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on Entrepreneurship |
| By: | Yojiro Ito (Director and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: youjirou.itou@boj.or.jp)); Harumasa Shirakawa (Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: harumasa.shirakawa@boj.or.jp)) |
| Abstract: | The invention of new goods or services, called product innovation, and improvements in production processes, called process innovation, can have distinct impacts on firm performance. By integrating firm-level innovation survey data with financial panel data in Japan, our empirical analysis yields two key findings. First, the increasing prevalence of process innovation over product innovation has been observed over the past two decades. Second, higher market growth stimulates product innovation, which, in turn, contributes to growth in firm sales and employment over several years. In contrast, no such patterns are observed for process innovation. These results suggest that there may be a positive feedback loop between product innovation and firm growth. |
| Keywords: | Economic Growth, Productivity, Product Innovation, Process Innovation |
| JEL: | D22 L1 L25 L53 O25 O31 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ime:imedps:25-e-18 |
| By: | Oded Galor; Marc Klemp; Daniel C. Wainstock |
| Abstract: | Why does inequality vary across societies? Why are some societies more unequal than others? We advance the hypothesis that in a market economy, where income differentials reflect variations in productive traits, a significant share of cross-societal differences in inequality may reflect enduring variation in the degree of diversity within societies, rooted in the prehistoric Out-of-Africa migration. Patterns of inequality within the U.S. population are consistent with this hypothesis, suggesting that disparities among groups originating from different ancestral societies may be related to the degree of diversity within those societies, shaped during humanity's dispersal from Africa. Consistent with the proposed mechanism, populations whose ancestors originated closer to East Africa tend to exhibit greater dispersion in productive traits-education, ability, and labor supply-channels that appear to mediate the relationship between diversity and inequality. |
| Keywords: | Inequality, Diversity, Culture, Education, Entrepreneurship, Out-of-Africa Migration |
| JEL: | D60 O10 Z10 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2552 |
| By: | Hang T.T. Nguyen (Otto-von-Guericke University Magdeburg) |
| Abstract: | This paper investigates the relationship between corporate income tax rates (CITR) and firm-level productivity growth using AMADEUS data of 304, 410 observations from 79, 842 European firms from 2006 to 2019. The results imply a robust non-linear relationship: higher CITRs are positively associated with productivity growth for high-productivity firms near the technological frontier and negatively associated with the productivity catch-up of less productive firms. Heterogeneity tests suggest a stronger productivity response to tax rate changes of small and medium-sized enterprises (SMEs) and domestic firms, while I do not find a significant productivity response to tax rate changes for large and multinational firms. The main findings are robust across various productivity estimation methods and model specifications and challenge the conventional view that higher business tax rates have a linear and negative effect on productivity growth. The paper contributes to the ongoing debate about the role of corporate taxation in shaping economic competitiveness and long-term growth. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:mag:wpaper:26006 |
| 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: | Fitzgerald, Jack (Vrije Universiteit Amsterdam) |
| Abstract: | I leverage a unique administrative register covering the universe of establishments in the Netherlands to examine how characteristics differ between establishments that do and do not respond to business surveys. Only 19% of Dutch establishments responded to regional business surveys in 2022. Responsive establishments employ fewer people, and exhibit higher parttime employment rates, than unresponsive establishments. Sectoral response rates vary by up to 32 percentage points. Enterprises registered to residential addresses comprise over 70% of establishments, yet exhibit response rates 18 percentage points lower than an average office. However, controlling for contact probability reveals that the majority of sectoral and occupational variation in response rates can be traced back to differences in contact probability rather than responsiveness. These findings highlight challenges in the representativeness and generalizability of business survey data, as well as opportunities to improve the design of business surveys. |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:zufw2_v1 |
| By: | Robert T. Nachtrieb |
| Abstract: | The distribution of income and wealth in developed economies exhibits a robust two-class structure: an exponential (Boltzmann--Gibbs) bulk covering $\sim\!97\%$ of the population, and a power-law (Pareto) tail in the upper $\sim\!3\%$. We derive this structure from first principles via an explicit mechanistic chain: Gibrat's law for firm growth implies a Zipf firm-size distribution; maximum entropy applied to within-firm wages, combined with mixture aggregation across firms, yields a Boltzmann--Gibbs income distribution with temperature $T_y$ for employees; additive-noise wealth dynamics with a reflecting wall at zero produce a Boltzmann--Gibbs employee wealth distribution with temperature $T_w$. For firm owners, multiplicative capital returns produce a Pareto wealth tail with exponent $\alpha_w = 1/\theta$, where $\theta$ encodes how total returns scale with firm size. The empirical value $\alpha_w \approx 1.30$ \cite{Yakovenko2009} is reproduced with no tuned parameters from the observed firm value scaling $V = V_0(s/s_0)^{0.77}$~\cite{Axtell2001}, and simultaneously yields the first quantitative estimate of the returns-per-employee size exponent: $\zeta = \theta - 1 \approx -0.23$. For empirical values $\nu \approx 0.3$, $c \approx 0.81$, $k \approx 0.15$ (BEA long-run savings rate $\approx 5\%$), the model gives $T_w/T_y \approx 1.7\, \text{yr}$, i.e.\ lower-class households hold roughly 1--2 years of income as wealth, with the precise ratio depending on savings and tax rates and testable cross-country. As a parameter-free empirical test, firms near zero profit have a cash martingale whose first-passage time gives establishment exit rate $\sim t^{-1/2}$; convolving with the Zipf firm-size distribution yields firm-level exit rate $\sim t^{-1/2}\!\log t$, with apparent exponent $b = 0.295 \pm 0.03$, confirmed against BDS firm-age data with no free parameters. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.22976 |