|
on Business Economics |
| By: | Jacob T. Hess (Banco de España); Xufeng Wang (KU Leuven) |
| Abstract: | We study how revenue productivity (TFPR) and markups evolve after mergers across the economy. In financial-statement data, targets cease to exist as reporting entities after a deal, so tracking the merged firm requires constructing the combined acquirer-target unit before the merger. We formalize the biases that arise without this correction and implement it across 3, 759 horizontal mergers in Spain between 1997 and 2022. Revenue productivity rises by approximately 4% within eight years and markups by approximately 5% to 6%. The breakdown by industry reveals that revenue productivity gains are broad-based, while markup increases are concentrated. Most industries show modest markup effects of 3% or less, with the largest increases occurring in two industries accounting for a small share of deals, led by human health activities. We find that without the boundary correction, both estimated effects reverse sign. The results suggest that mergers tend to raise the revenue productivity of the combined firm across the board, consistent with operational improvements, while large markup increases are a feature of specific industries rather than a general consequence of consolidation. |
| Keywords: | mergers and acquisitions, revenue productivity (TFPR), markups, consolidation |
| JEL: | C23 D24 G34 L41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2631e |
| By: | Seula Kim; Jane Olmstead-Rumsey; Honghao Wang |
| Abstract: | Teams of inventors now produce over 80 percent of U.S. patents, up from just 45 percent in 1976. Over the same period, inventor employment has become increasingly concentrated in large firms, rising six times more than overall employment concentration. To explain these trends, we develop a new model of endogenous team formation within firms and embed it in a general equilibrium model of the inventor labor market. Teams increase firms’ returns to scale by increasing the likelihood of productive matches between inventors. The value of these matches rises over time, possibly driven by increasing knowledge specialization. This causes large firms to expand and small firms to shrink in equilibrium, accounting for the observed increase in inventor employment concentration. Because firms do not internalize knowledge spillovers, there is misallocation of inventors across firms. The rise of team production amplifies this misallocation by a factor of six by reallocating inventors away from small firms that generate disproportionately large knowledge spillovers. |
| Keywords: | innovation; R&D teams; inventor allocation; firm dynamics; economic growth |
| JEL: | E23 E24 O31 O32 O33 |
| Date: | 2026–09–22 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:103815 |
| By: | Hartmut Egger; Peter Egger; Katharina Erhardt; Leandro Navarro |
| Abstract: | This paper studies how international firms hedge against trade-cost uncertainty. We analyze two margins of adjustment: foreign market entry (exporting versus foreign investment) and invoicing in free-on-board (FOB) or cost-insurance-freight-inclusive (CIF) prices. Under oligopolistic competition and price rigidity, trade-cost volatility jointly shapes entry and invoicing choices. Firms with small market shares prefer exporting and FOB-price invoicing, while firms with large market shares favor foreign investment and CIF-price invoicing. Using a novel measure of trade-cost volatility constructed from French customs data, we provide empirical support for these mechanisms and document the joint determination of entry and invoicing decisions. Counterfactual analyses based on the structurally estimated and calibrated model indicate that trade-cost uncertainty has sizable effects on these decisions. |
| Keywords: | trade-cost uncertainty, Oligopoly, Invoicing, Foreign market entry |
| JEL: | F12 F23 F31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13009 |
| By: | Anup Basnet (UNIS - University of Surrey); Magnus Blomkvist (EDHEC - EDHEC Business School - UCL - Université catholique de Lille); Karl Felixson (Hanken School of Economics [Helsinki]); Eva Liljeblom; Hitesh Vyas (Audencia Business School) |
| Abstract: | The Dodd-Frank Act in 2010 increased ex ante downgrade threats without changing credit-rated firms' underlying credit quality. We show that the act had negative impacts on credit-rated firms' acquisition activities, especially among speculative-grade firms as they face greater downgrade-induced costs. The more selective acquisition strategies led to higher announcement returns and greater postacquisition upgrade probabilities. Consistent with firms refraining from taking on overall acquisition risk rather than financial risk, we show significant reductions in both cash-and stock-settled dealmaking after the Dodd-Frank Act. In sum, our study highlights that increased legal stringency on credit rating agencies has important spillover effects on firms' mergers and acquisitions activities. |
| Keywords: | Mergers and Acquisitions JEL Classification: G30, G32, G34, Credit Ratings, Credit Ratings Dodd-Frank Act Mergers and Acquisitions JEL Classification: G30, G32, G34, Mergers and Acquisitions, Dodd-Frank Act |
| Date: | 2026–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05741138 |
| By: | Gustaf Dillner; Rebecca Freeman; Kalina B. Manova; Thomas Sampson |
| Abstract: | How successful is European integration in removing non-tariff trade barriers? We study how Brexit affected UK firms' input sourcing and sales. The post-Brexit Trade and Cooperation Agreement (TCA) reduced sales and input expenditure at firms with higher pre-Brexit EU trade exposure. It also caused firms to switch towards domestic and non-EU inputs. Through the lens of a trade model, the switch in input sourcing implies the TCA increased trade costs on EU imports by 21% and raised unit production costs by 3.1% for the average UK importer. Our results indicate EU membership secures large reductions in trade costs. |
| Keywords: | trade policy, non-tariff barriers, Brexit |
| JEL: | F13 F14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13007 |
| By: | Annika Bacher; Andreas Fagereng; Marius A. K. Ring; Ella Getz Wold |
| Abstract: | Governments have long imposed minimum equity requirements on new corporations. Opponents view them as barriers to entry while proponents argue that they protect stakeholders from financially unviable businesses. We study this quantity-quality trade-off using a Norwegian reform and comprehensive data linking entrepreneurs to their firms. A 70% reduction in required capital nearly doubled entrepreneurial entry, with no deterioration in survival, profitability, productivity, or interest-bearing leverage and no differences in founders’ ex-ante income, liquidity, or ability. These results suggest capital requirements restrict entrepreneurship without screening on quality or liquidity. Rather, we highlight returns-to-scale heterogeneity as an important determinant of the observed entry response. |
| JEL: | G38 G50 H10 H32 J24 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35780 |
| By: | Ampudia, Miguel; Beck, Thorsten; Popov, Alexander |
| Abstract: | Using exogenous variation generated by the creation of the Single Supervisory Mechanism (SSM) in the euro area, we find that relative to firms borrowing from banks subject to national supervision, firms borrowing from banks subject to supranational supervision reduce their share of intangible assets. This effect does not pre-date the supervisory reform and it does not obtain in non-SSM jurisdictions. The reallocation of investment away from intangible assets is stronger for small and young firms and appears to be driven by a short-term reduction in lending and a persistent increase in collateral standards. JEL Classification: D25, F30, G21, G28 |
| Keywords: | intangibles, international banking, investment, lending, supervision |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263286 |
| By: | Sparber, Chad (Colgate University) |
| Abstract: | H-1B status grants highly-educated foreign nationals the right to work in specialized occupations in the United States. Recent policy proposals include altering the method for allocating H-1B status, raising payments associated with entry into the country, and changing the limit on new issuances available. To help inform policy, this paper uses the universe of cap-bound H-1Bs awarded in fiscal year 2024 to examine how wages vary across different groups. Workers on F-1 student status accounted for 45% of new issuances, while another 43% went to individuals living abroad without any contemporary US immigration status. This former group earned 10% higher wages than the latter, or 6% more after accounting for observable differences between groups. Indian-born workers without current status seeking new employment at H-1B dependent firms earn the lowest wages. Policies favoring one of these groups over another -- whether intended or not -- will affect the average wage paid to H-1B recipients. |
| Keywords: | skilled immigration, H-1B, wage differentials |
| JEL: | J61 J68 J31 F22 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18940 |
| By: | Diris, Ron (Leiden University); Meekes, Jordy (Leiden University); van Vliet, Olaf (Leiden University) |
| Abstract: | This study analyses whether temporary work agency (TWA) employment is a stepping stone to better labour market outcomes for displaced workers. Using monthly Dutch administrative data for the period 2010-2022, we focus on a sample of incumbent employees who are displaced because of a firm bankruptcy, and analyse the causal effect of the first job after displacement being a TWA job vs. another job. The main contribution of this study is that we exploit variation in firm bankruptcy dates in a novel instrumental variable approach to deal with the endogeneity of TWA employment. We find that TWA causes negative effects on employment and working hours, which dissipate around 30 months after firm bankruptcy. Effects on hourly wages are negative (20\%) and consistent up until seven years after firm bankruptcy. TWA employment also reduces the probability of having a permanent contract by around 20 percentage points in the long run. |
| Keywords: | temporary work agency, stepping stone, labour market flexibilization, instrumental variables, displaced workers |
| JEL: | J31 J64 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18959 |
| By: | Luca Barbaglia (Joint Research Centre, European Commission); Marina Diakonova (Banco de España); Luis Díez-Catalán (Banco de España); Corinna Ghirelli (Banco de España); Alice Lia (Banco de España); Javier J. Pérez (Banco de España); Stefano Verzillo (Joint Research Centre, European Commission) |
| Abstract: | Governments increasingly use trade and industrial policy to reshape where multinationals produce, yet standard measures of this geoeconomic pressure are aggregate and cannot detect origin-specific discrimination. We build a bilateral, directional index of relative protectionism that measures how restrictive a destination is toward a given origin. We combine it with bilateral geopolitical risk indices and global ownership links over the period 2010-21, and estimate a gravity-type Poisson-Pseudo Maximum Likelihood model with three-way fixed effects. Our results show that where bilateral protectionism is greater, foreign-affiliate presence is markedly smaller: a 1 percentage point increase in the index is associated with 1.3% fewer subsidiaries than that origin-destination pair would otherwise have. The main mechanism runs through an operational hostility channel (e.g. discriminatory subsidies, procurement exclusion), which outweighs an offsetting tariff-jumping channel and concentrates in non-tradable sectors, where serving the market requires local presence. The estimates show no evidence of anticipation and are robust to longer lags and sample splits. Bilateral geopolitical risk enters with the same negative sign, adding a smaller but complementary layer of fragmentation risk to the effect of geoeconomic policy. |
| Keywords: | geoeconomic policy, multinational firms, global value chains, firm location, foreign direct investment, trade and industrial policy, economic fragmentation, international production networks, geopolitical risk |
| JEL: | F23 F13 F15 F60 D22 H25 L23 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2633e |
| By: | Olesya Fomenko; Melissa McInerney; Sebastian Negrusa |
| Abstract: | A growing body of research shows that excessive heat increases the frequency of heat-related injuries at work. While interest in mitigating occupational risks from excessive heat is high, there is little evidence on whether legislation targeting heat exposure can reduce such injuries. Using a triple-differences approach and administrative data from workers’ compensation systems, we evaluate California’s heat standard – adopted in 2005 - and find that the standard substantially reduces the frequency of work injuries in the construction, agriculture, and transportation industries. The effects increase with outside temperatures and are larger among younger workers. Our findings have clear implications for workplace safety and contribute to ongoing policy debates. |
| JEL: | H0 I1 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35772 |
| By: | Andy Chung (Department of Economics, University of Reading); Tin Cheuk Leung (Wake Forest University); James Reade (Department of Economics, University of Reading) |
| Abstract: | Digital platforms expose workers and managers to immediate, public, and persistent evaluations from external audiences, creating a form of social pressure that may shape workplace decisions. We examine whether such digital social pressure predicts subsequent opportunity allocation and worker performance, using professional football as a high-frequency empirical setting. We link player-match data from Europe’s five major leagues to post-match Twitter commentary and construct measures of negative sentiment, toxicity, and racial abuse. Comparing players with themselves over time and teammates in the same current match, we find that greater negative sentiment is associated with a lower probability of appearing in the team’s next match. Toxicity shows a similar but less stable association, while racial-abuse intensity is imprecisely estimated when the measures enter jointly. By contrast, associations with performance conditional on a subsequent appearance are small and imprecise. Overall, the findings suggest that digital social pressure is reflected more strongly in the allocation of subsequent opportunities than in worker performance, showing how public evaluations generated outside formal organizational boundaries can become part of the reputational environment surrounding internal managerial decisions. |
| Keywords: | digital social pressure, online criticism, managerial decision-making, worker performance, social media, professional football, racial abuse |
| JEL: | J24 M54 D91 Z22 J71 |
| Date: | 2026–09–29 |
| URL: | https://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2026-10 |
| By: | Hiroyuki Yamada (Keio University); Atsushi Nakagomi (Chiba University); Takahiro Tabuchi (Tohoku University) |
| Abstract: | Japan has the lowest rate of generative AI use among major economies, yet little is known about how the technology has spread within the country. This study uses the sixth wave of the Japan COVID-19 and Society Internet Survey (JACSIS, N = 27, 630), which asks respondents when they first started using generative AI, to reconstruct cumulative adoption curves for Japanese municipalities from November 2022 to January 2026. Because every respondent became able to adopt at the same moment, the release of ChatGPT, the retrospective cohorts support a discrete-time hazard analysis without left truncation. Linking postal codes to municipal statistics, we document four findings. First, adoption follows the urban hierarchy: by January 2026, 50% of residents of the quintile of municipalities with the highest population density had adopted, compared with 35% in the quintile with the lowest population density, and the ratio between the two rose from 0.55 to 0.71 over the four periods, indicating relative convergence alongside a widening absolute gap. Second, most of the geographic gradient reflects who lives where rather than where they live: individual characteristics explain 64% of the population-density coefficient, and the coefficients on population density and on distance to Tokyo become statistically indistinguishable from zero once individual controls are included. Third, municipal population aging is negatively associated with adoption beyond its compositional effect, but only in the first two years of diffusion. Fourth, the job openings-to-applicants ratio in the respondent's workplace area is positively associated with work-related adoption and unrelated to purely private adoption, a pattern consistent with labor scarcity pulling generative AI into workplaces. The association is statistically significant but economically small: a one-point increase in the ratio is associated with a work-adoption probability less than one percentage point higher. Regional differences are concentrated in whether people adopt, not in how intensively adopters use the technology or whether they stop using it: one in six ever-users has lapsed, and lapsing follows age, education, and job content rather than place. The results are correlational, but they suggest that Japan's low national adoption rate is a consequence of its demographic and occupational composition rather than of a distinct rural disadvantage. |
| Keywords: | Generative AI, technology diffusion, regional inequality, population aging, labor shortage, Japan |
| JEL: | O33 R12 J11 J23 L86 |
| Date: | 2026–09–15 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2026-020 |
| By: | Nikolova, Milena (University of Groningen); Angelini, Viola (University of Groningen) |
| Abstract: | As populations age, longer working careers become more essential, and technological advancements may prolong or shorten career spans. We examine how exposure to industrial robots, information and communication technology (ICT), and artificial intelligence (AI) relate to retirement expectations among workers in 20 European countries. To this end, we link individual-level data from the European Working Conditions Survey (2005–2024) with lagged technology-exposure measures. Technology exposure shows little systematic association with preferred retirement timing. Nevertheless, robots and especially AI are linked to the perception of being able to work until age 60. These associations vary across workers and tasks, suggesting that job design and worker adaptation determine whether technology supports longer working lives. |
| Keywords: | retirement, expectations, technological change, robots, ICT, AI |
| JEL: | I31 J26 O33 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18938 |
| By: | Matcham, William; Schankerman, Mark |
| Abstract: | We develop a dynamic structural model of patent screening incorporating incentives, intrinsic motivation, and multi-round negotiation. We use natural language processing to create a new measure of patent distance, which, together with detailed data on examiner decisions, enables us to estimate the model and study strategic decisions by applicants and examiners. Using the estimated model, we quantify the effectiveness of the U.S. Patent Office and evaluate counterfactual policy reforms. We find that patent screening is moderately effective, given the existing standards for patentability. Examiners exhibit substantial intrinsic motivation that strongly improves screening quality. We quantify the annual social costs of patent screening at $15.38bn, equivalent to 5% of total private sector R&D in the U.S. and show that reforms limiting the number of negotiation rounds significantly reduce social costs. |
| Keywords: | patents;innovation;incentives;screening;intrinsic motivation |
| JEL: | D73 L32 O31 O34 O38 |
| Date: | 2026–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137489 |
| By: | Pol Antràs; Adrian Kulesza; Andrea F. Presbitero |
| Abstract: | We study how the U.S.-China trade war has reshaped global trade patterns, creating significant spillovers to third countries. Using recent tariff policy changes and monthly international trade flow data, we document a redirection of Chinese exports away from the U.S. market and toward third countries. To interpret the impact of these reallocations on third countries, we introduce a taxonomy that separates four exposure margins - export competition, import competition, consumer gains, and sourcing gains - and construct theoretically-derived indices that map countries into these channels. Recent work often proxies such exposure with trade-basket similarity. We show why this can be problematic: similarity measures are symmetric and omit the size of product-specific shocks, Chinese market penetration, substitution elasticities, and incidence weights. Our model-based indices therefore generate country rankings that differ substantially from conventional similarity measures. |
| JEL: | F1 F2 F4 F6 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35785 |