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on Business Economics |
| By: | Çiğdem Ekiz; Eren Gürer; Erol Taymaz |
| Abstract: | We examine how innovation shapes firm-level workforce dynamics using rich administrative data from Türkiye, a developing economy characterized by medium-technology, incremental innovation. We find that patent-based innovation increases both firm size and average daily wages, with the largest employment gains among workers earning just above the median wage. To uncover the mechanisms behind these outcomes, we construct worker transition matrices. Relative to comparable non-innovative firms, innovative firms (i) retain incumbent workers at higher rates, particularly at the top of the wage distribution, (ii) promote retained workers into higher wage bins more frequently, and (iii) hire more new workers, disproportionately into higher wage bins. Finally, occupational composition analysis shows that employment growth is concentrated among technical and production occupations, consistent with the medium-technology, incremental nature of innovation in our sample. |
| Keywords: | innovation, patents, wages, employment, worker transitions |
| JEL: | J21 J31 O31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12986 |
| By: | Maarten Meeuwis; Dimitris Papanikolaou; Lawrence D.W. Schmidt |
| Abstract: | We study how aggregate financial conditions shape firm insurance and, through it, labor income risk. In a directed search model with dynamic wage contracts and two-sided limited commitment, firm insurance against idiosyncratic shocks erodes when risk premia rise. Using U.S. administrative data, we document new evidence supporting the model: pass-through of firm shocks to earnings rises in bad times, especially for lower-paid workers near the separation margin. The model reproduces many untargeted time-series and cross-sectional features of earnings risk and implies substantial welfare costs of idiosyncratic risk, high private discount rates on human capital, and large gains from recession-contingent transfers. |
| JEL: | D52 E0 E24 E32 E44 G0 G12 J0 J08 J31 J41 J63 J64 J65 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35781 |
| By: | Matteo Sartori (Bank of Italy); Marco Guido Palladino (Banque de France, IZA); Eliana Viviano (Bank of Italy) |
| Abstract: | This paper examines how Italian firms use fixed-term contracts (FTCs) and documents the relative importance of seasonal needs, worker screening and buffer-stock motives. Using matched employer–employee data for 2013–2017 merged with firm-level balance-sheet information, we select a set of firms that systematically rely on temporary employment, generating over 85 per cent of its total volume. By focusing on these firms, we show that two ex ante contract features - the seasonal label and the initial duration - are highly informative about firms' hiring intentions. Use of seasonal contracts is limited and concentrated in a narrow set of sectors, while longer initial durations strongly predict conversion into permanent jobs, reflecting screening behaviour driven mainly by firm-specific factors. In contrast, most FTCs are short, non-seasonal and concentrated in firms dealing with lower productivity and higher revenue volatility, consistent with buffer-stock adjustment. A clustering exercise confirms that about 10 per cent of firms predominantly use seasonal contracts, one fourth use FTCs for screening, and roughly 65 per cent rely on them to manage uncertainty. |
| Keywords: | fixed-term contracts, screening, contract conversions, seasonal workers, productivity |
| JEL: | J23 J41 J63 L23 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:wptemi:td_1543_26 |
| By: | Radek Sauer; Radek Šauer |
| Abstract: | The paper explores how a small low-tax economy is affected by foreign corporate-tax shocks. To address this question, I develop a dynamic general-equilibrium model, in which multinational firms engage in both tangible and intangible FDI. Intangible assets arise from multinationals' R&D activities. Each multinational decides whether to place its intangibles in the parent firm or in an overseas affiliate. The placement decision shapes the intra-firm trade in royalties and R&D services. The model reveals that corporate taxes can directly impact arm's-length prices of multinational firms. I investigate territorial corporate taxation as well as worldwide taxation of intangible income. |
| Keywords: | intangible assets, multinational enterprises, corporate taxation, royalties, R&D services, endogenous markups |
| JEL: | E22 E62 F23 H25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12957 |
| By: | Cahuc, Pierre (Sciences Po, Paris); Carry, Pauline (Princeton University); Malherbet, Franck (Paris Graduate School of Economics, ENSAE); Martins, Pedro (Universidade Nova de Lisboa) |
| Abstract: | Employment protection legislation often varies with firm or establishment size and age, and many evaluations of EPL reforms exploit these thresholds. This paper develops a search-and-matching model with multi-establishment firms to disentangle direct effects from general-equilibrium spillovers. We combine the model with quasi-experimental evidence from a 2009 Portuguese reform that restricted fixed-term contracts in young establishments of large firms. Spillovers barely distort the reduced-form estimate, yet they overturn the aggregate conclusion: extrapolating the reduced-form estimate implies a 1.51% employment decline, compared with a 0.11% increase in general equilibrium. Counterfactuals show that conditioning EPL on size versus age can yield opposite welfare effects, even when employment effects are similar, and that fixed-term contract and firing restrictions must be evaluated jointly. |
| Keywords: | employment protection legislation, general-equilibrium spillovers, fixed-term contracts, contingent regulation, directed search, structural estimation |
| JEL: | E24 D58 J41 J63 J68 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18909 |
| By: | Valerio Astuti; Daniele Piras |
| Abstract: | We present a comprehensive description of the network of Italian Business-to-Business commercial relationships, based on the universe of electronic invoices collected by the Italian Tax Office. The firm-to-firm detail of the data is exploited to describe the distribution of the numbers of buyers (customers) and sellers (suppliers) per firm, the centrality of each firm in the production network, and the average distance between firms. We characterize for the first time the firm-to-firm network describing the Italian production system, and present its geographic and sectoral breakdown. The analysis reveals heavy tailed distributions for the numbers of buyers and sellers per firm, implying a scale-free structure of the network. The distributions of centrality values display heavy tails as well, indicating a strong concentration of importance in a relatively small number of firms. We estimate the tail exponents for all these distributions, finding in all cases lower exponents for downstream (buyer-side) distributions than for the upstream (seller-side) ones. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.10227 |
| By: | Andrea Gazzani (Bank of Italy); Filippo Natoli (Bank of Italy) |
| Abstract: | Using detailed data on the artificial intelligence (AI) content of U.S. patents from 1980 to 2019, we construct a novel monthly measure of AI intensity in innovation and identify AI related technology shocks. These shocks generate delayed increases in total factor productivity, output, employment, hours, and wages, alongside persistent declines in consumer prices, consistent with a positive supply shock. Although AI-intensive patents largely fall within the broader ICT and automation domains, they stand out as higher-quality innovations, attracting more citations and exhibiting greater technological and market value. AI shocks consistently have substantially larger aggregate effects than broader ICT or automation shocks, suggesting that AI has had a particularly high-impact role in the ICT revolution. Unlike general technology shocks, however, AI shocks reduce the labor share and increase wealth inequality, indicating that their gains are not distributed evenly across the economy. To connect these historical findings to the most recent wave of innovation, we develop a new time series of Generative-AI patents within the U.S. patent universe. A shock based exclusively on Gen-AI patents produces the same qualitative supply-side effects as broader AI shocks, linking the macroeconomic consequences of earlier AI innovation to those of the emerging Generative-AI era. |
| Keywords: | artificial intelligence, technology shocks, local projections, business cycle, patents |
| JEL: | E32 C32 C36 O33 O34 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:wptemi:td_1542_26 |
| By: | Ronit Mukherji (Ashoka University); Alejandro Rojas-Bernal (University of Hawaii) |
| Abstract: | How does productivity evolve at the microeconomic level, and how does that evolution shape aggregate risk? Using restricted-use plant--product data from India's Annual Survey of Industries (2010-11 to 2022-23), we construct annual physical-output Solow-residual growth accounting for markups, inventories, and heterogeneous input costs. Productivity growth is sharply peaked and fat-tailed, with nonlinear mean reversion that varies with producer size. Larger producers recover more strongly after adverse shocks and retain more of their favorable gains-the Daedalian level effect-yet their shocks extend farther into both tails conditional on entry. Smaller producers exhibit sharper reversals after large favorable shocks-Icarian fallout. We capture these patterns with a three-regime Markov normal mixture conditioned on productivity history and size. Our law of motion yields the distribution of aggregate technology growth. Relative to a size-dependent Gaussian distribution, our regime model has lower aggregate dispersion but substantially thicker standardized tails and raises the probability of an aggregate technology contraction from 0.05% to 0.31%. Removing size dependence while retaining three regimes instead lowers expected growth and raises contraction probability to 2.47%. These separately estimated alternatives show that nonnormality and size dependence have distinct implications for aggregate risk. Granularity is distributional: aggregation weights determine whose shocks matter; productivity dynamics determine the risks they carry. |
| Keywords: | Firm productivity dynamics, aggregate productivity risk, non-Gaussian productivity shocks, production networks, granular fluctuations, firm-size heterogeneity, physical-output productivity |
| JEL: | C46 D22 D24 D57 E23 E32 L11 L25 O47 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:hai:wpaper:202604 |
| By: | Erol Taymaz (Department of Economics, Middle East Technical University, Ankara, Turkey); Kamil Yılmaz (Department of Economics, Koç University, İstanbul, Turkiye) |
| Abstract: | The employment effect of a minimum-wage increase depends on the wage-setting power of employers. The empirical literature, however, has measured this power only indirectly, through labor-market concentration. In this paper, we estimate firm-level product markups and wage markdowns for Turkish manufacturing firms using the Entrepreneur Information System (EIS) administrative micro-data. We show that a firm’s initial markdown predicts the sign and magnitude of its direct employment response to minimum-wage increases, including the exceptionally large January 2016 increase (33% nominal, ≈25% real). At minimum-wage firms with no markdown, employment falls year after year. At high-markdown firms that face the same wage floor, employment does not fall. The monopsony model can explain this difference, whereas the competitive model predicts employment losses for both groups of firms. Among firms paying the minimum wage, employment growth increases with the initial markdown in every year over 2013–2019: conditional on sector-year and province-year effects, high-markdown minimum-wage firms grow 6 to 9 log points faster annually than zero-markdown firms paying the same wage. |
| Keywords: | minimum wage, monopsony, labor market power, markdowns, markups, employment, production function estimation, Turkey |
| JEL: | D24 J23 J31 J38 J42 L11 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:met:wpaper:2605 |
| By: | Florian Ederer; Regina Seibel; Timothy Simcoe |
| Abstract: | This paper examines innovation outcomes before and after 1, 200 startup acquisitions by eight major technology firms. Linking patent and workforce data to these deals, we document four main findings. First, most acquired startups hold no patents, but those with patents tend to operate in technology areas where the acquirer already has a presence and that see further acquisition activity. Second, innovation typically rises before an acquisition, continues afterward only where further acquisitions follow, and falls back once acquisition activity ends. We propose a stylized model in which beliefs about commercial viability drive both startup entry and acquisitions to explain how these patterns arise through selection rather than effects of the deals. Third, acquired patents receive significantly more citations after the acquisition than comparable patents, not only from the acquirer but also from firms that hire the targets’ employees. Fourth, although 31% of employees and 23% of inventors depart within a year, inventors who stay go on to patent substantially more, while stayers and leavers were equally productive beforehand. In the aggregate, we find little evidence that acquisitions by digital incumbents suppress innovation, even though serial acquisitions go hand in hand with growing patent consolidation. |
| JEL: | L41 L63 L86 O31 O34 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35762 |
| By: | Brancati, Emanuele (Sapienza University of Rome); Brianti, Marco (University of Bologna); Nosal, Jaromir (Boston College); Schiantarelli, Fabio (Boston College) |
| Abstract: | Using the universe of Italian customs from 2000 to 2021, matched to firm balance-sheets, we study how invoicing currency shapes exchange-rate exposure and profitability for two-sided trading firms. We document four facts. First, when a firm begins invoicing imports in dollars, it becomes far more likely to invoice exports in dollars the same year, with import-side adoption leading. Second, this matching is bilateral: a firm importing from a country in dollars disproportionately invoices exports to that country in dollars, a corridor structure that aggregate hedging cannot rationalize. Third, corridor alignment reduces profit variance beyond what aggregate net dollar exposure explains. Fourth, exchange-rate movements transmit to profits mainly through transactions rather than balance-sheet revaluation, and dollar-invoiced import quantities rise after a euro depreciation, concentrated in inputs linked to exports. We interpret these facts through a model of invoicing currency choice with a rich sourcing and export destination structure, driven by price-stability motives and the incentive to hedge country-specific risk. In the richest framework, invoicing currency choice is a real hedge against country risk, not only currency risk. |
| Keywords: | invoicing currency, exchange rate pass-through, corporate hedging, firm profitability, exchange rate exposure |
| JEL: | F14 F31 F41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18943 |
| By: | Fischer, Alexander (Trivago, Germany); Gorshkov, Andrei (IFAU - Institute for Evaluation of Labour Market and Education Policy); Sandoy, Tróndur M. (University of Faroe Islands, Faroe Islands); Walldorf, Jeanette (Ministry of Children and Education, Denmark) |
| Abstract: | Do alumni ties preserve economic advantage? Linking random tutorial-group assignments at a Danish business school to administrative career data, we show that students align careers more with group peers than others in the same cohort, particularly through shared workplaces. These effects are especially pronounced among students from the wealthiest families and concentrated in top-paying firms. More exposure to affluent peers raises earnings, access to top-paying jobs, and increases the probability of reaching the top income ranks for similarly privileged students, while not for others. Job transitions to group peers point to gains from peer-connected moves, again concentrated among wealthier students. |
| Keywords: | Social connections; Peer effects; Elite university; Social mobility |
| JEL: | I24 I26 J62 |
| Date: | 2026–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2026_017 |
| By: | Catherine E. Fazio; Jorge Guzman; Scott Stern; Yan Xu |
| Abstract: | Motivated by William Julius Wilson’s account of concentrated disadvantage, we examine a local poverty-trap interpretation of low entrepreneurship in Black neighborhoods. Using registration data from 38 states, we document a long-standing Black neighborhood startup deficit. Amid shocks that raised expectations of greater economic activity, the deficit reverses sharply in 2020, particularly where pre-existing deficits were larger. While the overall surplus attenuates, relative entrepreneurship remains elevated in high-deficit Black neighborhoods, and neighborhood-oriented entrepreneurship also remains elevated through 2024. Together, these patterns are consistent with a partially sustained shift toward a higher-activity equilibrium. |
| JEL: | J15 L26 R23 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35752 |
| By: | Brad Cannon; David Hirshleifer; Joshua Thornton |
| Abstract: | Using Facebook friendship data, we study how three aspects of social capital shape innovative activity. We find that the most important aspect of social capital in explaining innovation is Economic Connectedness (EC)--the share of high-income friendships. One standard deviation greater EC is associated with 97% more patents per capita among patenting ZIP Codes and 45% more breakthrough patents per capita among ZIP Codes with breakthrough patents. Reverse-causality tests, a within-inventor relocation design, and a quasi-experiment using fracking-driven economic shocks to non-local friends support a causal interpretation. Mechanism tests provide evidence consistent with a financing channel. |
| JEL: | D14 D25 D83 D85 D9 G32 G41 G51 O16 O3 O33 O35 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35732 |
| By: | Dean Karlan; Natalia Rigol; Benjamin N. Roth |
| Abstract: | Evaluations of microenterprise credit typically measure effects only on borrowing firms. But what about their customers? If microenterprises sell relatively undifferentiated goods and services, as is often hypothesized, credit may simply reallocate sales across firms and create little consumer benefit. In a randomized controlled trial in Chile, large loans increased treated firms’ profits by USD 292 per month, a 13.4% increase. Customer survey data indicate even larger benefits for customers: a gain of USD 494 per month in consumer surplus. Furthermore, using a sample of more than 125, 000 non-treated firms operating in the same markets, we find little evidence of business stealing. The welfare gains from credit expansion thus extend well beyond the borrowers themselves. |
| JEL: | D53 L26 O12 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35729 |
| By: | Vitor C. Melo; David Neumark; Liam Sigaud; Gary A. Wagner |
| Abstract: | We study the employment effects of California’s $20 fast-food minimum wage. Evaluating this policy poses two challenges in commonly used aggregate datasets: coverage is based on 60-establishment chain-size threshold that cannot be identified; and there is measurement error in the industry codes used to identify fast-food restaurants. We address these challenges using establishment-level data. We find evidence of negative employment effects, but they are concentrated among small chains, among which the policy also slowed entry and increased exit. Thus, the primary effect of the fast-food minimum wage was to disadvantage small chains, albeit with modest overall employment effects thus far. |
| JEL: | J23 J38 J4 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35749 |
| By: | Xiwen Bai (Tsinghua University); Jesús Fernández-Villaverde (University of Pennsylvania); Yiliang Li (Peking University); Ricardo Marto (Federal Reserve Bank of St. Louis); Francesco Zanetti (University of Oxford) |
| Abstract: | We study the macroeconomic and trade-policy implications of disruptions to U.S.-bound shipping routes. Standard models treat them as iceberg-cost shocks, conflating the shock with the response to it. Using satellite vessel-tracking data, we construct route-level measures of potential and effective capacity for all U.S.-bound container ships from 2016 to 2025. Utilization losses in recent disruptions ran 20 to 40 percentage points, and began months before port congestion became visible. We embed these measures in a general equilibrium model in which firms reallocate a common fleet without internalizing the congestion they create and price above marginal cost, while importers’ sourcing responds to route profitability. The reallocation triggered by a disruption then has first-order welfare effects, and the route’s Domar weight is not a sufficient statistic for its welfare cost. The 2021 West Coast crisis and the 2023–2024 Red Sea attacks cost 0.69% and 0.35% of output. Naval protection of Red Sea shipping generated benefits of 0.04–0.08% of output at a fiscal cost of 0.02%. Tariffs decongest the routes they tax, offsetting or even reversing their conventional welfare cost. |
| Keywords: | AIS, shipping disruptions, shipping capacity, maritime transportation, general equilibrium, supply chains, trade policy |
| JEL: | E23 F12 L91 R40 |
| Date: | 2026–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:26-015 |
| By: | Hassan Afrouzi (Columbia University Department of Economics and NBER); Andres Blanco (Federal Reserve Bank of Atlanta and Emory University); Andrés Drenik (University of Texas at Austin Department of Economics and NBER); Erik Hurst (The University of Chicago Booth School of Business and NBER) |
| Abstract: | We study how an automating technology affects career dynamics, human capital, and welfare in an economy where workers acquire skill through the tasks they perform. In a continuous-time general equilibrium model, learning-by-doing is determined jointly with the share of tasks automated, the frontier of tasks managers maintain, and the worker-to-manager career transition. Economies with high learning capacity admit pairs of stationary equilibria strictly ranked by the aggregate learning rate. Cheaper technology has opposite effects across the two: in the high-learning equilibrium, it raises welfare through the learning channel itself; in the low-learning equilibrium, it tips the economy into a human-capital trap. The planner's first-best combines a tax on automation profits with a subsidy on frontier-maintenance expenditures at a common rate. |
| JEL: | E23 E24 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfi:wpaper:2026-61 |