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on Technology and Industrial Dynamics |
| By: | Filippo Biondi (Düsseldorf Institute for Competition Economics); Sergio Inferrera (Queen Mary University of London, School of Economics and Finance); Matthias Mertens (Massachusetts Institute of Technology); Javier Miranda (Halle Institute for Economic Research (IWH), Friedrich-Schiller University, and CompNet) |
| Abstract: | We study changes in job reallocation in Europe after 2000 using novel micro-aggregated data that we collected for 19 European countries. In all countries, we document broad-based declines in job reallocation rates that concern most economic sectors and size classes. These declines are mainly driven by dynamics within sectors, size, and age classes rather than by compositional changes. Simultaneously, employment shares of young firms decline. Consistent with US evidence, firms’ employment has become less responsive to productivity shocks. However, the dispersion of firms’ productivity shocks has decreased too. To enhance our understanding of these patterns, we derive and apply a firm-level framework that relates changes in firms’ market power, labor market imperfections, and production technology to firms’ responsiveness and job reallocation. Using German firm-level data, we find that changes in markups and labor output elasticities, rather than adjustment costs, are key in rationalizing declining responsiveness. |
| Keywords: | Business dynamism, job reallocation, productivity, responsiveness of labor demand, market power, technology, European cross-country data |
| JEL: | D24 D43 J21 J23 J42 L11 L25 |
| Date: | 2025–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2025-0004 |
| By: | Yoshiki Ando (Boston University); Emin Dinlersoz (Bureau of the Census); Jeremy Greenwood (University of Pennsylvania); Ruben Piazzesi (University of Pennsylvania) |
| Abstract: | Abstract The adoption of advanced technologies has important implications for employment and growth. The analysis of firm-level data from US Census Bureau indicates that firms with advanced technologies are disproportionately backed by venture capital (VC). While both advanced technology use and VC backing separately matter significantly for firm outcomes, VC backing has a larger effect on firms with advanced technology. A model of startups is constructed featuring decisions to use advanced technology and VC. The model is matched up with facts about firms' employment, technology use, and VC reliance. The implications of business taxation and subsidies are studied, and the significance of the availability of advanced technology and VC in the economy is quantified. |
| Keywords: | Advanced technology, banks, capital gains taxation, corporate income taxation, difference-in-difference analysis, employment, firm-level data, reallocation effect, startups, subsidies, synergy, venture capital, technology adoption, US Census data |
| JEL: | O30 O40 G20 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eag:rereps:40 |
| By: | Bettina Bruggemann; Zachary L. Mahone; Thomas Palmer |
| Abstract: | Ownership changes are common across firms of all sizes, and they have meaningful impacts on firm performance. Using a panel of Canadian administrative data we document that sales are an important margin in the firm life cycle, larger than exit rates for employer firms. Applying an event-study framework, we find that (a) survival rates initially decline post sale, leveling off after three years and (b) conditional on survival, profits are permanently higher. Embedding ownership changes in a model of firm dynamics, we find that 4.5% of entrants survive due to the option value of sale and that, within ten years from birth, 13% of dispersion in firm size is attributable to realized ownership changes. Moreover, ownership changes are particularly important for high productivity firms, accounting for one quarter of revenue concentration among the top 1% of businesses. |
| Keywords: | Firm Dynamics; Ownership Changes; Firm Concentration |
| JEL: | E0 L25 D22 M13 G30 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:mcm:deptwp:2025-03 |
| By: | Sam Desiere (Ghent University); Tiziano Toniolo (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Gert Bijnens (National Bank of Belgium) |
| Abstract: | Policies supporting small businesses are popular among policymakers but often criticised by economists for their potential to distort the economy. This paper provides a comprehensive evaluation of a unique policy that subsidises the first employee. Empirically, we find that the policy led to a surge in the number of firms employing exactly one employee, without a noticeable effect on the number of firms with two or more employees. A simple frictionless general equilibrium model of occupational choices predicts the empirical facts remarkably well. Leveraging our model, we show that the general equilibrium effects on wages and aggregate output are likely to be small. However, the policy is expensive. Our findings support the traditional view that size-dependent subsidies distort the optimal allocation of resources. |
| Keywords: | size-dependent policies; firm entry; small firms; wage subsidies; payroll taxes |
| JEL: | D22 H25 J08 L25 L26 |
| Date: | 2025–03–11 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2025005 |
| By: | Jan Behringer (Macroeconomic Policy Institute (IMK)); Till van Treeck (University of Duisburg-Essen); Vincent Victor (University of Duisburg-Essen) |
| Abstract: | This paper investigates the role of family firms in the fall of the labor share and rise in corporate saving in Germany from 1993 to 2019. Combining a new Family Ownership and Governance (FOG) database with financial data, we analyze 929 publicly listed firms. Our findings show that firm-level labor share declines are widespread in Germany, contrasting with findings from the U.S. that link this trend to a few fast-growing superstar firms. Family firms, particularly in manufacturing, experienced sharper decreases in the labor share and stronger increases in corporate saving compared to non-family firms. The level of family involvement in Germany's two-tier board system (management and supervisory board) further affects these outcomes. Despite paying lower wages, we find no evidence that family firms provide greater employment stability. Our results challenge global generalizations about the drivers of the labor share and corporate saving, while emphasizing the macroeconomic relevance of family firms, especially in Germany's corporate sector. |
| Keywords: | Labor share, corporate saving, family firms |
| JEL: | D22 D33 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:115-2025 |
| By: | Eren Gürer (Department of Economics, Middle East Technical University, Ankara, Turkey); Erol Taymaz (Department of Economics, Middle East Technical University, Ankara, Turkey) |
| Abstract: | This study examines the impact of domestic outsourcing on the wages of workers performing outsourced tasks in Türkiye, using an administrative employee-employer linked dataset. Outsourcing events are identified by tracking worker flows across firms with specific properties. Unlike existing studies, our dataset incorporates buyer-supplier transactions, enabling us to confirm that a relationship between the predecessor and successor firm begins following the outsourcing event. This improves our ability to identify outsourcing events, which we use to explore wage effects of both high-skilled and low-skilled outsourcing. Our findings indicate that low-skilled workers experience wage losses from domestic outsourcing, while high-skilled, professional workers benefit, suggesting that domestic outsourcing may be one of the factors contributing to rising wage inequality. |
| Keywords: | domestic outsourcing, subcontracting, wage inequality |
| JEL: | J31 J41 L24 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:met:wpaper:2501 |
| By: | Eichenauer, Vera; Köppl, Stefan; Köppl-Turyna, Monika |
| Abstract: | In this paper we analyze the effects of investment screening on cross-border venture capital investments in Europe between 2007 and 2022. The data we work with is originally based on PRISM data which has been extended by Eichenauer and Wang and which we combine with deal data from Preqin to assess investment activity. Our results point to unintended negative effects: while the number of actually blocked deals has remained very low, the associated uncertainty and an increase in transaction costs have led to a significant decline in cross-border deals. The effects are stronger in the case of financial (i.e. "non-strategic") investors, for late-stage venture capital deals, and for deals with investors from non-OECD countries. Moreover, we observe changes in the size of deals and their structure. This has profound policy implications for the financing of innovation in Europe. |
| Keywords: | cross-border venture capital, investment screening, Europe, transaction costs |
| JEL: | F55 F21 G24 L14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:313651 |
| By: | Klüh, Ulrich |
| Abstract: | We collect observations on how power constitutes itself in decentralized digital platform constellations that position themselves as alternatives to platforms operated by big tech (which we coin "hyperledgers"). We then compare these forms of power to the incumbent structures, the so called "hyperscalers". Such a comparison yields new insights into the way power "works" in surveillance-based platform capitalism. The crucial insight of our analysis is that it is highly unlikely that platform alternatives can be scaled up decisively within the current capitalist accumulation regime. Instead of focusing on finding business models within this regime, platform alternatives should therefore strive for regime change. This, however, would require new alliances, in particular between the victims of surveillance (workers and consumers) and the platform alternatives. The latter, in turn, would not only require massive public funding, but also support from civil society actors representing workers (i.e. unions) to be able to compete with incumbent hyperscalers. |
| Keywords: | Power relations, platform and surveillance capitalism, entrepreneurial activism, organizing studies, labor relations, democratization |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:znwudp:313639 |
| By: | Gutmann, Jerg; Brandimarte, Laura; Muehlheusser, Gerd; Weber, Franziska |
| Abstract: | We examine the trade-off between functionality and data privacy inherent in many AI products by conducting a randomized survey experiment with 1, 734 participants from the US and several European countries. Participants' willingness to adopt a hypothetical, AI-enhanced app is measured under three sets of treatments: (i) installation defaults (opt-in vs. opt-out), (ii) salience of data privacy risks, and (iii) regulatory regimes with different levels of data protection. In addition, we study how the willingness to adopt depends on individual attitudes and preferences. We find no effect of defaults or salience, while a regulatory regime with stricter privacy protection increases the likelihood that the app is adopted. Finally, greater data privacy concerns, greater risk aversion, lower levels of trust, and greater skepticism toward AI are associated with a significantly lower willingness to adopt the app. |
| Keywords: | Artificial intelligence, privacy concerns, randomized survey experiment, smart products, technology adoption |
| JEL: | D80 D90 K24 L86 Z10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ilewps:83 |