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on Business Economics |
| By: | Afroza Alam; André Diegmann |
| Abstract: | This paper provides new causal evidence on how patent allowances affect firms and their employees based on quasi-random assignment of patent applications to examiners. Exploiting employer–employee records with newly linked German firm data and web-scraped patent documents, we show that patent-induced shocks reduce firm exit, improve productivity, and increase wages, with rent-sharing elasticities between 0.10 and 0.21. Wage gains are broadly observed across occupational tasks, with high heterogeneity: managers benefit disproportionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. Our findings highlight the role of institutional features and firm organization in shaping how rents are shared. |
| Keywords: | innovation, firm performance, worker compensation, rent sharing |
| JEL: | O31 O34 J31 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12666 |
| By: | Bartelsman, Eric J.; Dobbelaere, Sabien; Zona Mattioli, Alessandro |
| Abstract: | This paper develops a micro-founded framework linking price-cost and wage markups to intangible assets. Intangible assets, once created, are a source of firm rents. Owing to limits to enforceable ownership and the non-rival nature of knowledge, these rents can be both retained by the origin firm and transferred to a competitor through poaching of workers. Search and matching frictions affect labor mobility and result in bargaining over rents between the firm and the worker. This environment generates hold-up in intangible asset creation and motivates rent sharing. Under non-compete agreements, poached workers face start delays that weaken outside options. Using microdata from the Netherlands, we document higher price-cost and wage markups in more intangible-intensive firms and lower wages for workers with non-compete agreements, consistent with the model. |
| Keywords: | intangibles, non-compete agreements, price-cost markups, rent sharing, wage markups |
| JEL: | J41 L10 O30 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:341089 |
| By: | Nuriye Melisa Bilgin; Gianmarco Ottaviano |
| Abstract: | Do the determinants of technology adoption depend on technological architecture? Using administrative data on Turkish firms from 2021 to 2024, we compare the adoption of traditional and generative artificial intelligence (GenAI).We show that GenAI adoption is driven by workforce skill intensity and is not positively associated with firm size, whereas traditional AI depends on both scale and skills. Firms that adopt both technologies are distinct and represent the most persistent adoption mode. Conditional on adoption, the skill-to-size ratio governs technology choice, and transition dynamics indicate a sequential process in which firms adopt GenAI before expanding to hybrid use. Exploiting the release of ChatGPT as a quasi-experimental reduction in access costs, we find that high-skill firms differentially increased GenAI adoption, while firm size played a limited role. These results suggest that the canonical size-based diffusion pattern is not universal but depends on the cost structure of technologies, with implications for innovation policy and productivity dispersion. |
| Keywords: | artificial intelligence, generative AI, technology adoption, firm heterogeneity |
| Date: | 2026–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2184 |
| By: | Brandon Pecoraro; Nicholas C. Hoffman; Martin Lopez-Daneri; Elena C. Derby; Rachel Moore; Shannon E. Sledz |
| Abstract: | Using a panel of confidential corporate tax returns, we provide the first direct estimates of the realized present value of corporate tax benefits from R&D credits and deductions in the United States. Realized tax benefits can deviate from statutory tax benefits because firms in loss status are typically unable to fully utilize credits and deductions to offset current-year taxes and instead must carry these attributes forward. We develop a novel procedure to track the intertemporal firm-level utilization of tax attributes generated by corporate R&D spending, and find that the present value of R&D tax benefits varies substantially with firms’ loss status, age, and size. Old and large firms typically use R&D tax benefits quickly, while young firms – especially those that are small – frequently operate in loss status and use tax attributes more slowly. From 2012–2016, the average firm generated $0.41 in statutory tax benefits per dollar of R&D investment, with a realized present value of $0.36. Young and small firms in a loss position realized only $0.23 per dollar, a 44% decrease relative to the statutory benchmark. |
| JEL: | D22 H25 O30 O38 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35208 |
| By: | Bloom, Nicholas; Iacovone, Leonardo; Pereira-López, Mariana; Van Reenen, John |
| Abstract: | Using comprehensive administrative management surveys from Mexico and the United States, we document large management gaps between the two countries, driven by both lower average management quality among Mexican firms and greater misallocation. Compared with the United States, Mexico displays a weaker link between firm size and management quality, especially in the distorted service sector. The size-management gradient is weakest in smaller markets—services in low-population-density regions and manufacturing in locations farther from the United States. It is also attenuated in areas with weaker institutions, including poor contract enforcement, high crime, corruption, and informality. |
| JEL: | J1 J50 |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138432 |
| By: | Holger Breinlich; Elsa Leromain; Martina Magli |
| Abstract: | This paper examines how policy-induced supply-chain shocks affect firms' performances, using the UK-EU Trade and Cooperation Agreement (TCA) as a source of exogenous variation. Using UK microdata on firm-level goods and services trade linked to firm's outcomes and employer-employee records, we document a sharp decline in firms' imports of intermediate goods from the EU after 2021. We then show that firms more exposed to EU input sourcing experience declines in employment and sales, with corresponding effects on workers' hours and pay. These impacts are heterogeneous across occupations, with larger losses concentrated among lower-skilled roles. Interestingly, we find that firms' services activities play an important role in mediating the impact of GVCs disruptions. On the one hand, these firms experience smaller declines in intermediate inputs imports; on the other hand, they experience stronger negative reactions to the overall GVC shock. |
| Keywords: | GVCs, Trade in Goods and Services, Brexit, TCA |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2183 |
| By: | K. Peren Arin; Ozan Eksi; Neslihan Kaya Eksi; Moo-Sung Kim |
| Abstract: | We examine the international transmission of US monetary policy shocks to European firms using high-frequency identification and granular firm-level panel data. Exploiting monetary policy surprises around FOMC announcements combined with firm-level data across eight European economies over 2004-2024, we document a sharp divergence in spillover effects. A contractionary US monetary shock significantly reduces investment rates and sales growth among UK firms, with investment declining by approximately 4% and sales growth by around 0.7-0.8% at peak, with effects persisting for two to four years. By contrast, Continental European firms, whether members of the euro area or independent-currency economies such as Sweden and Switzerland, do not exhibit a significant response. Heterogeneity analysis reveals that large and small UK firms bear broadly similar average burdens, with large firms showing more precisely estimated responses, while leverage does not systematically differentiate transmission. The UK-EU divergence is not explained by the exchange rate regime: the null result for Continental Europe extends to non-euro countries, pointing instead to the exceptional depth of UK-US financial integration, and the centrality of London in global dollar funding markets. |
| Keywords: | monetary policy spillovers, firm-level heterogeneity, international transmission channels |
| JEL: | E52 F43 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-33 |
| By: | Denis F. Alves (Federal University of Pernambuco, Brazil); André L. S. Chagas (University of Sao Paulo, Brazil); Roberta M. Rocha (Federal University of Pernambuco, Brazil); Raul M. Silveira Neto (Federal University of Pernambuco, Brazil) |
| Abstract: | We examine the local economic impacts of the opening of the RioMar Shopping Mall in Recife, Brazil, in 2012 using a georeferenced panel of firms covering 2005–2019. We exploit variation in proximity to the mall through concentric distance rings (up to 500 meters, 500 meters–1 km, and 1–2 km) and implement a Difference-in-Differences (DiD) framework combined with Propensity Score Matching (PSM). We find strong and spatially concentrated effects: firms within 500 meters increase employment and wages substantially, with effects that decay monotonically with distance but remain statistically significant up to 2 kilometers. Event study estimates support the parallel trends assumption and show no evidence of pre-treatment dynamics. We show that these effects are primarily driven by the expansion of incumbent firms rather than new firm entry, indicating that agglomeration economies operate through the intensification of existing activity. We also document important heterogeneities: gains are larger for firms with more skilled workers, in managerial occupations, and in consumption- and service-related sectors. However, benefits are unevenly distributed across demographic groups, with stronger effects for male and white workers. These results are robust to alternative control groups and to placebo tests based on both timing and spatial location. Overall, we show that large urban commercial developments act as localized economic hubs, generating positive but spatially bounded externalities. Our findings contribute to the literature on place-based policies and urban agglomeration by providing causal evidence from developing countries such as Brazil, where such interventions play a central role in shaping urban economic dynamics. |
| Keywords: | Shopping Malls; Local Economic Effects; Spatial Externalities; Agglomeration Economies; Difference-in-Differences |
| JEL: | R10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:022483 |
| By: | Joachim Hubmer (University of Pennsylvania); Lukas Nord (University of Pennsylvania) |
| Abstract: | The allocation of demand across firms determines aggregate productivity. Firms affect allocations through prices and non-price investment in demand. We develop a framework with search frictions and dynamic customer relationships in which demand investment shapes allocations directly by matching customers to suppliers and indirectly by driving price competition. A quantitative version matches key facts on how firms compete for customers. In equilibrium, markup distortions and business-stealing externalities induce misallocation and demand over-investment. Equilibrium interactions between demand investment and pricing create policy complementarities. Rising demand investment can raise concentration without raising market power, while reducing firms’ intangible value through equilibrium effects. |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:26-006 |
| By: | Cauê Dobbin; Daniel Fernandez; Tom Zohar |
| Abstract: | A well-known empirical regularity is that high-productivity firms have lower worker separation rates, but it is unclear whether this pattern reflects quits or layoffs. Using matched employer-employee data from Brazil that distinguish the reason for each separation, we show that the productivity-separation gradient is driven primarily by layoffs rather than quits. We then propose and test a mechanism in which downward wage rigidity prevents firms from adjusting wages in response to adverse shocks, causing those shocks to translate into layoffs. High-productivity firms are less exposed because their larger markdowns provide a buffer between productivity and wages. Consistent with this mechanism, we find that firms with higher markdowns have lower layoff rates, and that markets with stronger wage rigidity exhibit both higher layoff rates and a steeper productivity-layoff gradient. These findings suggest that productivity differences across firms shape not only wages, but also workers' exposure to job loss. |
| JEL: | J31 J63 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35177 |
| By: | Rüdiger Fahlenbrach; Leandro Sanz; René M. Stulz |
| Abstract: | Many startups in the 2000s have remained private after achieving large valuations, a pattern that funding availability alone cannot explain. We propose that startups relying heavily on organization capital to achieve economies of scale and network effects through digital technologies are more likely to become large private firms than exit earlier via an IPO or acquisition. Using LinkedIn data, we construct a novel measure of organization capital intensity for startups. Exploiting a legal shock that strengthened organization capital protection, we provide causal evidence that organization-capital-intensive startups are more likely to remain private and grow large rather than exit early. |
| JEL: | G24 G32 G34 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35191 |
| By: | Ruben Gaetani; Alexander T. Whalley |
| Abstract: | The emergence of firms like SpaceX and Blue Origin has made space a leading example of how private enterprise drives innovation, marking what many see as a sharp break between Old Space and New Space. Yet little systematic evidence documents when the transition to this new phase of space innovation occurred and which firms drove it. We use patent data to provide this measurement and find that the largest surge in space innovation occurred in the 1990s, coinciding with demand-side market creation, and preceding the entry of high-profile startups after 2005. Throughout this period and since, incumbent aerospace firms account for most of the space-related patenting, with entrants contributing a growing but minority share. The same geographic regions that dominated space innovation during the post-Apollo era remain dominant today. These patterns are consistent with directed technical change: incumbents direct R&D toward policy-created markets accessible from existing capabilities, while entrants bring science-based insights into domains requiring new paradigms. Our findings suggest that New Space is more closely connected to Old Space than prevailing narratives imply, and that government's most consequential role in space innovation may lie in constructing appropriable markets. We make patent data on space-related technologies available for future research. |
| JEL: | L64 O31 O38 R48 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35212 |
| By: | Alfaro, Laura; Chor, Davin |
| Abstract: | This paper documents stylized facts about the “Great Reallocation” in US supply chain trade following the 20182019 tariff shocks and the April 2025 Liberation Day announce-ments. We find that: (i) The US has decoupled from China but not from the world overall. (ii) US imports diversified mainly among its top-20 partners, rather than expanding to new source countries. (iii) Local linear projections confirm ongoing declines in Chinas import shares, with compensating increases from Vietnam, Mexico, and Taiwan. (iv) Most of this shift occurred along the product-level intensive margin, though extensive margin adjust-ments became more pronounced for Vietnam and India from 2021-2024. (v) After a period of “wait and see”, the decline in import shares from China spread to contract-intensive and relationship-sticky goods by 2021-2024. (vi) Trade reallocation has already accelerated after Liberation Day, in favor of trade partners facing lower additional tariffs and with ge-ographically proximate supply networks. Together, these findings show that the US-China tariff shocks have unwound the US sourcing from China back to where it stood at the time of Chinas WTO accession. |
| Keywords: | Protectionism;Trade reallocation;Supply Chains;diversification |
| JEL: | D80 F10 F60 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14596 |
| By: | Holger Breinlich; Martina Magli |
| Abstract: | Services account for one-third of global trade, yet little is known about the impact of trade restrictions on services trade. To make progress in this area, it is crucial to understand through which modes services are traded (cross-border, consumption abroad, foreign investment or movement of people) and how firms substitute among these modes. We provide novel micro-level evidence on firms' mode choices, combining detailed data on UK firms' trade and affiliates' sales. We also estimate the substitution between trade modes using Brexit as an exogenous shock, finding that UK firms increasingly relied on local affiliate sales to serve the EU market after 2016. This shift protected firm-level services exports from the expected higher trade barriers after Brexit, but at the cost of lower domestic employment. |
| Keywords: | Trade Shocks, Services Trade, Modes of Supply, Brexit |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2182 |
| By: | Koichiro Ito; James M. Sallee; Jonathan (Andrew) Smith |
| Abstract: | How should policymakers evaluate policy impacts when firms design products for global markets? Standard economic analyses typically focus on domestic outcomes, implicitly assuming that policies affect only the jurisdiction in which they are enacted. Yet multinational firms often harmonize product design across markets, creating the potential for policies implemented in one country to generate global spillovers through changes in product attributes. We call this phenomenon "attribute propagation" and develop a framework to measure and assess its quantitative importance. Applying this framework to an environmental policy affecting automobiles, we find that a fuel-economy subsidy in Japan led to significant improvements in the fuel economy of vehicles sold in the United States. We then develop a model of multinational automobile markets featuring cross-market cost complementarity as a key mechanism driving attribute propagation. Using the estimated model, we conduct counterfactual simulations to quantify environmental benefits accounting for the policy’s global spillover effects. We find that global spillover effects are first-order—a majority of the CO2 emissions reductions induced by the Japanese policy arise through its impact on the U.S. automobile market. These findings suggest that standard economic analyses that abstract from attribute propagation can substantially understate the full policy impact. More broadly, attribute propagation provides a new lens for evaluating environmental, safety, antitrust, and technology policies in a global economy. |
| JEL: | L0 Q4 Q5 R4 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35197 |
| By: | Joshua S. Gans |
| Abstract: | Empirical measures of AI's wage effect typically hold fixed the bundle of activities a worker is paid for at its pre-AI shape. We argue that this assumption hides much of the action. When automation breaks a job apart, firms decide how to recombine the surviving activities; whether they rebundle them into one broad role or split them into specialist roles changes which surviving skills the labour market actually rewards. A skill that played no role in the pre-AI wage can become the dominant component of the post-AI wage, while a skill that anchored the pre-AI wage can disappear from the schedule. We develop an assignment model in which the priced human bundle is endogenous, and we use it to show that a fixed-bundle wage regression can mis-sign the effect of AI exposure. In general, the omitted-redesign bias has no unconditional sign: it is the residual covariance between exposure and role-specific redesign terms. Under explicit sufficient conditions, exposure-correlated unbundling loads specialist comparative-advantage premia onto the exposure coefficient, while exposure-correlated rebundling loads a different, often opposite, omitted term. The sign must therefore be measured from local post-AI partition changes rather than assumed from exposure alone. |
| JEL: | D23 J23 J24 J31 O33 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35211 |