernæs; Andreas Ravndal Kostøl
    Abstract: This paper uses data on the universe of private-sector employment in Norway up to February 2026 to examine whether AI exposure has contributed to a widening employment gap across occupations with varying AI exposure. Since October 2022, the month before ChatGPT's release, employment in the most exposed occupations has grown by 0.1 percent, against 0.3 percent in the least exposed occupations. We track this number on a monthly basis on the public dashboard kiindeksen.no. The dashboard updates the full-distribution comparison each month as new administrative data arrives, allowing differential employment growth by AI exposure to be tracked over time. We also show that when we compare young workers by complete occupation quintiles of exposure, the relative decline of the most exposed quintile is estimated as an imprecise zero.
    Keywords: Artificial intelligence, labor market, employment, AI exposure, Norway
    JEL: J23 O33 J21
    Date: 2026–07
    URL: https://d.repec.org/n?u=RePEc:crm:wpaper:26179
  23. By: Zanna Iscenko; Scott Strand; Yiyuan Chen; Guillaume Aimard; Mihai Codreanu; Vivek Sampathkumar; Alex Imas; Julian Jacobs; Evalyne Muiruri; Juan Mateos-Garcia; Jia Jen Ng; Samirah Javed; Josh Martin; Omar Ajmeri; Denis Calin; Andrew Kim; Fabien Curto Millet; James Manyika
    Abstract: This paper introduces the AI & Economy ATLAS (Activity, Task, Landscape, and Adoption Study), an ongoing economic research initiative using Google AI usage data. The first iteration of ATLAS is built on 15 million de-identified interactions across the Gemini App, Google AI Mode, and Gemini API. Using privacy-preserving algorithms as well as established and bespoke classification methods, we map AI usage to over 800 occupations, 4000 tasks, 300 household activities, 150 countries, and 140 languages. We then make a number of observations on what the data reveals about AI's diffusion, and its usage at work and in day-to-day life. In the workplace, we show that while AI adoption spans occupations covering just above 88% of US employment, penetration remains shallow and overwhelmingly collaborative in nature, with end-to-end task automation limited in scope. Outside of work, AI spans activities making up about 98% of Americans' non-sleep time, with disproportionately high use in high-friction tasks such as engaging with government and professional service providers, likely delivering economic value that standard national accounts may miss. Globally, adoption scales with national wealth and has broad linguistic distribution, with English queries representing only around a third of volume. As we build upon ATLAS and expand its scope and capabilities, we will continue to provide large-scale empirical evidence to inform the public, policy and academic questions about the ongoing AI transformation.
    Date: 2026–07
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2608.00038

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