nep-fdg 2006-01-24 papers

on Financial Development and Growth

Issue of 2006‒01‒24
two papers chosen by

Growth and Convergence across the U.S.: Evidence from County-Level Data By Matthew J. Higgins; Daniel Levy; Andrew T. Young
Releasing constraints to growth or pushing on a string ? the impact of credit, training, business associations, and taxes on the performance of Mexican micro-firms By Rojas, Gabriel V. Montes; Maloney, William F.; Fajnzylber, Pablo

Growth and Convergence across the U.S.: Evidence from County-Level Data

By:	Matthew J. Higgins; Daniel Levy; Andrew T. Young
Abstract:	We use U.S. county data (3,058 observations) and 41 conditioning variables to study growth and convergence. Using OLS and 3SLS-IV we report on the full sample and metro, non-metro, and 5 regional samples: (1) OLS yields convergence rates around 2 percent; 3SLS yields 6–8 percent; (2) convergence rates vary (e.g., the Southern rate is 2.5 times the Northeastern rate); (3) federal, state and local government negatively correlates with growth; (4) the relationship between educational attainment and growth is nonlinear; and (5) finance, insurance & real estate industry and entertainment industry positively correlates with growth while education employment negatively correlates.
Date:	2005–09
URL:	http://d.repec.org/n?u=RePEc:emo:wp2003:0529&r=fdg

Releasing constraints to growth or pushing on a string ? the impact of credit, training, business associations, and taxes on the performance of Mexican micro-firms

By:	Rojas, Gabriel V. Montes; Maloney, William F.; Fajnzylber, Pablo
Abstract:	The authors employ propensity score matching and a traditional control function approach to examine the impact of participation in various societal institutions on microfirm performance in Mexico. They find that firms that participate in credit markets, receive training, pay taxes, and belong to business associations exhibit significantly higher profits, even after controlling for the various factors that drive participation in those institutions. They also find that firms that borrow from formal or informal sources and those that pay taxes are significantly more likely to stay in business, but firms that received credit exhibit lower rates of income growth. Overall, the results suggest that even if the best performing micro-firms are more likely to be selected into participating in societal institutions, causality also runs in the opposite direction. In particular, increases in strictly or broadly defined formality have the potential for increasing profits and survival rates, and appear to bring micro-firms closer to their optimal sizes.
Keywords:	Economic Theory & Research,Science Education,Scientific Research & Science Parks,Investment and Investment Climate,Educational Sciences
Date:	2006–01–01
URL:	http://d.repec.org/n?u=RePEc:wbk:wbrwps:3807&r=fdg

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