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on Business Economics |
| By: | Kyoji FUKAO; YoungGak KIM; Hyeog Ug KWON |
| Abstract: | This study examines the dynamics of total factor productivity (TFP) by firm size to clarify the recent drivers of productivity growth in the Japanese economy, utilizing firm-level financial data from Teikoku Databank (TDB) spanning the years 1999 to 2020. In particular, we examine Japan’s distinctive “negative exit effect†by differentiating among various types of firm exit, including bankruptcy, closure, dissolution, and mergers. Our analysis shows that while within-firm productivity improvements at large firms played a dominant role in driving productivity growth through the 2000s, reallocation effects have become increasingly important since the 2010s. Notably, a substantial share of high-productivity firms exited the market through mergers, accounting for nearly half of the overall negative exit effect. Furthermore, while TFP among acquiring firms tends to stagnate in the short term after mergers, their labor productivity shows a significant and sustained increase, likely driven by capital deepening. These findings provide new insights into the shifting drivers of productivity growth in Japan—from within-firm productivity growth to market-driven resource reallocation—as well as into firm-size heterogeneity and the role of mergers in shaping productivity dynamics. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26007 |
| By: | Aldasoro, Iñaki; Gambacorta, Leonardo; Pal, Rozalia; Revoltella, Debora; Weiss, Christoph; Wolski, Marcin |
| Abstract: | This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12, 000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption. |
| Keywords: | Artificial intelligence, firm productivity, Europe, digital transformation |
| JEL: | D22 J24 L25 O33 O47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eibwps:335876 |
| By: | Sam Desiere; Rigas Oikonomou; Tiziano Toniolo; Bruno Van der Linden; Gert Bijnens (-) |
| Abstract: | Belgium’s 2016 payroll tax exemption for first-time employers triggered a sharp increase in firms hiring their first worker but little growth among larger firms. To account for this pattern, we develop and estimate a directed search model—with discrete hiring, firm heterogeneity, and endogenous entry—using Belgian microdata. The exemption reduces the high marginal cost of the first hire, enabling many previously non-hiring entrepreneurs to become employers, but most lack the productivity needed to expand beyond one worker. The model matches the post-reform size distribution and identifies the conditions under which size-dependent hiring subsidies can foster sustained firm growth. |
| Keywords: | payroll taxes, size-dependent policies, hiring frictions, wage subsidies, competitive search theory |
| JEL: | H25 J08 J23 J38 L25 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:26/1133 |
| By: | Mauro Caselli; Arpita Chatterjee; Shengyu Li |
| Abstract: | This paper introduces a method for estimating productivity and quality at the firm-product level using a transformation function framework. We use firm optimization conditions to establish a one-to-one mapping between observed data and unobserved productivity and quality. We do not need to impute firm-product input shares and can avoid imposing productivity evolution processes. The method is scalable to numerous products and can address the bias caused by unobserved heterogeneous intermediate input prices. We apply the method to a set of Mexican manufacturing industries and examine the roles of across-firm and within-firm technological spillovers, accounting for the trade-off between productivity and quality. Our quantitative analysis shows that an exogenous, product-specific technological improvement generates substantial gains in welfare, amplified by both within-firm and across-firm spillovers by approximately 17 percent and 5 percent, respectively. Moreover, within-firm resource reallocation toward the most productive products accounts for 60 percent of the resulting firm-level productivity gains. |
| Keywords: | Productivity; Technology; Industrial organization |
| JEL: | D24 L11 L15 O33 |
| Date: | 2026–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:102364 |
| By: | Jiandong Ju; Yuankun Li; Shang-Jin Wei |
| Abstract: | We document and characterize a new history of U.S. federal-level industrial policies by scanning all 12, 167 Congressional Acts and 6, 030 Presidential Orders from 1973 through 2022. We find several interesting patterns. First, contrary to a common perception, the United States has always been an active industrial policy nation throughout the period, regardless of which party is in power, with 5.4 laws and 3.4 Presidential Orders per year on average containing new industrial policies. Second, we identify roughly 300% more instances of industrial policies than those in the Global Trade Alert (GTA) database during 2008-2022, despite using essentially the same definition. Third, industrial policies in practice are as likely to be justified by national security as by economic competitiveness. Fourth, many U.S. industrial policies incorporate design features that help mitigate potential drawbacks, such as explicit expiration dates and pilot programs for emerging technologies. Finally, based on stock market reactions and firm performance, the identified policies are recognized as economically significant in shifting resource allocations. |
| JEL: | F1 H20 H4 K20 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34744 |
| By: | Huiyu Li; Julien Sauvagnat; Tom Schmitz |
| Abstract: | Using administrative data from France, we document that within the same detailed occupation, industry, and commuting zone, workers who work from home earn on average 12% higher hourly wages than fully on-site workers. Approximately half of this wage premium is accounted for by observable worker characteristics (such as education, gender, and age) and firm characteristics (such as size and productivity). The remaining 6% wage premium largely reflects selection: workers who work from home after the COVID-19 pandemic already earned higher wages before the pandemic. |
| Keywords: | wage premium |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:102384 |
| By: | Daniel Da Mata; Mario Dotta; Edson R. Severnini |
| Abstract: | Does industrial activity drive deforestation and land degradation, and can limited state capacity be overcome to decouple economic growth from environmental harm? We examine these questions in the context of slaughterhouse plant openings in Brazil from 1994 to 2019. Guided by a simple conceptual framework and using a staggered difference-in-differences approach, we show that plant openings increase livestock production while reducing forest cover and degrading pastureland. However, following the introduction of legally enforceable, incentive-compatible agreements between slaughterhouses and federal prosecutors—which penalize purchases of livestock from illegally deforested areas but act as a green certification mechanism—plant openings increase productivity without driving deforestation. Our findings suggest that tying firm performance to environmental goals through market-aligned legal mechanisms can generate economic and environmental gains at low cost to the government. |
| JEL: | K32 O13 P18 Q01 Q15 Q56 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34751 |
| By: | Hirs, Jorge; Andrian, Leandro Gaston; Valencia, Oscar |
| Abstract: | This paper examines how firm perceptions influence the transmission of fiscal policy. Using natural language processing on corporate earnings calls from 51 countries over two decades, we construct Fiscal Perceptions Indicators (FPI) that capture the incidence, risk framing, and tone of fiscal discussions. Periods of heightened fiscal concern are associated with rising sovereign spreads, weaker investment, and slower output growth. In response to exogenous fiscal shocks, effects on spreads and macroeconomic activity vary systematically with firm sentiment: favorable views compress spreads and strengthen demand. These results underscore the role of perceptions in conditioning fiscal transmission and provide a scalable cross-country measure of fiscal views. |
| Keywords: | Fiscal credibility;Fiscal Policy Transmission;sovereign risk |
| JEL: | E62 E6 D84 C55 H63 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14475 |
| By: | Justin R. Pierce; Peter K. Schott; Cristina J. Tello-Trillo |
| Abstract: | We find that US workers outside manufacturing exhibit relative earnings increases after US trade liberalization with China. These relative gains cumulate over time as the beneficial effect of a workerâ s upstream exposureâ increased competition from China in input marketsâ more than offsets the detrimental impact of her own and downstream (customer) exposures. These relative gains are smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings, and are absent among manufacturing workers due to a lack of upstream gains and stronger downstream losses. |
| Keywords: | Employment; Manufacturing; Labor markets; International trade; Trade policy |
| JEL: | F13 F14 F15 F16 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:102365 |
| By: | Sueyoul Kim; Ginger Zhe Jin; Eungik Lee |
| Abstract: | Using a comprehensive dataset of posts from a major platform for anime- and manga-style artwork, we study the impact of the launch of a prominent text-to-image generative AI. Focusing on the majority of incumbent creators who do not adopt AI as a primary tool, we show that the AI launch led to a significant decline in post uploads by illustrators, whereas comic artists were less affected, reflecting the need for tight stylistic alignment across sequential images in comics. We present empirical evidence for two underlying mechanisms. First, illustration posts experience a loss of viewer attention, measured by bookmarks, following the AI launch, which can significantly harm creators’ business models. Second, direct competition from AI-generated content plays an important role: illustrators working on intellectual properties (IPs, such as Pokémon) that are more heavily invaded by AI reduce their uploads disproportionately more. We further examine creators’ responses and show that illustrators with greater exposure to AI avoid using tags favored by AI-generated content after the AI launch and broaden the range of IPs they work on, consistent with a risk-hedging response to AI invasion. |
| JEL: | D22 J24 L86 O14 O33 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34733 |
| By: | Kevin André Pineda-Hernández; François Rycx; Mélanie Volral; Alexandre Waroquier |
| Abstract: | While rent-sharing is known to vary according to worker characteristics, the impact of profits on the gender wage gap warrants closer examination. Most studies adopt a single-gender view, neglecting factors tied to bargaining power. Our paper aims to fill this gap by leveraging rich matched employer-employee data covering the Belgian private sector from 1999 to 2016 and by examining whether the relationship between rent-sharing and gender depends on variables reflecting bargaining power, i.e. level of education, field of study, tenure, occupation and type of wage agreement. Accounting for a wide range of individual, job and firm characteristics, and addressing potential endogeneity issues, we find a wage-profit elasticity of 2.8%, which does not differ statistically between women and men. Our results further indicate that firms share more of their profits with workers who have greater bargaining power, as assessed by our moderators. This result holds overall for both women and men, so that the price effect associated with rent-sharing is generally insignificant in explaining the gender wage gap. Conversely, given that women, regardless of their bargaining power, tend to be employed in less profitable firms than their male counterparts, the quantity effect associated with rent-sharing appears to play a non-negligible role. In short, our findings suggest that it is not so much the unequal sharing of profits within companies that fuels the gender pay gap, but rather the segregation of women, particularly those with limited bargaining power, into less profitable companies. |
| Keywords: | Rent-sharing; linked employer-employee data; wage decompositions; instrumental variables; gender wage gap; bargaining power |
| JEL: | C26 J16 J24 J31 |
| Date: | 2026–01–29 |
| URL: | https://d.repec.org/n?u=RePEc:sol:wpaper:2013/402522 |
| By: | Anthony Le (University of Chicago - Booth School of Business); Parth Shah (London School of Economics and Political Science) |
| Abstract: | We study the e!ect of licensing-induced, occupation-specific education requirements on workers’ occupational mobility and earnings. We study this question in the context of Certified Public Accountants’ (CPAs) licensing rules, exploiting the staggered introduction of a change in the number and composition of CPAs’ educational requirements across states. We find that an increase in mandatory accounting-specific credit hours leads to more time spent in accounting jobs, less cross-occupation job switching, and a reduction in the licensing earnings premium. Supplemental analyses indicate that the e!ects represent a specialization of worker skills rather than a general decline in CPAs’ accounting performance. The collective findings suggest that by imposing occupationspecific course requirements, licensing regimes can create less portable human capital, reducing both occupational mobility and the licensing earnings premium. |
| Keywords: | Occupational Licensing; Occupational Mobility; Coursework Requirements; CPAs; Human Capital; 150-Hour Rule |
| JEL: | D45 I21 J24 J44 J62 M41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfi:wpaper:2026-16 |
| By: | Ricardo J. Caballero |
| Abstract: | AI technology can generate speculative-growth equilibria. These are rational but fragile: elevated valuations support rapid capital accumulation, yet persist only as long as beliefs remain coordinated. Because AI capital is labor-like, it expands effective labor and dampens the normal decline in the marginal product of capital as the capital stock grows. The gains from this expansion accrue disproportionately to capitalists, whose saving rate rises with wealth, raising aggregate saving. Building on Caballero et al (2006), I show that these features generate a funding feedback—rising capitalist wealth lowers the required return—that can produce multiple equilibria. With intermediate adjustment costs, elevated valuations are the mechanism that sustains a transition toward a high-capital equilibrium; a loss of confidence can precipitate a self-fulfilling crash and reversal. |
| JEL: | E21 E22 E24 E44 O33 O41 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34722 |