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on Business Economics |
| By: | Hall, Tessa |
| Abstract: | This paper estimates the firm productivity returns to degree field, institution quality, and degree level, and compares them with wage returns. I link a LinkedIn panel from Revelio Labs to Orbis financial accounts for over 20, 000 UK firms over 2015?2024. Within firms, a bachelor's degree raises a worker's productivity by around 20%; a top-20 institution adds a further 10% and a postgraduate qualification 6%. The returns differ by organisational role. A bachelor's degree raises productivity for managers and non-managers alike. Specialist credentials - a STEM field, an elite institution - raise productivity for non-managers but not for managers, whose premium loads instead on postgraduate qualifications, above all MBAs. Managers also contribute around 26% more than otherwise identical non-managers, a premium that education does not explain. Averaged over the workforce, wage premia are close to productivity premia for each type of degree. However, the average conceals two wedges of opposite sign: STEM-trained non-managers are paid below their relative productivity, and degree-holding managers above it. Finally, for a subset of firms matched to the World Management Survey, workforce education accounts for around a quarter the well-documented correlation between management practices and productivity. |
| Keywords: | human capital;firm productivity;education returns;management |
| JEL: | J24 J31 D24 M11 |
| Date: | 2026–10–23 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141789 |
| By: | Santiago Caicedo (Northeastern University); Cheng Chen (Clemson University); Aspen Gorry (Clemson University); Takahiro Hattori (The University of Tokyo) |
| Abstract: | Population aging changes the composition of workers in the labor force. We develop a framework to understand how worker composition affects productivity in an economy with heterogeneous establishments and apply it to Japan. Reallocating workers to the optimal composition of experience and skill increases output by 8.5%. Strong complementarity between workers’ skill and establishment productivity implies differential hiring strategies across establishments and heterogeneous effects of population aging on wages and market concentration. We find evidence consistent with these predictions using Japanese data. Despite large potential gains from reallocation, we find that further aging in Japan has only modest impacts on worker productivity. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:cfi:fseres:cf633 |
| By: | Holger Görg; Michael Irlacher; Michael Koch; Saskia Meuchelböck |
| Abstract: | Does exporting both goods and services help firms weather disintegration shocks? Using novel linked German microdata on firms' goods and services exports, we examine how exporters adjusted to the Brexit referendum. Firms exporting only goods or only services reduced their UK sales. Dual exporters, which sell both, proved more resilient: their goods exports fell more, reflecting deeper price cuts, but their exports of complementary services rose. On net, their total UK exports show no statistically detectable decline, and - unlike single-mode exporters - they are no less likely to serve the UK market after the referendum. To rationalize these findings, we develop a model of one-way complementarity, in which services raise demand for the firm's goods. Because complementary services are priced where demand is inelastic, their sales can rise as goods sales fall, giving dual exporters an additional margin of adjustment. |
| Keywords: | services trade, goods trade, Brexit, firm exports, demand complementarities |
| JEL: | F10 F14 L80 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13114 |
| By: | Heikki Kauppi (Department of Economics, University of Turku); Eero Mäkynen (Department of Economics, University of Turku); Timo Virtanen (Department of Economics, University of Turku) |
| Abstract: | We develop a permanent–transitory earnings process in which permanent shocks depend on a latent firm type and workers’ exposure to firm types is persistent. Persistence can substantially slow the finite-horizon attenuation of earnings skewness and excess kurtosis over the life cycle relative to an iid mixture benchmark. We estimate the model from matched employer-employee data, first grouping firms based on the distribution of residual earnings changes and then using worker transitions across groups to estimate persistence. Finnish data reveal heterogeneity in permanent-shock variances and persistent exposure to firm groups. Although skewness and excess kurtosis are not targeted in estimation, over ages 35–50 the extended model accounts for 49 percent of average empirical skewness and 39 percent of average excess kurtosis, compared with 4 percent and 3 percent under the iid benchmark. Quantitative exercises show that persistence increases the life-cycle cost of earnings risk and affects saving behavior. |
| Keywords: | earnings risk, firm heterogeneity |
| JEL: | E21 J31 J24 |
| Date: | 2026–11 |
| URL: | https://d.repec.org/n?u=RePEc:tkk:dpaper:dp181 |
| By: | Daniel P. Gross; Maria P. Roche |
| Abstract: | Large, mission-oriented R&D efforts sometimes generate substantial technological advances, but their commercial impacts vary. This paper uses one such effort—the U.S. World War II radar program—to explore how the outputs of such programs may contribute to later commercial development. Using archival records together with data on firm entry, patenting, and technical labor flows, we reconstruct the organization and outputs of wartime radar R&D, document the rapid postwar growth of a civilian industry, and evaluate which outputs were used in subsequent commercial activity. Codified knowledge (in publications and patents) diffused broadly, embodied knowledge (trained personnel) diffused more locally, and the component-system industrial architecture of the wartime program was mirrored in firms' postwar commercial positions. The evidence points to specific channels through which coordinated technology development programs can give shape to emerging high-tech industries. |
| JEL: | N42 N72 O31 O32 O33 O38 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35978 |
| By: | Sabien Dobbelaere (Vrije Universiteit Amsterdam); Ana Popovici (Vrije Universiteit Amsterdam) |
| Abstract: | We study whether firms share gains from innovation tax incentives with incumbent workers and whether such rent sharing is associated with increased worker retention. The Dutch innovation box reduces tax rates on profits from in-house innovation. Linking first-time beneficiaries to matched employer-employee data, we combine nearest-neighbour matching with staggered difference-in-differences. Part of the additional after-tax surplus is passed on to incumbent workers: wages rise by 3.27% on average, with increases of 2.05% for workers least involved in R&D and 4.14% for tertiary-educated STEM workers. Descriptively, treated non-R&D incumbents are 3.47 percentage points less likely to switch employers following treatment. |
| Keywords: | Innovation policy, rent sharing, worker mobility |
| JEL: | H25 J31 J62 O31 |
| Date: | 2026–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260087 |
| By: | Wang, Han; Lee, Neil |
| Abstract: | This paper investigates the long run association between business networks and entrepreneurship and regional development in China. We focus on chambers of commerce, bodies which facilitated networking between businesses until private firms were banned by Mao. Our results suggest that the pre-Mao chamber system is associated with long-lasting patterns of business creation and economic output in China, with this influence surviving until the post-1978 return of the market economy. The associations are strongest in the early reform period but weaken over time. We show evidence that historic chambers density is correlated with later social capital, despite major political change. |
| Keywords: | networks;chamber of commerce;entrepreneurship;economic development |
| JEL: | D85 N85 R11 |
| Date: | 2026–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141318 |
| By: | Michelangelo Rossi; Adèle Diehl; Louis-Daniel Pape |
| Abstract: | Integrating generative AI into digital platforms may reshape competition among AI assistants. We study whether Google’s introduction of AI Mode within Search reduces traffic to competing services. We exploit the August 2025 expansion of Google’s AI Mode, which reached 25 sample countries, using website traffic estimates for ten AI assistants and a difference-in-differences design with 30 countries where AI Mode was unavailable. Making AI Mode available within Google Search reduced ChatGPT website visits by 5.9 percent over the first four weeks, implying 3.5 million fewer daily visits across treated countries. The decline is concentrated in direct visits, while organic-search referrals change little. Daily unique visitors decline by a similar proportion, with little change in visits per daily visitor or average visit duration, suggesting the reduction primarily reflects lower daily reach. Point estimates remain negative throughout the 40-day follow-up, after which comparison countries also gain access to AI Mode. We find no statistically significant average effect on Gemini or the eight smaller assistants combined over the first four weeks. These findings suggest integrating conversational AI into established search interfaces can reduce traffic to standalone competitors, highlighting distribution channels’ importance for competition among AI assistants. |
| Keywords: | generative AI, search engines, platform integration, platform competition |
| JEL: | L13 L86 M31 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13098 |
| By: | Sweder van Wijnbergen (University of Amsterdam) |
| Abstract: | We study whether firms share gains from innovation tax incentives with incumbent workers and whether such rent sharing is associated with increased worker retention. The Dutch innovation box reduces tax rates on profits from in-house innovation. Linking first-time beneficiaries to matched employer-employee data, we combine nearest-neighbour matching with staggered difference-in-differences. Part of the additional after-tax surplus is passed on to incumbent workers: wages rise by 3.27% on average, with increases of 2.05% for workers least involved in R&D and 4.14% for tertiary-educated STEM workers. Descriptively, treated non-R&D incumbents are 3.47 percentage points less likely to switch employers following treatment. |
| Keywords: | Tariffs, Intermediate Goods, Real Exchange Rate, Employment, Trade Balance |
| Date: | 2026–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260088 |
| By: | Brounstein, Jakob; Bachas, Pierre; Bajaña, Alex |
| Abstract: | Tax havens weaken tax enforcement by obscuring firm ownership and facilitating offshore evasion. This paper studies a reform in Ecuador that imposed a corporate tax surcharge on firms with owners in tax havens, using a newly available ownership registry. Comparing haven-owned firms to other foreign-owned firms, the analysis finds that the reform reduced haven ownership by 12 percentage points, largely through disclosure of non-haven individual owners. Exposed firms reduced transactions with tax havens and increased corporate tax payments, with no detectable effects on investment or firm size. The results suggest that ownership transparency can meaningfully improve tax compliance at limited efficiency cost, even through unilateral action. |
| Date: | 2026–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11493 |
| By: | Christoph Boehm; Andrei A. Levchenko; Wei Xiang |
| Abstract: | We analyze optimal tariffs in a dynamic version of the Venables (1987) framework with a time-to-build lag in firm creation. In this environment, trade protection is driven by the desire to increase firm creation at home at the expense of the foreign trade partner. When firm creation takes time, the benefits of protection accrue in the future, whereas the costs in the form of higher consumer prices occur immediately. Under certain parameterizations, a policymaker that can commit to a full time path of tariffs leaves trade unrestricted at date 0, and announces high tariffs coming on at a pre-specified future period. But there is a time inconsistency: the policymaker's short-run incentive is not to impose contemporaneous tariffs due to the adverse effect on prices. Thus, lack of commitment to future tariffs can preserve free(er) trade and derail a manufacturing renaissance. |
| JEL: | F02 F12 F13 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35976 |
| By: | Ciprian Domnisoru; Tuomas P. Heikkinen |
| Abstract: | Have concerns about the potential job displacement effects of artificial intelligence affected the education choices of students? We analyze administrative data on the university applications and course choices of Finnish students. We find, after the launch of ChatGPT 3.5 in November 2022, a persistent drop in applications to fields of study classified as more exposed to AI under several different measures. The drop is particularly large in computer science and other ICT fields. Examining the elective course choices of non-ICT students, we find declining enrollment in programming and algorithms courses, particularly among students who had not taken mathematics as part of their high school exit exam. At the same time, non-ICT students enrolled more in AI/ML courses, and this increase was relatively larger among men. |
| Keywords: | artificial intelligence, college major choice, higher education, unemployment |
| JEL: | I21 J24 J64 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13105 |
| By: | Gupta, Arpit; Chicker, Soumya; Chand, A.K.Srustidhar; Prasad Sahu, Jagadish |
| Abstract: | The paper aims to empirically demonstrate the country-of-origin effects of FDI on wages in the Indian manufacturing sector. We have employed firm-level panel data by mapping FDI and PROWESS data for the time period 2011-12 to 2020-21. Our results show that FDI has a significant positive impact on wages in the Indian manufacturing sector. Furthermore, we find that FDI from the USA has a significant positive impact on average wages. We also find that direct investment coming from tax haven countries (Mauritius, Cayman Islands, and Cyprus) has a positive impact on wages. Our results suggest that the average wage of the Indian manufacturing firms receiving FDI from the USA are significantly higher than the other firms. On the other hand, FDI from Asia and Europe does not have statistically significant impact on wages. |
| Keywords: | Foreign Direct Investment, Country-of-Origin Effects, Manufacturing Sector Wage, Generalized Method of Moments |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344190 |
| By: | Ricardo Marto |
| Abstract: | A new measure using satellite vessel-tracking data reveals how much potential U.S.-bound shipping capacity was reduced by disruptions such as port congestion, canal bottlenecks and rerouting. |
| Keywords: | shipping; satellite data |
| Date: | 2026–10–27 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:103987 |
| By: | Apoorva Babbar; Shawn Kantor; Alexander Whalley; Jingyuan Zeng |
| Abstract: | This paper examines how public research and development shaped the direction of technological change during the Cold War–era Space Race and its consequences for US manufacturing. While prior research has documented the effects of public R&D on innovation and economic growth, less is known about whether mission-oriented public investment directed innovation toward automation and how this affected labor markets. We exploit variation in exposure to NASA's Space Race investments across industries and locations to estimate the effects of public R&D on innovation and manufacturing outcomes from 1947 to 1992. Combining newly developed measures of automation in full-text patent data with historical evidence on government involvement in patenting, we show that NASA-sponsored patents are systematically more automation-intensive than non-NASA patents within the same technological classes. Industries and locations more exposed to Space Race activity experienced persistent declines in labor share, consistent with the diffusion of labor-saving technologies developed for space applications. In contrast, we find little evidence of systematic changes in skill composition. These findings show that mission-oriented public R&D can shape the direction of technological change and have lasting distributional consequences. |
| JEL: | H59 J23 J24 N62 N72 O33 R11 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35966 |
| By: | Javier D. Donna (University of Miami-Rimini Center for Economic Analysis); Marit Hinnosaar (University of Nottingham - CEPR); Toomas Hinnosaar (University of Nottingham - CEPR); André Trindade (Nova School of Business and Economics) |
| Abstract: | In 2019, North Dakota repealed its Sunday closing law, which had required most non-grocery stores to close between midnight and noon. Using this policy change and consumer GPS data, we study the impact of opening hours on shopping behavior and welfare. We compare visits before and after the repeal in North Dakota and neighboring states using difference-in-differences and event-study designs. The repeal caused a large increase in Sunday morning visits, originating partly from intertemporal, store-type, and cross-border substitution. The closing law’s welfare loss is equivalent to increasing the travel distance to affected stores by about 1.4 miles per consumer. |
| Keywords: | consumer behavior, opening hours, store choices, deregulation, GPS data |
| JEL: | L81 L51 D12 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:411 |
| By: | Richard Baldwin |
| Abstract: | This paper argues that globalisation’s frontier has shifted from manufacturing GVCs to services GVCs: from the Global Factory to the Global Office. While the Factory remains larger in gross trade, the Office is growing much faster. A heatmap of trade in intermediates shows that the Factory is bloc-shaped and dominated by China, whereas the Office is star-shaped and dominated by America. Gravity estimates show that distance matters less for Office exports, but time zones matter more: each hour of time-zone separation reduces Office exports by roughly 4%, while having no effect on Factory exports. Importantly, all of the world’s export-linked net job creation between 2008 and 2022 occurred in digitally delivered services rather than manufacturing, and trade-linked service jobs command higher average pay globally. The Factory-to-Office shift is also reshaping development. Most emerging economies have seen export-led growth tilt towards services, but their service exports are not yet large enough to drive overall GDP growth the way manufacturing did historically. The big picture is that globalisation’s second unbundling is running out of steam even as its third unbundling is powering ahead. The paper, which raises more questions than it answers, closes with the conjecture that the future of trade is services. |
| JEL: | F10 F14 F23 F63 L80 O14 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35975 |
| By: | Jesús Fernández-Villaverde |
| Abstract: | When machines can perform a growing share of tasks, growth depends on two margins: how the task structure affects the returns to accumulating machines, and how strongly capital accumulation responds to those returns. I argue that, in a standard task model, capital supply governs the size of the growth boom associated with automation, while the task structure sets the duration of this growth boom and the evolution of wages. I document how the same technology path that generates 11.7% annual growth when households choose their saving rate optimally delivers only 2.2% when the saving rate is fixed at the calibrated U.S. 2025 level of 23%. Therefore, slow growth might reflect too little capital accumulation instead of a technological bottleneck. Also, the saving rate rises mainly because automation raises the capital share, not because households become thriftier. Long yields price the growth boom: the ten-year real yield jumps from 5.1% to 13.6% on impact. In my benchmark calibration, hand-to-mouth households lose the equivalent of two-fifths to two-thirds of their consumption, while keeping them on trend temporarily costs at most a fifth of GDP. |
| JEL: | E21 E22 E43 O33 O41 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35964 |