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on Business Economics |
| By: | Luca Macedoni; John Morrow; Vladimir Tyazhelnikov |
| Abstract: | Which firms supply which products? Modeling multi-product firms under heterogeneous markups, we recover firms' costs for produced products and develop an algorithm inspired by recommender systems to predict costs for unproduced products. Lower predicted costs imply increased product adoption and identify which firms enter when export demand rises, including firms crossing broad product classifications. We use these counterfactual costs to quantify how reductions in fixed and marginal costs induce product entry and lower price indices. In a price-stabilization exercise following a cost shock, entry subsidies can cost less than subsidies to incumbents, particularly for smaller shocks when capable potential entrants remain available. |
| Keywords: | multi-product firms, firm capabilities, classification, industrial policy |
| JEL: | F1 F6 D2 L1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13044 |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Chinese acquisitions of Western firms have become central to debates over technology transfer, national security, and investment screening. Understanding their economic consequences requires evidence on how acquired firms perform and reorganize under Chinese ownership. Using linked Swedish firm and worker registers for 1997–2021 and a matched, stacked difference-in-differences design, we examine majority acquisitions by Chinese and other foreign owners. Other foreign acquisitions raise labor productivity by about 6 percent and employment by about 14 percent on average, alongside increases in total factor productivity, workforce skills, and trade intensity. They also reshape management, strengthen trade links with the acquirer’s home country, and increase workers’ mobility to multinational enterprises. For Chinese acquisitions, we find no statistically detectable improvements in firm performance or comparable evidence of management restructuring, worker mobility, or trade integration. Chinese acquisitions are also rare in industries classified as security-sensitive. These findings provide a detailed account of the economic footprint of Chinese ownership in an advanced host economy. The pattern is consistent with acquisitions seeking assets valuable to the parent group rather than gains through restructuring the target. |
| Keywords: | Geoeconomics; Chinese Acquisitions; Foreign Direct Investment (FDI); Firm Performance; National Security |
| JEL: | F21 F23 G34 L25 |
| Date: | 2026–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1569 |
| By: | Glenn Magerman; Alberto Palazzolo; Emmanuel Dhyne; Andras Borsos; Dmitry Kulikov; Andrea Linarello; Alari Paulus; Giacomo Romanini; Martín Saldias |
| Abstract: | How much a firm’s shocks move the aggregate, and how they propagate to other firms, both depend on its position in the network of firm-to-firm trade. As firm-level networks are available for few economies, quantitative work typically relies on firm size and/or input–output tables as proxies. Using administrative VAT records and tax filings, we build harmonized production networks for five European economies (Belgium, Estonia, Hungary, Italy, and Portugal) and measure firms’ positions directly. Five facts stand out. First, firm size and centrality summarize a firm’s first-order aggregate impact, but not its vertical position along production chains, which is orthogonal to size and governs how shocks propagate across firms. Second, firm size is itself a function of the network: roughly half of within-industry size dispersion reflects the number of customers a firm has, rather than a primitive such as productivity. Third, granularity runs along several dimensions beyond firm size: network sales, transaction values, and the number of customers are heavy-tailed, spanning several orders of magnitude. Fourth, firm-to-firm networks differ structurally from IO tables: they are orders of magnitude sparser, “roundabout” production disappears, and input shares vary widely even within narrow sector pairs. These patterns are stable across all five economies and persist within narrowly defined industries, reflecting firm-level characteristics rather than sectoral composition or country-specific factors. Finally, these distinctions are economically relevant: firm-level responses to monetary policy vary systematically with vertical position, and cross-country differences in where firms sit along production chains generate heterogeneous aggregate responses to a common shock. We provide these moments as calibration targets and as a guide to when sector-level structure is an adequate approximation and when firm-level detail is first-order. |
| JEL: | C81 D57 E52 L14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202611 |
| By: | Beata Smarzynska Javorcik; Alessia Lo Turco; Daniela Maggioni; Gianluca Santoni |
| Abstract: | This paper examines whether and how foreign acquisitions improve occupational safety. Using linked administrative data on French manufacturing plants over 2003-2017 and event studies on a matched sample, we find that foreign acquisitions reduce accident rates and workdays lost. Safety gains coincide with expanded managerial hierarchies, greater technical-manager presence, foreign manager hiring, and worker training. We find little evidence supporting automation, task reallocation, or outsourcing as alternative explanations. Moreover, domestic acquisitions do not generate comparable improvements. Our findings are consistent with foreign acquisitions improving workplace safety through the transfer of managerial and organisational practices, highlighting a benefit of multinational activity beyond conventional measures of firm performance. |
| Keywords: | multinationals, workplace safety, work accidents, organisational changes |
| JEL: | F23 F61 I10 J21 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13071 |
| By: | Matthew Dey; Emin Dinlersoz; Lucia Foster; Cheryl Grim; John Haltiwanger; Peter B. Meyer; Sabrina Wulff Pabilonia; Aditya Pande; Martha Stinson; Sean Wang; Zoltan Wolf |
| Abstract: | Measures of exposure to artificial intelligence (AI) are widely used to study where AI is likely to affect firm and worker outcomes, yet limited evidence exists on how closely exposure relates to realized AI adoption at the firm level. We examine this relationship by linking 14 firm-level exposure measures, constructed from occupational exposure estimates in the literature and occupational employment shares from the Bureau of Labor Statistics Occupational Employment and Wage Statistics program, to direct measures of firm AI adoption from the Census Bureau’s Business Trends and Outlook Survey. Exposure is positively and statistically significantly associated with adoption, but explains only a modest share of its variation. The strength of the relationship varies considerably across standardized exposure measures: a one-standard-deviation increase in firm-level exposure is associated with a 4–11 percentage point higher firm adoption probability, falling to 1–8 percentage points after controlling for year and sub-sector fixed effects. The exposure–adoption relationship is also heterogeneous across firm-size classes and sectors. Exposure is thus an informative but incomplete signal of adoption. More broadly, the results have implications for the interpretation of exposure-based measures in studies of the economic effects of AI. |
| Keywords: | Artificial Intelligence, AI adoption, AI exposure, firm-level data, occupational mix |
| JEL: | O33 D22 J23 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-61 |
| By: | Schnabel, Oliver; Nasir, Rabiya; Mullane, Fintan; Wickersham, Tom |
| Abstract: | This paper uses three waves of the ONS Management and Expectations Survey (2016, 2020 and 2023) to examine how management practices evolve over time and to understand response behaviour in a voluntary business survey. We track management scores for firms responding across multiple waves and assess the extent to which changes in management practices reflect genuine managerial improvements or responder biases captured by the responder’s occupation. Firms that responded in 2020 were 24.9 percentage points more likely to respond in 2023 when controlling for firm characteristics. Where the individual responding on behalf of the firm was a senior official, such as a director, the respondent provided faster and more consistent responses across waves than firms responding with junior staff. Firms responding in all three waves report higher and improving management practices on average, particularly in employment practices. However, this difference is associated with observable firm characteristics, such as firm size. These results highlight the importance of understanding response patterns when interpreting survey results. We recommend maintaining continuity by retaining firms that responded in all three waves, encouraging responses from senior staff, and applying longitudinal weights to address non-response. The findings support improved survey design for future MES waves and strengthen the use of management practices as a measure of organisational capital in productivity research. |
| Keywords: | management practices; survey design; response volatility; respondent burden; response rates; productivity |
| JEL: | C23 C83 L25 M10 |
| Date: | 2026–10–13 |
| URL: | https://d.repec.org/n?u=RePEc:eoe:escoet:escoe-tr-35 |
| By: | Vanessa Alviarez; Brian C. Fujiy; Angel Espinoza E.; Tomasz Swiecki |
| Abstract: | Do the boundaries of the multinational firm shape how shocks propagate through global production networks? We link U.S. Bill of Lading microdata, geocoded natural disaster records, and cross-border ownership data to trace the transmission of exogenous supply disruptions from foreign suppliers to U.S. importers. Exploiting the quasi-random timing and location of natural disasters in a staggered event-study design, we document that disasters abroad generate sharp, persistent export declines at affected suppliers—shocks that propagate downstream, reducing the growth rate of U.S. importers’ total purchases by up to 25 percentage points. Transmission, however, is far from uniform: non-MNC buyers contract roughly twice as much as importers belonging to global corporations, and a comparable gap separates arm’s-length from intra-firm trade. These patterns point to the internal networks of multinational firms as shock absorbers that attenuate and redirect supply-side disruptions—suggesting that firm boundaries are not merely organizational choices, but also determinants of macroeconomic resilience. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-55 |
| By: | Tarikua Erda |
| Abstract: | Disasters devastate economies, yet productivity can improve in their wake. Why? Using confidential plant-level microdata from the US Census Bureau and an event study design, I trace the creative destruction process that follows large federally declared floods. Exits are concentrated among the least productive plants, whose used machines are then acquired by high-productivity entrants. Survivors upgrade their machinery as they rebuild and see productivity gains. Federal disaster spending facilitates this process by expanding financing access for nimble young and small firms that disproportionately fuel productive reallocation. Without it, financing constraints stifle creative destruction and productivity declines. Ultimately, the relative income gains from federal disaster assistance generate tax revenues far exceeding the policy's upfront cost, making it both efficiency-enhancing and fiscally sound. My findings reveal a novel allocative efficiency channel through which government spending supports post-disaster recovery, with critical implications for a warming world. |
| Keywords: | Natural Disasters; Disaster Aid; Firm Dynamics; Creative Destruction; Allocative Efficiency |
| JEL: | Q54 H84 R11 L26 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-52 |
| By: | Mitsuru Katagiri (Waseda University and TDB-CAREE. (E-mail: mitsuru.katagiri@waseda.jp)); Naoki Wakamori (Keio University and TDB-CAREE. (E-mail: nwakamo@keio.jp)) |
| Abstract: | This paper examines how geographic distance between bank branches and firms affects firms' borrowing costs. Building on descriptive evidence that highlights the role of nearby competing banks in determining loan rates, we develop a model where firms choose their lenders and banks compete in loan rates, and we structurally estimate the model using matched firm- and bank-branch-level microdata from Japan. The estimates suggest that distance affects loan rates by increasing both banks' and borrowers' costs. Counterfactual simulations indicate that the impact of branch closures on small businesses' borrowing costs depends on local banking market conditions. |
| Keywords: | Banking, Loan pricing, Spatial price discrimination |
| JEL: | G21 L13 L14 D43 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ime:imedps:26-e-11 |
| By: | Einiö, Elias; Feng, Josh; Jaravel, Xavier |
| Abstract: | What are the implications of unequal access to innovation careers for the direction of innovation and inequality? Leveraging novel linked datasets in the United States and Finland, we document that innovators create products more likely to be purchased by consumers like them in terms of gender, socioeconomic status, and age. Homophily exists both within narrow product categories and across industries, and has been stable in recent decades. Incorporating this “social push” channel into a growth model, we estimate that unequal access to innovation careers has a large effect on cost-of-living inequality and long-run growth. |
| Keywords: | direction of innovation;entrepreneurship;inequality;economic growth |
| JEL: | O31 O33 O41 |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130164 |
| By: | Ana Melissa Ferreira; Pedro Brinca; João Duarte; João Pereira; Pedro Martins |
| Abstract: | While pay transparency is an increasingly popular policy to reduce the gender wage gap (GWG), its effectiveness is still unclear. We evaluate the impact of a 2018 law in Portugal that required firms to assess their potential gender wage disparities, while imposing penalties to firms of 250 or more employees that did not correct or justify gender gaps. Using difference-in-difference-in-differences, regression discontinuity, and difference-in-discontinuity methods, together with detailed matched data, we find that the transparency reform had a minimal impact to reduced the GWG by around 1 percentage point (p.p.). These effects are particularly strong in firms that employ high-skilled females, and for employees that are not covered by collective bargaining, where the impacts rise to 1.5 p.p.. This effect is not associated with employment effects. |
| JEL: | J16 J31 J78 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202610 |
| By: | Løken, Katrine V. (Dept. of Economics, Norwegian School of Economics and Business Administration); Silliman, Mikko (Dept. of Economics, Aalto University); Willén, Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration); Xu, Yaling (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | The division of labor is fundamental to how firms organize production. Since Adam Smith, economists have recognized that dividing tasks more finely increases productivity through specialization but also raises coordination costs—a tradeoff formalized by Becker and Murphy (1992). Yet we have little systematic evidence on how this tradeoff operates within firms. Moreover, this classical perspective overlooks a second, dynamic tradeoff: firms not only produce output, but also develop a central input into future production—their workers’ human capital. A finer division of labor allows workers to develop greater expertise through repeated performance of narrowly defined tasks, but may also reduce opportunities to learn from coworkers by limiting interactions and knowledge exchange. We study both tradeoffs using population-wide Norwegian employer–employee records, linked workplace surveys, quasi-experimental variation in coworker availability, and randomized experiments with workers and managers. We find that more specialized firms exhibit higher productivity but also greater coordination costs. Their workers report more learning-by-doing but substantially less coworker learning, resulting in lower overall learning and slower wage growth. To establish the importance of coworker learning for human capital accumulation, we exploit extended coworker absences and show that losing access to colleagues reduces subsequent wage growth, particularly in occupations characterized by greater task overlap and coworker learning. To isolate the role of the division of labor from other workplace characteristics, we conduct randomized experiments that vary task allocation in otherwise identical workplaces. Workers and managers anticipate greater coordination demands, weaker coworker interactions, and lower skill accumulation under greater specialization. The experiments then ask workers to choose their preferred workplace and managers how they would organize production. Both favor greater task overlap, citing coworker interactions and learning opportunities as key reasons for their choices. Together, our findings show that the division of labor shapes not only the efficiency of current production but also the accumulation of human capital and future productive capacity. |
| Keywords: | division of labor; learning; firm organization |
| JEL: | D21 J24 L25 |
| Date: | 2026–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhheco:2026_016 |
| By: | Pauline Carry; Claire Montialoux; Elio Nimier-David; Alexandra Roulet; Nina Roussille |
| Abstract: | Do shorter workweeks generate work-sharing and productivity gains, as intended by policymakers? We study France’s pay-preserving reduction in the workweek from 39 to 35 hours, bundled with employer payroll tax cuts. We first exploit the staggered implementation by firm size to identify the impact of the reform package. We then use differential exposure to the hours cut and tax cut to separate their effects. We combine matched employer-employee, balance-sheet, and survey data to study worker, firm, and local labor market effects. The reform package left employment unchanged. This zero masks large offsetting effects: absent the tax cuts, the shorter workweek would have reduced employment by 3.8%. The effects are skill-biased, raising employment among managers and professionals while reducing it among other employees. Finally, shorter hours raised total factor productivity by 2%, limiting the output decline to 1% despite a 6% fall in total hours. Surveys point to work intensification and organizational changes as potential drivers of productivity gains. |
| JEL: | J08 J22 J23 J38 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35917 |
| By: | Chun Pang Chow (Vancouver School of Economics, University of British Columbia (E-mail: alexccp@student.ubc.ca)); Hiroyuki Kasahara (Vancouver School of Economics, University of British Columbia (E-mail: hkasahar@mail.ubc.ca)); Atsuki Kotani (Department of Economics, Boston University (E-mail: atsuki@bu.edu)); Yoichi Sugita (Faculty of Business and Commerce, Keio University (E-mail: ysugita@fbc.keio.ac.jp)) |
| Abstract: | Conventional productivity estimation treats unobserved heterogeneity as a single efficiency term, conflating product quality with physical output efficiency. This paper shows that unobserved quality and quantity-based productivity (TFPQ) can be separately identified from panel data on prices, quantities, and inputs when the two latent variables exhibit differential persistence. A constructive nonparametric identification argument based on transformation models is developed, alongside a parametric estimator for implementation. Applied to Japanese cotton spinning (1914-1920), instrumenting for electric motor adoption with geographic variation in electricity grid access, quality increased by 1.5 percent per percentage point increase in electric motor share while TFPQ remained unchanged. Full electrification raised quality by nearly 60 percent relative to no adoption. |
| Keywords: | Production function, quality, productivity, electrification |
| JEL: | D24 L11 N65 O33 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:ime:imedps:26-e-13 |
| By: | Hanna Brosch; Christina Langer; Philipp Lergetporer; Sandra Mueller; Harald Pfeifer; Nele Tschoepe |
| Abstract: | Does generative artificial intelligence (AI) expand the set of tasks that middle-skilled, early-career workers can successfully perform? In a field experiment with 673 final-year IT apprentices at twelve German vocational schools, we randomly assign access to AI for completing occupation-specific tasks. To identify task expansion, we study tasks both within the apprenticeship curriculum and deliberately beyond it. AI raises productivity substantially across all task types, with gains tending to be larger on tasks where performance without AI is lowest. Crucially, productivity increases by 26–31 percentage points on tasks beyond apprentices’ formal training, providing direct evidence of AI-enabled task expansion. These productivity gains do not come at the cost of reduced immediate task comprehension. Treatment effects are generally larger among apprentices with above-median AI literacy. |
| Keywords: | generative artificial intelligence, field experiment, productivity, task expansion, middle-skilled workers, apprenticeships |
| JEL: | J24 O33 C93 I21 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13045 |
| By: | Caitlin Hegarty; Matias Moretti; Pablo Ottonello; Diego J. Perez |
| Abstract: | We study how global financial conditions transmit to firms’ investment. We document that increases in risk premia are followed by large investment contractions, particularly among firms with higher default risk. We develop a quantitative heterogeneous-firm open-economy model where firms finance investment with defaultable debt priced by risk-averse global investors. We identify a strong risk channel linking changes in the global price of risk to financing costs through firms’ quantity of risk—the sensitivity of debt repayment to global shocks. This introduces a risk dimension to stabilization policy: smoothing cash flows reduces firms’ quantity of risk and dampens international financial transmission. |
| JEL: | E22 F00 F30 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35918 |
| By: | Hellsten, Mark (The Ratio Institute) |
| Abstract: | Despite growing policy interest in AI workforce development, surprisingly little is known about what defines these workers, or indeed if they differ from their occupational peers. Using a novel matched vacancy-hire dataset linking Swedish job postings to the individuals hired to fill them, drawn from register data on the entire Swedish population, I study the characteristics of workers who develop and apply AI. Observable traits including high cognitive ability, a tertiary degree in STEM subjects, and a recent migrant background largely explain occupational sorting. Of these, only higher education, prior AI experience, and a science degree set them apart within occupation. I then use earnings as a window onto unobservable differences: AI workers earn approximately 5% more than their peers, entirely explained by firm-level wages. However, AI workers with a doctorate degree stand out sharply in both traits and earnings, indicating that AI workers split into segments that differ by the complexity of their skills and tasks. Taken together, these results point to two distinct policy levers: the supply of average AI workers, termed AI integrators, can be expanded via STEM education participation, while the elite AI developers are supplied by researchers moving to the private sector. |
| Keywords: | Artificial Intelligence; Wage premium; Labor demand; Skills; Technology diffusion |
| JEL: | D22 J24 M20 O33 |
| Date: | 2026–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ratioi:0393 |
| By: | David J. Deming; Raffaella Sadun; Christopher T. Stanton |
| Abstract: | Some firms are more likely than others to invest in workers’ skills. We document this phenomenon and discuss its implications in light of models of firm-sponsored skills training. The data show that better managed firms, even in the same industries and labor markets, are more likely to train, while training clusters around either managerial or frontline worker development. We argue that organizational differences provide incentives for firms to train beyond traditional explanations that focus on labor market frictions. We illustrate how organizational heterogeneity can generate training investments through a knowledge hierarchy framework where top managers with different skills build bespoke organizations tailored to their unique needs. This in turn makes general skill firm-specific, allowing firms to capture returns on training investment. |
| JEL: | J2 J24 M5 M51 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35920 |