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on Business Economics |
| By: | Kathryn Bonney; Cory L. Breaux; Emin Dinlersoz; Lucia S. Foster; John C. Haltiwanger; Aditya A. Pande |
| Abstract: | Using novel, nationally representative data from the 2026 AI supplement to the U.S. Census Bureau’s Business Trends and Outlook Survey (BTOS), we characterize AI diffusion across three layers: firm-wide adoption, business-function deployment, and worker-task use. During Nov 2025–Jan 2026, 18% of firms used AI in at least one function (32%, employment-weighted), with adoption expected to reach 22% within six months. Use is concentrated in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70%, employment-weighted) among very large firms in Information, Professional Services, and Finance. Among adopters, scope remains limited: 57% use AI in three or fewer functions, most often Sales and Marketing (52%), Strategy (45%), and IT (41%). Worker-level use appears in 23% (41%, employment-weighted) of firms, primarily for writing, document analysis, and information search; 65% restrict use to three or fewer tasks. Evidence suggests both top-down and bottom-up diffusion: worker use can occur without firm adoption, and vice versa. Most firms (66%) use AI for task augmentation, while employment reductions are rare (2%). Regression results show a positive relationship between firm performance and AI integration breadth. However, functional deployment and operational investment are associated with employment declines, while worker-task use is not once these factors are controlled for. |
| JEL: | L23 O33 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35141 |
| By: | Erik CANTON (European Commission) |
| Abstract: | This paper examines how employment protection legislation shapes firm-level technology adoption across OECD countries using novel survey data. We document a negative association between employment protection legislation and the adoption of artificial intelligence and other restructuring-intensive technologies, while more modular digital technologies display weaker relationships with labor market institutions. The patterns are particularly pronounced among large incumbent firms, while younger and fast-growing firms exhibit higher adoption rates. To interpret these patterns, we develop a general equilibrium model with heterogeneous firms in which workforce restructuring costs raise the productivity threshold for technology adoption. The model predicts heterogeneous firm responses: some adopters expand employment, others contract, and highly productive incumbents may optimally refrain from adoption when restructuring costs rise with scale. The framework is extended to incorporate endogenous technology arrival and diffusion through both adoption by incumbent firms and entry of new firms implementing frontier technologies. The analysis highlights how labor market institutions can affect technology diffusion and, through this channel, influence incentives to develop and commercialize new technologies. |
| Keywords: | Employment protection legislation, technology adoption, artificial intelligence, labor market institutions, firm heterogeneity, restructuring costs, general equilibrium |
| JEL: | O33 J24 J38 L25 O32 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-26-053-en-n |
| By: | Bertschek, Irene; Erdsiek, Daniel; Niebel, Thomas; Sack, Robin; Zimmermann, Volker |
| Abstract: | Recent literature has increasingly focused on deciphering the modern productivity puzzle, with particular attention given to the link between digital technologies and firm-level productivity. So far, much of this research has primarily focused on large and publicly listed firms. Leveraging a panel dataset covering German small- and medium-sized enterprises (SMEs) over the period 2016 to 2021, we investigate whether digitalisation can help revive the sluggish productivity growth and narrow the gap between productivity frontrunners and laggards. We measure digitalisation through firms' digital capital stocks (DK) that we derive from a broad measure of digitalisation expenditures. Building on an augmented Cobb-Douglas production function, we examine the relationship between DK and labour productivity (LP ). Our findings show that higher DK is positively associated with higher LP levels, with the effect being even stronger for firms that are already more digitally advanced. Moreover, higher digitalisation expenditures appear to be related to narrowing the productivity gap between laggards and the frontier. |
| Keywords: | Heterogeneity of Digitalisation, Productivity, Firm-level Data |
| JEL: | L25 O14 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:340839 |
| By: | Namrata Kala; Madeline McKelway |
| Abstract: | Worker agency—workers' influence over organizational decisions—is a commonly-cited determinant of employee engagement, productivity, and organizational culture. We conducted a firm-level RCT in India, randomizing whether employee recognition and associated bonuses were allocated: based on a worker vote (agency treatment), at the discretion of the manager (managerial discretion treatment), or at random and unrelated to performance (control). We find that workplace democracy increases worker attendance, but managerial discretion improves productivity. There are also implications for firm culture and knowledge spillovers, with the manager arm reducing work-related discussions between workers. Winners in the manager arm are positively selected on attendance and productivity, while those in the democracy arm are positively selected on attendance, social interactions, and likelihood of sharing the reward with co-workers in exchange for votes. These results highlight how what is valued in the workplace impacts worker behavior and firm culture, as well as the potential for informal contracts among workers to interact with workplace incentives. |
| JEL: | D22 D23 D70 J50 J54 M52 M54 O10 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35138 |
| By: | Girish Bahal; Damian Lenzo; Jia-Wei Loh |
| Abstract: | Idiosyncratic volatility in the stock returns of large firms can drive aggregate volatility and real activity. Using daily stock price data for firms in 21 countries over 1999 to 2020, we isolate firm-specific volatility shocks and exploit the fat-tailed distribution of market capitalization to construct a granular instrument for country-level volatility (uncertainty). A one standard deviation increase in aggregate volatility reduces real GDP by 1%, raises unemployment by 1.2 percentage points, and lowers investment by 7% over three years. We validate 389 firm episodes using contemporaneous news coverage and show that narratively verified shocks generate even larger macroeconomic effects. |
| Keywords: | uncertainty shocks, granular instrumental variables, firm-level volatility, aggregate uncertainty, investment |
| JEL: | E32 E44 G10 E22 C26 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-28 |
| By: | Eric Bartelsman (Vrije Universiteit Amsterdam); Sabien Dobbelaere (Vrije Universiteit Amsterdam); Alessandro Zona Mattioli (University of Amsterdam) |
| 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: | Price-cost markups, wage markups, rent sharing, intangibles, non-compete agreements |
| JEL: | J41 L10 O30 |
| Date: | 2026–02–26 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260008 |
| By: | Baumgart, Eike; Blaufus, Kay; Paczkowski, Katharina |
| Abstract: | We provide firm-level evidence on expected tax burdens under the OECD's Pillar Two minimum tax using hand-collected financial statement disclosures from listed multinational groups headquartered in countries where Pillar Two has already taken effect. Our setting exploits a common reporting framework that requires inscope firms to assess and disclose material tax liabilities under the global minimum tax, allowing us to study the early incidence of the reform across firms and jurisdictions. We find that expected burdens are highly concentrated: although most firms disclose exposure to Pillar Two, only 22.5% recognize positive global minimum tax liabilities, and a few firms account for much of the total reported burden. Cross-sectional variation in global minimum tax liabilities is strongly associated with firm exposure to low-taxed foreign income and a group's international presence. At the same time, substantial cross-country differences remain, despite harmonized rules and accounting standards. These differences are positively associated with country-level tax enforcement. Our results suggest that the early expected incidence of Pillar Two is considerably less uniform than its common legal framework might suggest. |
| Keywords: | Global Minimum Tax, Pillar 2, Corporate Taxation, International Taxation, Tax Enforcement |
| JEL: | H25 H26 F23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:340834 |
| By: | Sydnee Caldwell; Ingrid Haegele; Jörg Heining |
| Abstract: | We estimate firm-specific amenity valuations using discrete choice experiments embedded in a large-scale survey of German workers linked to administrative records. Workers rank hypothetical offers from real firms they would consider joining, with randomized wages identifying money-metric valuations. Valuations vary substantially across firms and demographic groups, yet a single index performs surprisingly well. Valuations are approximately orthogonal to firm wage premia; they therefore do not offset between-firm wage inequality. However, male-female differences in amenity valuations explain part of the gender wage gap. |
| JEL: | J31 J32 J33 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35149 |
| By: | Francesco Paolo Conteduca; Marco Errico; Fabrizio Leone; Ludovic Panon; Giacomo Romanini |
| Abstract: | Bilateral trade shocks affect firms in third countries by redirecting demand and reallocating competition across markets, creating winners and losers. We propose a tractable trade model with heterogeneous firms to decompose firm-level export responses as a function of destination-specific changes in demand, own-price and cross-price elasticities, and external economies of scale. Using the 2018–2019 US-China trade war as a source of exogenous variation and data on the universe of Italian firms, we show how bilateral trade shocks occurring elsewhere identify these primitives for third countries. On average, the US-China trade war created a 2.5% export gain, albeit with substantial heterogeneity across firms. The external economies of scale channel accounts for three-quarters of changes in export performance. |
| Keywords: | firm heterogeneity, reallocation, scale economies, trade wars |
| JEL: | D21 D22 E65 F13 F14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12629 |
| By: | Hanming Fang; Soo Jin Kim |
| Abstract: | We analyze the effects of data neutrality regulations on downstream market competition, the incentive of the platform to produce data, and consumer welfare. In our framework, data neutrality requires that firms seeking access to the platform’s data be treated equally, irrespective of whether they are affiliated with the platform. We consider two forms of regulation. Under weak data neutrality, the platform must provide the same amount of data to affiliated and unaffiliated sellers; under strong data neutrality, it must also charge the same price. We show that weak data neutrality can be largely ineffective, as the platform may restore exclusion through discriminatory pricing. Strong data neutrality is more consequential, but it does not necessarily raise welfare. Although it broadens access and intensifies downstream competition, it also reduces the incentive of the platform to refine and produce data. Consequently, data neutrality can reduce the equilibrium amount of data available in the market, and this data-reduction effect can dominate its benefits, which enhance competition. These findings suggest that regulating access to platform data requires balancing fair competition against the incentive to generate valuable data inputs. |
| JEL: | D4 L1 L4 L5 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35159 |
| By: | Alexandre Mas |
| Abstract: | I study hiring under uncertainty when firms can either hold permanent labor as a buffer or hire from a spot market after demand is realized. I build a model where the spot market is endogenously determined such that when one firm relies more on spot labor, it thickens the market that other firms use as well. Individual firms do not internalize that contribution, so the competitive equilibrium involves too much buffering. I evaluate the model in the market for registered nurses using the universe of daily time sheet records from skilled nursing facilities. The data support the model’s general equilibrium predictions. Markets with thicker agency markets have less rationing conditional on total nursing hours, and thicker agency markets have compressed upper tails of permanent staffing and higher overall hours in the lower part of the distribution. Estimating a facility-level newsvendor model with heterogeneous spot market frictions and rationing costs I find that the nursing labor market was more efficient post-COVID, there are substantial welfare gains from lower spot market frictions, and that the marginal external benefit for a firm that participates in the spot market instead of hiring an employee as buffer averages 7 percent of wages. This labor market underprovides flexibility because the value of availability is not fully priced. |
| JEL: | J0 J2 J3 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35148 |