|
on Business Economics |
| By: | Ana Figueiredo; Agnieszka Markiewicz; Elliott Weder |
| Abstract: | Using matched employer-employee data from the Netherlands, we decompose the wage penalty of temporary work. Temporary workers earn 28 log points less per hour than permanent workers. Worker fixed effects explain half this gap, while firm pay premia account for 28%. Most of the firm contribution reflects temporary workers sorting into low-paying firms rather than within-firm pay differences. As temporary employment differs substantially across demographic groups, we extend our framework to gender and native-migrant wage gaps, separating contract from firm sorting. Differential exposure to temporary work explains part of the native-migrant firm pay-premia gap but matters little for the gender wage gap. |
| Keywords: | Temporary employment; Firm pay premia; Wage inequality |
| JEL: | J31 J41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26240 |
| By: | Francis Annan; Collin B. Raymond |
| Abstract: | We study how firms choose among incentive contracts and how accurately managers predict their effects. Using a survey of managerial beliefs and a large-scale field experiment, we randomly assign agents at the market level to several widely used, expenditure-equivalent incentive schemes. In the field, the best-performing contract increases agent output and firm revenue by over 20% relative to the status quo, despite being ranked lower by managers, whereas the worst-performing contract performs as predicted. Managers correctly identify underperforming contracts but systematically underestimate top- performing ones. We document the sources of performance di!erences—labor supply responses rather than selection or pricing and the determinants of managerial predictability: contract complexity and managerial hierarchy. Our results highlight the importance of contract design for firm performance and reveal systematic limits to managerial cognition in shaping incentives. |
| JEL: | D86 D91 G23 L21 O12 O16 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35788 |
| By: | Thomas Drechsel; Daniel Lewis; Davide Melcangi; Laura Pilossoph |
| Abstract: | To study monetary policy transmission at the firm level, researchers typically consider heterogeneity along a small number of firm characteristics, such as size or leverage. We instead estimate the full distribution of firms’ investment responses to monetary policy, using a clustering regression framework. Our novel approach captures multidimensional and unobservable heterogeneity across firms and time. We find that investment by most firms in most time periods responds little to monetary policy. Only about 5% of firm-time observations are associated with a strong response. We then investigate the sources of heterogeneity ex post. We find that most of the variation in investment sensitivity arises within firms over time. Although several firm characteristics predict responsiveness to monetary policy, the majority of heterogeneity remains unexplained by firm observables. We demonstrate that our empirical estimates provide new targets for disciplining structural models of firm heterogeneity. |
| JEL: | D25 E22 E32 E52 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35867 |
| By: | Marius A. K. Ring |
| Abstract: | Whether imposing higher taxes on business owners adversely affects business activity by constraining investment and inducing capitalist flight is a central question in the ongoing debate on how to tax the ultra wealthy. To shed new light, I exploit a series of related Norwegian reforms during 2021–2024 that increased dividend tax rates, removed migration-related capital gains tax loopholes, and nearly doubled the effective marginal tax rate on business wealth. These reforms spurred international debate and, allegedly, an “exodus” of Norwegian billionaires (Financial Times, 2023). While I document clear effects on migration, these responses are concentrated among the top 0.1% of the wealth distribution and mostly confined to 2022 and 2023. My results indicate that at most 100 individuals left due to the reforms. I find no evidence of significant outmigration or reduced inflows of startup founders or inventors. I estimate that absent any outmigration, wealth tax revenues would have increased by 75% from 2021 to 2024. Reform-driven outmigration lowers the revenue gain to 71.5%. My findings further show that outmigrating owners’ firms remain economically active and do not reduce investment. In a broader set of analyses, I examine whether business outcomes are affected, regardless of whether owners outmigrate, since firms may reduce investment both due to liquidity constraints or distortions to owners’ savings decisions. I compare firms owned by Norwegian individuals subject to the wealth tax with firms owned by foreigners and other tax-exempt entities. By merging historical ownership data from Orbis with the Norwegian shareholder register, I perform these analyses on both Norwegian and foreign-domiciled firms. Across settings, I find no evidence that Norwegian-owned firms pay out more dividends or invest less after the reforms, nor is there any evidence that the reform induced more bankruptcies. These findings indicate that the short-run economic costs of wealth taxation, in terms of migration and firm investment, are more limited than the public debate implies. |
| JEL: | H0 H2 H3 H31 H32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35854 |
| By: | Isha Agarwal; Wentong Chen; Eswar S. Prasad |
| Abstract: | When does bad news stick? This paper shows that the persistence of media sentiment depends not only on whether news is good or bad, but also on what the news is about. Using the complete Wall Street Journal archive from 1990 to 2025, we construct monthly positive and negative sentiment indices for twelve economic topics and estimate topic-specific sentiment dynamics. Bad-news innovations generate larger cumulative responses than positive-sentiment innovations in every topic, indicating that negativity asymmetry is a broad feature of media sentiment. But the size of this asymmetry varies sharply across topics. The bad-minus-positive persistence gap is largest in security and human rights, firms and corporate strategy, health and public safety, and real estate and financial stability. Bad-news persistence is also sizable in data-rich topics such as financial markets, real estate, and corporate news, suggesting that frequent information arrival does not necessarily lead narratives to revert quickly. These findings show that aggregate sentiment indices mask substantial topic-level heterogeneity in the asymmetric dynamics of narratives, with potential implications for how persistent negative sentiment shapes expectations, asset prices, and real economic outcomes. |
| JEL: | C55 D83 D84 G14 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35838 |
| By: | Gaetano Alfredo Minerva |
| Abstract: | I propose a mechanism for the coexistence of vertical integration and outsourcing within an industry. In a monopolistically competitive model with incomplete contracts, final-good producers under either organizational form combine labor and differentiated inputs to produce fixed capital. Since its unit cost depends on the industry price index, distinct zero-profit conditions can hold, sustaining a mixed free-entry equilibrium. The forms differ in fixed-capital cost per unit of contribution to the price index; this ranking determines comparative statics and whether local stability is possible. I derive a sufficient condition ensuring stability whenever the mixed equilibrium exists. In numerical parameterizations using empirically standard elasticities of substitution, the condition holds throughout the admissible range of vertical-linkage intensity. Within the stable region, larger markets raise the integrated share without changing output prices or supplier bargaining terms. Relative firm size depends on governance costs and upstream bargaining share, so the model imposes no uniform ranking. |
| JEL: | C62 D23 D43 F12 L23 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bol:bodewp:wp1233 |
| By: | Alden Cheng; Riley League |
| Abstract: | We study strategic responses by firms to threshold-based regulations. We document extensive bunching in response to additional staffing requirements for California nursing homes with at least 100 beds. To estimate the regulation’s effect on staffing, we develop a novel treatment effects estimator for threshold-based regulations under precise manipulation, by decomposing firms into response types based on counterfactual and realized staffing and size, separating causal effects from selection. We estimate that higher staffing above the threshold is nearly entirely due to selection, with low-staffing facilities manipulating their size to avoid the regulation. These size distortions limit access, particularly for disadvantaged patients. |
| JEL: | I11 I18 L51 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35849 |
| By: | Dihan Zou |
| Abstract: | We study monopoly regulation when capacity is contractible but subsequent output is not. A firm privately observes its production cost before installing costly capacity and then choosing output, while the regulator cannot use transfers. We provide sufficient conditions under which a single capacity floor implements an optimal mechanism with full participation. The floor raises output by changing investment while leaving utilization to the firm after installation costs are sunk. Under additional conditions, the allocation has three regions: laissez-faire, full utilization of the floor, and underutilization. High-cost types knowingly install capacity they will not fully use, yet produce more than under laissez-faire. This physical waste is a necessary evil of optimal regulation that expands service. We also show that underutilization can persist in optimal regulation with capacity-contingent subsidies or a common entry fee. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.07189 |
| By: | Sevrin Waights; Liliana Cuccu; Maximilian Priem |
| Abstract: | We provide the first estimates of minimum wage effects on the aggregate price level using data on the near-full German consumer basket across four national reforms, 2015-2024. Drawing on a structural model of pricing under imperfect competition, we utilise minimum wage cost shocks rather than the commonly used firm-level ‘bite’ that we show to be biased under strategic complementarity. Labour cost pass-through is 83-94 percent, at the higher end of estimates for other cost shocks. The implied macro-price elasticity is 0.024. The largest increase in October 2022 to €12 raised the aggregate price level by 0.39 percent. |
| Keywords: | Minimum wages, Consumer prices, Inflation, Cost pass-through, Strategic complementarity |
| JEL: | E31 J08 J30 J38 L11 |
| Date: | 2026–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0112 |
| By: | Peter Haan; Julia Schmieder; Izabela Wnuk-Soares |
| Abstract: | We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market. |
| Keywords: | Immigration, labor supply, prices, nursing homes |
| JEL: | J61 F22 J30 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26224 |
| By: | Isabella Mantel; Regina T. Riphahn |
| Abstract: | Demographic aging causes substantial worker shortages. So far, policy debates neglect the aspect of age at labor market entry. We study the age at which young individuals first enter the labor market and how it has developed over the last four decades. Based on long-running administrative data, we describe birth cohorts from 1960 through 2000, and separately consider different types of employment entry. We investigate the entry age distribution and heterogeneities across demographic groups. We find that conditional on employment, the median age of first holding a stable full-time employment increased by almost 4 years between the birth cohorts 1960 and 1995. Our decomposition analysis yields that more than one quarter of this increase is explained by higher educational attainment and the rising share of non-German workers, which appear to be the main mechanisms behind the delay in labor market entry. Additionally accounting for changed occupations, industry composition, and relative entry-level earnings explains about 40 percent of the observed delay in labor market entry. The role of different mechanisms varies across the types of employment entry. |
| Keywords: | demographic aging, age at labor market entry, administrative data |
| JEL: | J11 J21 I28 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bav:wpaper:250_mantel_riphahn.rdf |
| By: | Stijn Van Nieuwerburgh |
| Abstract: | Artificial intelligence is driving a large expansion in data center capacity, power infrastructure, and specialized computing equipment. We estimate that a 1 GW AI campus costs about $41 billion. A 188 GW U.S. buildout completed by 2032 would require total investment of nearly$9 trillion and amount to annual investment of 3.2 percent of GDP over 2025–2032. As hyperscaler capital expenditures outgrow internal cash flow, financing is shifting toward leases, joint ventures, project debt, private credit, securitization, and special-purpose vehicles. These structures expand funding capacity but also raise asset-level leverage, obscure contingent obligations, and expose investors to tenant concentration, technological obsolescence, execution delays, and uncertain residual values. |
| JEL: | E01 E22 G1 G31 R33 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35865 |
| By: | Andrew C. Barr; Laura Kawano; Bruce Sacerdote; Michael Stevens |
| Abstract: | The COVID-19 pandemic caused a sharp initial rise in unemployment, followed by an unexpectedly tight labor market. Using a panel of tax data containing newly assembled information on worker occupation, we document persistent labor force exit, especially among low-income and low-skill workers. Low-skilled unmarried men are by far the most likely to exit, reinforcing recent concerns regarding the economic and social engagement of this group. Contrary to prevailing theories, we find little evidence that school closures, virus exposure, stimulus payments, or unemployment benefits explain these exits. Nor is the exit explained by additional upgrading of occupations or firm quality. Individuals who leave the labor force do not (on average) make up the missing income; however, self-employment income replaces roughly a quarter of the lost W-2 income. The facts suggest that the willingness to work for low pay decreased and preferences for leisure and job flexibility increased among a large set of workers who have found ways to get by with less income. These results have implications for tax policy, fiscal projections, and labor market dynamics in the post-pandemic economy. |
| JEL: | J01 J2 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35856 |
| By: | Haonan Li (Graduate School of Economics, Waseda University); Yasuyuki Todo (Graduate School of Economics, Waseda University, and Research Institute of Economy, Trade and Industry) |
| Abstract: | Existing measures of geopolitical risk are country-level and assume that all investors face the same risk in a given destination. This paper constructs a directional, bilateral geopolitical risk index that captures how the domestic media of each source country report on geopolitical conflicts involving each destination country. Using GDELT news data, the index covers more than 200 source and destination countries at a monthly frequency. We combine the index with project-level data on greenfield FDI and product-level trade data, and exploit variation across source countries for the same destination and period while controlling for destination-specific shocks. Source countries whose media place greater emphasis on a destination's geopolitical risk subsequently announce more greenfield projects there: a one-standard-deviation increase in the index is associated with a 7% increase in new projects. This suggests that firms may read such coverage as a signal of future market-access frictions and localize production in advance. Consistent with this interpretation, the association is concentrated in projects serving the host market and in sectors that depend on local demand, and is absent among politically aligned country pairs. By contrast, higher risk coverage is followed by a short-lived decline in imports, driven by severe conflicts, while exports do not respond. |
| Keywords: | geopolitical risk, media, foreign direct investment, trade, GDELT |
| JEL: | F14 F21 F23 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2615 |
| By: | Rosanne Altshuler; Lysle Boller; Kevin A. Roberts; Juan Carlos Suárez Serrato |
| Abstract: | We use newly linked IRS data to study how US multinationals use tax-planning structures that exploit mismatches between US and foreign tax laws. In 2016, these structures accounted for 36% of foreign profits despite being adopted by only 18% of firms. We develop and estimate a structural model using adoption patterns and changes in foreign effective tax rates, domestic and foreign investment, and global R&D following adoption. The model implies substantial heterogeneity in adoption costs and benefits and shows that restricting tax planning creates tradeoffs between tax revenue and economic activity that are amplified by global R&D linkages. |
| JEL: | D22 H25 H26 H32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35874 |
| By: | John S. Ahlquist; Eric Thai |
| Abstract: | Unions are important economic and political actors at the local level, but the primary source on US union membership, the Current Population Survey (CPS), is unreliable below the state level. Researchers have therefore turned to union-reported membership in federal "LM" filings, geolocating unions and aggregating their reported membership to estimate union density for counties, commuting zones, and congressional districts. We ask whether this practice is sound. We develop and defend multilevel regression with poststratification (MrP) on the CPS as a benchmark, then validate LM-based estimates against it from the state level down. LM, CPS, and MrP are highly correlated at the state level, but this correlation is roughly halved at the congressional-district, commuting-zone, and county levels. The breakdown is driven in part by reporting "lumpiness, " which produces improbable values, including union densities exceeding 100%. Missing public sector union members explains only a small part of this divergence. These issues are substantively consequential: in a standard commuting-zone "China shock" regression, swapping density measures changes the import-exposure coefficient enough to alter its magnitude, significance, and sign. We conclude that LM records remain a rich resource for studying unions as organizations, but aggregating LM-reported membership is not a reliable way to measure union density at fine geographic resolution. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.06774 |
| By: | Cole, Shawn; Meh, Cesaire Assah; Mashwama, Fanele; Moelders, Florian |
| Abstract: | Private debt is an important form of corporate financing in emerging markets, but its investor returns are not well understood. This paper uses loan-level cash flow data from the International Finance Corporation to provide the first systematic evidence on realized returns across 4, 109 loans over more than 20 years, totaling about US$115 billion in 127 countries. Post–global financial crisis loans outperform both the JPMorgan Corporate Emerging Market Bond Index and U.S. Treasuries, with public market equivalents of 1.02 and 1.10, respectively, rising to 1.05 and 1.14 over the latest five years. Over 2002–24, the corresponding public market equivalents are 0.98 and 1.07, respectively, with global financial crisis–era vintages posting weaker performance relative to the JPMorgan Corporate Emerging Market Bond Index. Overall, returns are competitive with public markets. The paper also assesses financial performance more specifically within the most challenging markets: very low-income countries and fragile and conflict-affected states. Although default rates are higher in these markets, returns relative to public-market alternatives are statistically indistinguishable from those of the overall portfolio, suggesting that the International Finance Corporation priced default risk appropriately even in these markets. |
| Date: | 2026–10–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11479 |