Comparative Analysis of Enterprise Data – CAED
The following papers have been registered by their presenters.
Ahmad, Nadim
"Comparing High Growth Enterprises in Developed Economies: What Are They, Who Are They, Where Are They, What Are Their Characteristics"
Nadim Ahmad, OECD
Ditte Rude Petersen, FORA, the Danish Authority for Enterprise and Construction
Abstract: This paper describes work undertaken by the OECD’s Entrepreneurship Indicators Programme, whose aims include the establishment of common international definitions for High-Growth Enterprises, and young High-Growth Enterprises (often referred to as ‘Gazelles’) and the motivation of the development of these indicators across OECD countries and beyond.
Ahn, Sanghoon
"Plant Turnover and TFP Growth: Evidence from Korean and Japanese Manufacturing Data"
Sanghoon Ahn, Korea Development Institute
Kyoji Fukao, Hitotsubashi University and RIETI
Young Gak Kim, Hitotsubashi University
Hyeog Ug Kwon, Nihon University
Abstract: Using establishment-level panel data for manufacturing in Korea and Japan, this study analyzes: (i) the patterns of plant turnover and TFP growth in Korea before and after the financial crisis in the late 1990s; and (ii) the causes of the slowdown in Japan
Ahn, Sanghoon
"Measuring Productivity-Enhancing Effects of Patent Information Policy: Findings from Patents-by-Industry and Plant-Level Data in Korea"
Sanghoon Ahn, Korea Development Institute
Abstract: Using micro-data on patent applications and on the government's spending under the three major policy measures for facilitating the IP utilization by the Korea Intellectual Property Office (KIPO) from 1990 to 2006, this paper quantitatively examines: (i) links between patent information policy and patent applications; and (ii) links between the growth of patent applications and the productivity growth after controlling for R&D expenditures. In examining the links between patent information policy and patent applications in part (i), we used sectoral data at the level of subclass in IPC (640+ sectors). For the links between the growth of patent applications and the productivity growth in part (ii), we analysed a large-scale plant-level data having more that 400,000 observations. Results of plant-level TFP growth regressions suggest that productivity-enhancing effects of the recent patent ifnromation policy could be substantial.
Alfaro, Laura
"Intra-Industry Foreign Direct Investment"
Laura Alfaro, Harvard Business School
Andrew Charlton, London School of Economics
Abstract: We use a new firm level data set that establishes the location, ownership, and activity of 650,000 multinational subsidiaries-close to a comprehensive picture of global multinational activity. A number of patterns emerge from the data. Most foreign direct investment (FDI) occurs between
rich countries. The share of vertical FDI (subsidiaries which provide inputs to their parent firms) is larger than commonly thought, even within developed countries. More than half of all vertical subsidiaries are only observable at the four-digit level because the inputs they are supplying are so proximate to their parent firms' final good that they appear identical at
the two-digit level. We call these proximate subsidiaries 'intra-industry' vertical FDI and find that their location and activity are significantly
different to the inter-industry vertical FDI visible at the two-digit level. These subsidiaries are not readily explained by the comparative advantage considerations in traditional models, where firms locate their low skill production stages abroad in low skill countries to take advantage of factor cost differences. We find that overwhelmingly, multinationals tend to own the stages of production proximate to their final production giving rise to a class of high-skill intra-industry vertical FDI.
URL: http://www.hbs.edu/research/pdf/08-018.pdf
Antal, Gabor
"Dispersion of Earned Income and Transition: The Robustness of Earnings Inequality Growth in the Hungarian Business Sector, 1986-2005"
Gábor Antal, Central European University
Abstract: Exploiting a large linked employer-employee dataset of 1.7 million workers employed by 39,000 enterprises, I study earnings inequality of full-time employees in the Hungarian business sector. Computing several measures of inequality I find that the dispersion of real monthly earnings increased rapidly from 1989 to 2000 - with the exception of 1995 -, then declined significantly until 2002, and started to rise again afterwards. This pattern is robust to the choice of alternative measures, however, the magnitude - and in some years even the direction - of changes are indicated to be very different. As measured by the interdecile ratio, wage inequality rose by 75% for men between 1989 and 2000, whereas most social welfare based and entropy measures record a growth rate of more than 120% for the same period. Inequality measures that are more sensitive to the upper tail exhibit the largest rate of increase. Although the size criteria of sample inclusion for companies varies across years, it does not influence results. The main findings do not change when analyzing real hourly wages.
Bach, Laurent
"Family CEO Successions and Corporate Bankruptcies: Evidence from France"
Laurent Bach, Paris School of Economics and CREST
Abstract: This paper measures the effect of family CEO successions on French firms
Bachmann, Ronald
"The Importance of Two-sided Heterogeneity for the Cyclicality of Labour Market Dynamics"
Ronald Bachmann, RWI Essen
Peggy David, RWI Essen
Abstract: Using a linked employer-employee data set derived from German administrative data, we investigate the cyclicality of worker and job flows. The analysis stresses the importance of two-sided labour market heterogeneity in this context. We find that firms that are characterized by high turnover, and small size hire mainly at the beginning of an economic expansion. Later on in the expansion, as the pool of the short-term unemployed dries out, hirings more frequently result from direct job-to-job transitions, with employed workers moving to larger firms with lower worker turnover. Contrary to our expectations, workers moving to larger firms do not experience significantly larger wage gains than workers moving to smaller establishments, which is probably due to the institutional settings of the German labour market. We argue that our findings have important implications for understanding the cyclicality of firms’ hiring, separation, and churning decisions, of worker flows, and of wage dynamics.
Balsvik, Ragnhild
"Is Mobility of Labour a Channel for Spillovers from Multinationals to Local Domestic Firms?"
Ragnhild Balsvik, Norwegian School of Economics and Business Administration
Abstract: This paper documents the extent of labour mobility from multinationals (MNEs) to non-MNEs in Norwegian manufacturing
during the 1990s. On average, each year around one percent of workers in MNEs move to non-MNEs. By the year 2000, 45 percent of the non-MNEs employed workers with experience from MNEs. These workers earned a wage premium of more than 3 percent compared to their new colleagues in the non-MNEs. I estimate a Cobb-Douglas production function for non-MNEs and
include the share of workers with recent MNE experience. Consistent with mobility being a channel for knowledge diffusion, I find that these workers contribute 20-25 percent more to
productivity than workers without experience from MNEs. The
difference between the private returns to mobility and the
productivity effect at the plant level suggests that labour
mobility from MNEs to non-MNEs represents a true knowledge
externality.
Bartelsman, Eric
"Barriers to Exit, Experimentation and Comparative Advantage"
Eric Bartelsman, VU University, Amsterdam
Stefano Scarpetta, OECD
Enrico Perotti, University of Amsterdam
Abstract:
Becker, Randy
"On Spatial Heterogeneity in Environmental Compliance Costs"
Randy A. Becker, U.S. Census Bureau
Abstract: This paper examines sub-state variation in the stringency of environmental regulation. In particular, establishment-level data from the U.S. Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) survey are used to construct a first-of-its-kind, county-level index of environmental compliance costs. This paper then documents whether counties within a state are statistically – and meaningfully – different from each other (and the state average) in terms of their regulatory intensity, as measured by this index. If they are, this suggests that potentially important spatial variation is lost in state-level studies of environmental regulation. Results suggest that spatial heterogeneity in environmental compliance costs is indeed real, widespread, and significant. The index constructed here could therefore prove to be quite useful in regulatory analyses, by expanding the research laboratory to include U.S. counties. Among the issues that could be (re)examined using this index are the effects of environmental regulation on industrial location, employment, output, investment (including foreign direct investment), industrial emissions, and ambient pollution levels. Subsequent work will further explore, test, and refine the cost index introduced here in this paper.
Békés, Gábor
"Permanent and Temporary Trade Flows"
Gábor Békés, Institute of Economics, H.A.S.
Balázs Muraközy, Institute of Economics, H.A.S.
Abstract: With a very detailed firm-product level dataset on Hungarian exports we provide evidence for the importance of temporary trade relationships, which otherwise, could not have been be explained by existing trade models in a satisfactory way. Our results suggest that about two thirds of non-zero entries of the bilateral trade flow matrices are not permanent within a 4-year period. We propose a number of reasons for temporary trade: the small number of firms behind each cell, exporting activity by small firms, product switching of multi-product firms and the important role of asset and inventory sales. After presenting descriptive statistics we turn to a probit analysis using gravity variables and measures of the explanatory factors. This analysis suggests that gravity variables and existence of asset sales play an important role in explaining whether a trade relationship is permanent.
Ben-Ner, Avner
"Does Organization Ownership Matter? Structure and Performance in For-profit, Nonprofit and Local Government Nursing Homes"
Avner Ben-Ner, University of Minnesota/CEU
Ting Ren, University of Minnesota
Abstract: We compare the structure and performance of for-profit (FP), nonprofit (NP) and local government (LG) organizations. These organizations differ in their ownership structure, objectives and agency relations. We conjecture that, compared to NP and LG, FP firms (a) delegate less decision-making power to employees, (b) provide more incentives and fewer fringe benefits, (c) monitor less, and (d) rely less on social networks to recruit employees. We also hypothesize that, relative to NP and LG, FP firms (i) are more efficient, (ii) provide similar levels of service elements that observable to their customers, (iii) provide lower levels of less-well observable elements, and (iv) provide less of the relational elements. Differences in structure and performance are likely to be tempered by market competition and institutional pressures for similarity. Our empirical investigation of Minnesota nursing homes (utilizing state, federal and survey data) supports these hypotheses.
URL: https://netfiles.umn.edu/users/benne001/www/papers/Ben-Ner&RenNH08.pdf
Bernard, Andrew
"Intra-Firm Trade and Product Contractibility"
Andrew B. Bernard, Tuck School of Business and NBER
J. Bradford Jensen, McDonough School of Business - Georgetown, NBER and Peterson Institute
Stephen J. Redding, London School of Economics and CEPR
Peter K. Schott, Yale School of Management and NBER
Abstract: This paper examines the determinants of intra-firm trade in U.S. imports using detailed country-product data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intrafirm trade is high for products with low levels of contractability sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries.
URL: http://mba.tuck.dartmouth.edu/pages/faculty/Andrew.Bernard/ift.pdf
Bessonova, Evguenia
"Competition, Foreign Investment, and the Efficiency of Russian Industrial Firms"
Evguenia Bessonova, CEFIR
Abstract: In this paper we investigate the influence of the entry of foreign firms on the efficiency of Russian industrial enterprises using the firm level data for 1995-2004. Using stochastic frontier analysis we estimate production functions for about 100 industries and calculate TFP growth rates and efficiency levels for each firm. We observe the stable decreasing trend of technical efficiency. The productivity gap within each industry increased significantly over the period which resulted in overall slowdown of TFP growth rates in all industrial sectors. The analysis the competition structure of Russian industrial sectors reveals that domestic concentration ratios remain high on regional level even after 10 years of transition period. Different effects of foreign competition for different groups of enterprises are reported. Entry of foreign companies has positive effect on the most efficient domestic firms, but on a large group of inefficient enterprises it could have negative effect. The overall effect could be also negative.
URL: http://www.nes.ru/files/Bessonova_CAED.pdf
Brandt, Loren
"The Impact of Entry into WTO on Chinese Enterprise Productivity"
Loren Brandt, University of Toronto
Johannes Van Biesebroeck, University of Toronto
Yifan Zhang, Lingnan University
Abstract: Drawing on a unique firm-level data set that spans the period 1998-2005, we analyze the effect of several important dimensions of China’s entry into WTO on firm and industry level productivity. We construct firm-level measures of firm-level TFP, and examine the impact of changes in tariffs on final goods and intermediates, and NTBS following China’s entry into WTO late in 2001. We are especially interested in the heterogeneity across firms and assess the impact on firms by ownership type, pre-WTO productivity levels, involvement in exporting, and location. Since WTO likely affected sector-level productivity through exit and entry of firms, we also carry out decomposition exercises that provide estimates of the contribution of productivity growth in surviving firms, and entry and exit to overall productivity growth.
URL: http://www.chass.utoronto.ca/~jovb/seminars/CAED_May_2008.pdf
Brown, J. David
"Understanding the Contributions of Reallocation to Productivity Growth: Lessons from a Comparative Firm-Level Analysis"
J. David Brown, Heriot-Watt University
John S. Earle, Upjohn Institute for Employment Research and CEU
Abstract: We analyze comprehensive manufacturing firm data to measure the contribution of inter-firm employment reallocation to aggregate productivity growth during the socialist and transition periods in Georgia, Hungary, Lithuania, Romania, Russia, and Ukraine. Using a standard decomposition technique modified to better reflect the contribution of firm entry, we find that reallocation rates and contributions to productivity growth are both very low under socialism. They rise dramatically after reforms, with reallocation contributions greatly exceeding those observed in market economies. Early in the transition process, faster reform is associated with larger contributions from reallocation, but later on, and on average over the whole transition period, this relationship is reversed. Though the volumes of reallocation are larger in faster reforming economies, the higher levels of productivity dispersion and stronger correlations between reallocation and relative productivities in the slower reformers create much higher productivity gains for a given volume of reallocation. The results imply that reallocation should be viewed as necessary regular maintenance for a well-functioning economy, and large contributions of reallocation to aggregate productivity growth tend to reflect previous neglect more than current virtue.
Brown, J. David
"Employment and Wage Effects of Privatization"
J. David Brown, Heriot-Watt University
John S. Earle, Upjohn Institute for Employment Research, CEU
Almos Telegdy, CEU and Institute of Economics, Hungarian Academy of Sciences
Abstract: We use longitudinal methods and universal panel data on 30,000 initially state-owned manufacturing firms in four transition economies to estimate the impacts of privatization on employment and wages. The results consistently reject job losses from privatization, and they never imply large wage cuts. The point estimates for new foreign ownership are positive for both employment and wages in all four countries, although statistical significance is lower in specifications with firm-specific trends. Decompositions imply that the negligible consequences of domestic privatization result from effects on scale, productivity, and costs that are large but offsetting in Hungary and Romania, and from small effects of all types in Russia and Ukraine. The positive employment outcome under foreign ownership results from a substantial scale-expansion effect that dominates the productivity-improvement effect, and the positive wage outcome from productivity improvement dominating the cost-reduction effect.
Buhai, Sebastian
"The Impact of Workplace Conditions on Firm Performance"
Sebastian Buhai, Aarhus School of Business, University of Aarhus and Tinbergen Institute/Erasmus University Rotterdam
Elena Cottini, Aarhus School of Business, University of Aarhus and Catholic University Milan
Niels Westergaard-Nielsen, Aarhus School of Business, University of Aarhus
Abstract: This paper estimates the impact of work environment health and safety practice on firm performance, and examines which firm-characteristic factors are associated with good work conditions. We use Danish longitudinal register matched employer-employee data, merged with firm business accounts and detailed cross-sectional survey data on workplace conditions. This enables us to address typical econometric problems such as omitted variables bias or endogeneity in estimating i) standard production functions augmented with work environment indicators and aggregate employee characteristics and ii) firm mean wage regressions on the same explanatory variables. Our findings suggest that improvement in some of the physical dimensions of the work health and safety environment (specifically, "internal climate" and "repetitive and strenuous activity") strongly impacts the firm productivity, whereas "internal climate" problems are the only workplace hazards compensated for by higher mean wages.
URL: http://www.tinbergen.nl/~buhai/papers/publications/firmperm_workenv_18May08.pdf
Buhai, Sebastian
"Employer Size, Employee Wage and Stochastic Labour Demand"
Sebastian Buhai, Aarhus School of Business, University of Aarhus and Tinbergen Institute/Erasmus University Rotterdam
Abstract: We provide a parsimonious model for analyzing the joint determination of firms’ employment sizes and workers’ individual wages in a setup characterized by decreasing labour returns to scale, firm specific idiosyncratic shifts in labour demand and worker-firm match costs. We test the model on employer-employee longitudinal data from Denmark. Permanent and transitory shocks to the firms’ labour demand are identified by isolating changes in firm performance indicators and are subsequently used to address the typical endogeneity of the employment size in wage determination. In line with our theoretical predictions and with previous empirical literature, the results indicate that larger firms pay significantly higher and less dispersed wages for most workers and in most industries.
Calavrezo, Oana
"The Short-Time Compensation Program in France: an Efficient Measure against Redundancies?"
Oana Calavrezo, Centre d’Etudes de l’Emploi (CEE)
Richard Duhautois, CEE and Université Paris-Est and CREST
Emmanuelle Walkowiak, LEO and CEE
Abstract: The short-time compensation program aims to avoid layoffs in case of short-term downturns. This paper questions about the short-time compensation efficiency within French establishments (between 1996 and 2004) by investigating relationship between the short-time compensation recourse and establishments’ redundancy behaviour.
URL: http://oana.calavrezo.googlepages.com/STC_and_layoffs_april.pdf
Chen, Longhwa
"Vacancy Duration, Vacancy Characteristics and Employment Change – Evidence from Firm-level Data"
Longhwa Chen, National Chung Hsing University, Taiwan and Aarhus School of Business, Aarhus University, Denmark
Abstract: Besides wage offers, credentials like education, work experience and skill requirements are key screening tools for firms in their recruitment of new employees. This paper adds some new evidence to a relatively tiny literature on firms’ recruitment behaviour regarding. In particular our analysis is concerned with how vacancy durations vary with firms’ minimum wage offers and minimum worker qualification requirements (with regard to education, skills, age, gender and earlier work experience).
The econometric analysis is based on the data from “The Job Vacancy and Employment Status Survey” carried by the DGBAS on Taiwan. The sample includes 35,137 job offers from years 1996 to 2006. Durations of vacancies are recorded monthly and a discrete time duration model is therefore applied. The logistic discrete hazard models are estimated with controls for 9 duration dummies and rich set of explanatory variables.
The results show higher paid job vacancies are, ceteris paribus, likely to be filled faster. It is easier for larger firms to fill a vacancy, especially in the recession, reflecting the fact that big firms are more attractive probably because workers are more concerned with job security during this period and believe that larger firms are more able to cope with the business cycle risks. Vacancy durations are longer when employers require language skill certificates and when the vacant job requires skills that are new to the organization.
Criscuolo, Chiara
"The Effect of Industrial Policy on Corporate Performance: Evidence from Panel Data"
Chiara Criscuolo, Centre for Economic Performance, London School of Economics
Ralf Martin, Centre for Economic Performance, London School of Economics
Henry Overman, Centre for Economic Performance, London School of Economics and CEPR
John Van Reenen, Centre for Economic Performance, London School of Economics, CEPR and NBER
Abstract: Industrial or business support policies designed to raise productivity and employment are a common feature of the policy landscape. Despite this ubiquity, rigorous micro-econometric evaluation of their causal effect is rare primarily because
of the difficulty of achieving credible identification. In this paper we tackle this problem by exploiting multiple changes in the area-specific eligibility criteria for a major business support scheme in the UK (“Regional Selective Assistance”). These changes arose because of the need to comply with the European Commission revisions of the eligibility criteria and coverage rules. We match over twenty years of
administrative panel data on program participation and firm performance from the Census Bureau to investigate the causal impact of the policy on employment, investment, productivity and entry/exit. Using an instrumental variable approach we find that the program has had a positive effect on both employment and investment, which naïve estimators underestimate. There is no statistically significant effect on total factor productivity, however. There is also some evidence that the program, by supporting less efficient enterprises, may slow down reallocation from less efficient plants, negatively affecting aggregate productivity growth.
URL: http://personal.lse.ac.uk/criscuol/papers/criscuolo.pdf
Davis, Tim
"Understanding Entrepreneurship: Developing Comparable Indicators on Entrepreneurship and Its Determinants"
Tim Davis, OECD
Axel Behrens, European Commission
Abstract:
Dekker, Ronald
"The EU Framework Programmes: Are They Worth Doing?"
Ronald Dekker, Delft University of Technology
Alfred Kleinknecht, Delft University of Technology
Abstract: Using Community Innovation Survey (CIS 3 & CIS 4) data for four countries, we analyze determinants of innovative output. Innovative output is defined as sales of innovative products that are new to the market. We are particularly interested in finding out whether a firm's participation in EU Framework Programmes (FPs) for collaborative R&D leads to increased R&D input and increased sales of innovative products in subsequent years. One of our remarkable results is that sales of innovative products do not differ between firms that collaborate on R&D (outside the EU Framework Programs) and firms that do it alone. The same holds for participants and non-participants in EU Framework Programs. In interpreting our results, one needs to take into account that the EU Framework Programs are 'pre-competitive'; i.e. they are typically more distant from the market than are 'normal' R&D or 'normal' collaborative R&D projects (outside the EU Framework Programs). Evidence from independent sources suggests that projects under the EU Framework Programs typically are more complex, more longlasting and more risky from a scientific or technical viewpoint. On the other hand, EU program participants (as well as 'normal' R&D collaborators outside these programs) are expected to benefit from various types of synergies and complementarities that should enhance innovativeness. While sales of innovative products of firms participating in EU FPs differ only little from those of non-participants, we find evidence that smaller firms that participate in FPs do increase their R&D input substantially. In other words, participation in EU programs does show some 'input additionality', but no 'output additionality'.
URL: http://mpra.ub.uni-muenchen.de/8503/1/CAED_Budapest_May_2008_submit.pdf
Delahaie, Noélie
"Profit-Sharing and Employee Ownership in France: Empirical Analysis Using Matched Employer-Employee Data Sets"
Noélie Delahaie, CEE
Hélène Chaput, French Ministry of Labor, DARES
Marc-Arthur Diaye, Centre d’Etudes de l’Emploi and Université d’Evry
Abstract: This paper aims to provide an empirical answer to the question, why French firms develop a particular wage system saving based on both profit sharing and employee ownership (PSEO). Using a principal-agent model, we argue that such a mechanism is designed for both risk sharing between shareholders and employees and capital stabilization. Therefore, from the empirical side, a PSEO mechanism has:
1.no direct effect on employees’ effort. However, it has an indirect effect (through selection effect) if firms using PSEO attract the less risk adverse workers and the most productive ones.
2.on average no impact on employees’ total payment but a negative impact on base wage and a positive one on the intra-dispersion of the total payment.
3.on average a positive impact on firms’ profit.
These predictions are tested using a matched employer-employee data set. This data set is constructed linking three interesting surveys: “Enquête sur la structure des salaires 2002” (French National Statistical Institute, INSEE), “Participation, Intéressement, Plan d’épargne entreprise et Actionnariat salarié 2002” (French Ministry of Labour) and “FIchier Complet Unifié du Système unifié des statistiques d’entreprises 2002” (INSEE). From an economic standpoint, we use a PS matching model.
Doms, Mark
"Local Labor Market Endowments, New Business Characteristics, and Performance"
Mark Doms, Federal Reserve Bank of San Francisco
Ethan Lewis, Dartmouth College
Alicia Robb, UC Santa Cruz
Abstract: This study examines how the education and skill level of the local labor force is related to three aspects of new businesses: the education of the business founders, the industry in which the business starts, and business performance. The motivation for examining these issues stems from a growing body of literature that examines the wide and persistent variation in skill levels across U.S. cities, and how economic outcomes are related to these differences. To examine the issues of how local labor market conditions are related to various aspects of new businesses, two datasets are merged. The first dataset contains the demographic information, over time, for a large set of U.S. cities. The second dataset, the Kaufman Foundation Survey (KFS), has longitudinal data on approximately 4,000 businesses that started in 2004. Currently there is one follow up year of data and a second follow up year will be available in March of 2008. These data, which only recently became available, contain a vast array of information on owner demographics, firm characteristics, and financing patterns, and location. Preliminary estimates indicate that the main hypotheses find some support with the data.
Draca, Mirko
"Trade-Induced Technical Change? The Impact of Chinese Imports on Technology and Employment"
Nick Bloom, Stanford University
Mirko Draca, London School of Economics
John Van Reenen, Centre for Economic Performance, London School of Economics, CEPR and NBER
Abstract: Despite popular belief among politicians and the public, the consensus amongst empirical economists is that trade has not been a major cause of increased wage inequality in advanced countries and the technological and institutional change are much more important. However, this consensus mainly uses data before the rise of China in the 1990s. In this paper we examine the impact of the growth of Chinese imports on a panel of over 30,000 establishments in 11 European countries. We find that Chinese import competition is associated with a significant increase in the propensity of establishments to adopt information technology. We also find that exposure to trade with China significantly increases the probability of establishment exit and reduces employment growth, but this effect is significant only for less IT intensive establishments. Despite these effects on the intensive and extensive margins, we calculate that trade with China still only accounts for a small proportion of the increase in IT intensity (around 6%) so does not overturn the conventional wisdom that trade is less important than technical change. We do find, however, that the job effects of Chinese imports are important, accounting for about a fifth of the fall in employment for the low-tech establishments.
URL: http://www.stanford.edu/~nbloom/index_files/Page315.htm
Duhautois, Richard
"The Impact of Mergers and Acquisitions on Employment: A French Perspective"
Matthieu Bunel, UTBM-CEE
Richard Duhautois, CEE
Lucie Gonzalez, Insee
Abstract: The aim of the paper is to identify the net effect of mergers and acquisitions (M&A) on employment. The impact of M&A is seen as a shock that may affect employment changes. Changes in employment are considered jointly in the acquirer firm and in the target company. As there are important differences according to the type of M&A involved, we take into account different types of M&A. We test panel data models over the period 1997-2001 for French firms involved in a M&A. The results show that effects are not homogeneous across the different categories of acquisition: When less than 50% of the workforce of the target company is transferred to the acquirer, the net overall employment effect on the acquirer and target firms is negative (-12%). For M&A in which more than 50% of the target company’s workforce is transferred and the target is absorbed during the operation, the employment effect is positive (+4%). Thus, M&A involving the transfer of assets and the transfer of only a small proportion of the workforce are net destroyers of jobs. Conversely, when the asset transfer is accompanied by a significant transfer of personnel, these operations are net creators of jobs.
Eriksson, Tor
"Changes in Wage Inequality in the Czech Republic: New Evidence Using Linked Employer-Employee Dataset"
Abstract: In this paper, we look at the evolution of the change in the wage structure using a linked employer-employee dataset covering a large fraction of the Czech labor market over the period 1998-2006. We find evidence of slightly diminishing gender inequality and increasing returns to human capital. Moreover, exploiting the linked employer-employee character of the data set, we document changes in within-firm wage dispersion and between-firm dispersion. We investigate various hypotheses related to transition towards a market economy, increased domestic and international competition, an increasingly decentralized wage bargaining and a changing educational composition of the workforce to explain these patterns. We find some support that these factors have contributed to the changes in the Czech wage structure, although the latter is the most strongly associated with the observed changes in wage inequality.
Faberman, Jason
"Adjusted Estimates of Worker Flows and Job Openings in JOLTS"
Steven Davis, University of Chicago and NBER
Jason Faberman, Federal Reserve Bank of Philadelphia
John Haltiwanger, University of Maryland and NBER
Ian Rucker, Bureau of Labor Statistics
Abstract: We develop and implement a method for adjusting the JOLTS estimates to more accurately reflect worker flows and job openings in the U.S. economy. Our method involves reweighting the cross-sectional density of employment growth rates in JOLTS to match the corresponding density in the Business Employment Dynamics (BED) data. To motivate our adjustments, we compare JOLTS data to other sources and document large differences with respect to aggregate employment growth, the cross-sectional density of establishment growth rates, and the magnitude of worker flows. We also discuss some concerns with the JOLTS methodology related to sample design and imputation practices. Our estimates produce hires and separations rates that are higher than the published statistics by about one-third. In addition, separations are now more volatile than hires, which mostly occurs through an increase in the volatility of layoffs.
Fabling, Richard
"The “Suite” Smell of Success: Complementary Personnel Practices and Firm Performance"
Richard Fabling, Reserve Bank of New Zealand; Motu Economic and Public Policy Research
Arthur Grimes, Motu Economic and Public Policy Research; University of Waikato
Abstract: How do choices about personnel practices affect firm performance? To examine this issue we use a unique panel of over 1,500 New Zealand firms, drawn from a diverse range of industries. The panel is constructed around respondents to official surveys of management practices in 2001 and 2005. These surveys ask a wide range of comparable qualitative questions covering organizational practices in the areas of: leadership, planning, customer and supplier relations, human resource management (HRM), quality and process monitoring, benchmarking, and innovation. To this panel, we attach longitudinal firm performance data, covering the 2000 to 2006 financial years, sourced from the prototype Longitudinal Business Database (LBD). The linked data allow us to examine the effect of HRM-related organizational change on firm productivity and worker outcomes.
URL: http://rfabling.googlepages.com/PersonnelpracticesperformanceFabling.pdf
Ferreira, Priscila
"A Match Made in Heaven? Workers, Firms, Mobility and Wages"
Priscila Ferreira, University of Essex and University of Minho
Abstract: We investigate the returns to within- and between-firm job mobility using Portuguese linked employer-employee data. Results show that observed characteristics of firms and workers explain only a small amount of the variation in wages, and a major proportion of such variation is left unexplained. We explore this unexplained wage dispersion by disaggregating the residual into three components, unobserved worker, firm and match effects and estimating each. In doing so, we explain more than 90% of the variation in wages, obtain unbiased estimates of the coefficients of interest, and are able to compare the distributions of the unobserved effects across types of job mobility.
URL: http://prisferr.googlepages.com/Ferreira_CAED.pdf
Fibla Gasparin, Maria Teresa
"Productivity in Southern European Small Firms: When and How Work Organization Complements Process Innovation"
Maite Fibla Gasparin, Rovira & Virgili University
Ferran Mane Vernet, Rovira & Virgili University
Abstract: This study analyzes empirically the hypothesis that process technology (specifically ICT related technologies), new work organization practices and human capital are important determinants of firm efficiency and performance, further that the combined use of these three factors leads to a reinforcement (complementarities) of their impact on firm performance. This study expands current knowledge in this area because we use a unique employer-employee data set for small firms in an area of southern Europe (Catalonia, Spain). The results provide evidence in favor of the complementarity hypothesis between human capital, new technology and new work organization practices. We show that the complementarity effects depend on what kinds of work organization practices are used by the firm. For small Catalan firms the only set of work organization practices that improve the benefits of human capital and technology investment are those practices more quality oriented, like quality circles, problem-solving groups or Total quality management.
Foster, Lucia
"The Slow Growth of Plants: Learning About Demand?"
Lucia Foster, Center for Economic Studies, US Census Bureau
John Haltiwanger, University of Maryland and NBER
Chad Syverson, University of Chicago and NBER
Abstract: One of the most consistent findings in the literature using business-level microdata is that average plant sizes vary considerably with by age. New plants tend to be considerably smaller than established plants in the same industry, and their size convergence tends to be slow—taking well over a decade in some cases. We show that this is not due to productivity gaps. Indeed, new plants are just as technically efficient as, if not more than, older plants. They are small in spite of their prices, not because of them. The size patterns thus appear to be tied to differences in demand-side fundamentals. New plants start with a considerable demand deficit and only slowly erase it over time (if they survive). We document the patterns in plants’ idiosyncratic demand levels, and explore the sources of their variance across plants and growth rates within them. We estimate a dynamic model of firm growth behavior in the presence of a “demand accumulation” process (e.g., building a customer base) that is affected by plants’ past production decisions. We find interesting differences in the levels and growth rates of plants depending on the types of firms that own them.
URL: http://www.econ.umd.edu/~haltiwan/learning%20about%20demand.pdf
Fuss, Catherine
"Understanding Sectoral Differences in Downward Real Wage Rigidity: Workforce Composition, Competition, Technology and Institutions"
Philip Du Caju, National Bank of Belgium
Catherine Fuss, National Bank of Belgium
Ladislav Wintr, National Bank of Belgium
Abstract: This paper examines whether differences in wage rigidity across sectors can be explained by differences in workforce composition, competition, technology and bargaining institutions. We adopt the measure of downward real wage rigidity (DRWR) developed by Dickens and Goette (2006). The estimates are based on a large administrative matched employer-employee dataset for Belgium over the period 1990-2002. Our results indicate that DRWR is significantly higher for white-collar workers and sectors with a larger proportion of white-collar workers. DRWR is lower for older workers and for workers with higher earnings and bonuses. Sectors with larger dispersion of earnings and larger firms have lower DRWR. In addition, we find that DRWR is related to competition, technology and bargaining institutions: wages are more rigid in more competitive sectors, as well as in labour-intensive sectors and in sectors with predominant centralised wage setting at the sector level as opposed to firm-level wage agreements.
URL: http://students.clarku.edu/~lwintr/papers/DuCajuFussWintr_CAED2008.pdf
Fürnkranz-Prskawetz, Alexia
"Firm Productivity, Workforce Age and Vocational Training in Austria"
Bernhard Mahlberg, Institute for Industrial Research
Inga Freund, Vienna Institute of Demography
Alexia Prskawetz, Vienna University of Technolgy and Vienna Institute of Demography
Abstract: In most industrialized countries the economic output will be achieved by a smaller and older labor force in the future, which is accompanied by a change in the quantity and composition of human capital. From a firm level point of view human capital investment is less common for the elderly workforce due to lower learning capabilities and less time till retirement. Recent literature has concentrated on the effect of workforce ageing and the effect of continuing vocational training (CVT) on productivity separately. Controlling for training effort at the firm level as well as firm-specific characteristics we assess the relation between a firm’s productivity level and the age composition of its employees using a unique dataset for Austria. Our aim is to test whether the hump-shaped age profile of the employees’ age structure on labor productivity that we found in previous studies is robust once we control for training intensity.
URL: http://www.oeaw.ac.at/vid/download/FirmProductivityWorkforceAgeAndVocationalTrainingInAustria.pdf
Golikova, Victoria
"Looking for Effective Managers: Owner vs. Hired Managers (the Case of Russian JSCs)"
Victoria V. Golikova, Institute of Industrial and Market Studies, Higher School of Economics
Abstract: The paper is based on the results of survey of 822 JSC in industry and communication conducted in 2005 in 64 regions of Russia and micro-level financial data for 2004-2006.
Short description of the data-sources.
(1) The survey of Russian JSC, conducted by State University-Higher School of Economics (Russia) in cooperation with Hitotsubashi University (Japan) - 822 large and medium size manufacturing firms and firms in communication . Focused on Corporate Governance, Restructuring and Performance.
(2) SPARK (System of Professional Analysis of Markets and Companies) database. Interfax Agency.
Following drastic changes in distribution and redistribution of property rights in the Russian economy during last decade a new generation of professional managers appeared. Now they more often occupy positions in management teams introducing market economy standards in every day management routines, implementing organizational innovations and modernizing business. Still a part of the “old guard” continue to fulfill both functions – an owner and manager. What type of managers are more likely to be effective?
First, we explore to what extent Russian CEOs differ from the managers in other countries. Trying to answer this question we compare the results of JSC survey in Russia with Booz Allen Hamilton surveys , exploring qualitative characteristics of general directors (age, education, professional skills and “origin”) and discover that now Russian market of CEOs currently has more differences then common characteristics with western one.
Second, we analyze the economic consequences of management teams’ composition headed by owners and hired managers and management turnover: what teams contribute to better performance and modernization of company (and to what extent?). Does separation of property rights and executive management contribute to better firm performance or simply reflect the necessity to hire a manager providing loyalty to the owner and thus contributing to resolving of principal-agent problem. In order to answer this question we explore directions and effectiveness of restructuring implemented by old and renewed management teams headed by owners and hired managers. The results of the analysis give us an opportunity to state that neither changes of key owners, no turnovers of CEOs and middle levels managers had significant positive influence on the scale of restructuring in the period analyzed. This might be due to narrow market of professional managers and, second, due to week inforcement of property rights that influence the choice of attracting loyal to the owner but less effective managers.
URL: http://narod.ru/disk/413227000/CAED_Vict_Golikova.doc.html
Grim, Cheryl
"Regulatory Regimes and Electricity Pricing for Manufacturing Customers"
Steven J. Davis, University of Chicago, NBER, and American Enterprise Institute
Cheryl Grim, U.S. Census Bureau
John Haltiwanger, University of Maryland, U.S. Census Bureau, and NBER
Abstract: We use a large customer-level database covering the years 1963 to 2006 to study the relationship between regulatory regimes and electricity prices for manufacturing customers. In previous work, we documented large electricity price differences among industrial customers. We found that this variation is associated with spatial differences as well as substantial differences in prices within utilities across customers with different purchase quantities. While we found evidence supporting a cost-based rationale for quantity discounts in electricity pricing, there are also regulatory forces at work. In this paper, we investigate the impact of two aspects of regulatory regimes on the electricity pricing structure. First, we compare the electricity pricing structure across states with elected versus appointed public utility commissions. Second, we look for changes in the structure of electricity prices in response to state-level restructuring of electricity markets. Between 1998 and 2002, 20 states and the District of Columbia introduced retail competition for industrial customers. Our data span this period of deregulation, and the variation across states and time provides considerable scope for exploring the impact of this deregulation on the structure of electricity prices across industrial customers.
URL: http://www.econ.umd.edu/~haltiwan/energy/Regulatory%20Paper%20(13%20May%202008).pdf
Guertzgen, Nicole
"Job and Worker Reallocation in German Establishments - The Role of Employers"
Nicole Guertzgen, Centre for European Economic Research, Mannheim
Abstract: Using a large linked employer-employee data set, this paper studies the relationship between job reallocation, worker reallocation and the flexibility of wages in western German manufacturing. Using the plant-specific residual wage dispersion as a proxy for wage flexibility, we find that more flexible wages are associated with less job reallocation due to demand shocks being absorbed by wage rather than by quantity adjustments. As to excess worker reallocation, our results provide evidence of a significant positive relationship between excess worker flows and residual wage dispersion. Consistent with the hypothesis that more flexible wages should help employers in dissolving bad matches, this relationship is found to be most pronounced for low-quality workers. In interacting our measure of wage flexibility with the degree of plant-specific employment protection we find that less stringent firing practices may considerably reduce the need for more flexible wages in order to attain optimal worker-firm matches.
URL: ftp://ftp.zew.de/pub/zew-docs/dp/dp07084.pdf
Göbel, Christian
"Age and Productivity: Evidence from Linked Employer Employee Data"
Christian Göbel, ZEW - Mannheim
Thomas Zwick, ZEW - Mannheim
Abstract: This paper provides first evidence on age-productivity profiles based on linked employer-employee panel data for Germany. Our estimates show that the productivity of workers increases slightly with the age. However the effects of the size of different age groups on the productivity of an establishment are not significant when we control for unobserved time-invariant heterogeneity and for the endogeneity of age groups in production functions.
Görg, Holger
"Multinationals as Stabilizers?: Economic Crisis and Plant Employment Growth"
Roberto Alvarez, Central Bank of Chile
Holger Görg, Kiel Institute of the World Economy and University of Kiel
Abstract: This paper examines the link between multinational enterprises and employment growth at the plant-level. We investigate in detail the comparative response of multinationals and domestic firms to an economic crisis, using the empirical setting of a well defined case of economic slowdown in Chile as a natural experiment. In our empirical analysis we find that employment growth in manufacturing plants has been drastically reduced during the economic crisis. More importantly, we do not find evidence that multinationals react to the economic crisis differently than do domestic firms. Our findings hold in a number of robustness tests, in which we also investigate the role of access to finance. The results are in contrast to the idea that multinationals are less affected by an economic crisis and that they may be able to act as stabilizers in developing countries.
URL: http://www.gep.org.uk/leverhulme/publications/Papers/2007/2007_15.php
Haller, Stefanie
"Exchange Rates and Producer Prices: Evidence From Micro-Data"
Doireann Fitzgerald, Department of Economics, Stanford University
Stefanie Haller, Economic and Social Research Institute, Dublin
Abstract: We estimate the effect of demand and cost shocks driven by exchange rates on the extensive and intensive margin of pricing behavior using
a unique data set that matches a monthly survey of output prices with annual plant census data. The crucial features of the data that allow us to identify responses to demand and cost shocks are, first, the fact that we observe prices for the same product being sold by the same plant in multiple markets that are segmented by variable exchange rates. Second, we observe prices for multiple plants, differentially exposed to exchange rates on the cost side, selling the same product in the home market. We find evidence of state-dependence of price setting in response to demand and cost shocks driven by exchange rate changes. Moreover, conditional on prices changing, we find that relative markups increase in response to increases in relative demand and fall in response to reductions in relative demand. Both of these observations are at odds with the standard assumptions of Calvo pricing and constant markups conventionally used to match the behavior of real exchange rates.
Halpern, Laszlo
"Imports and Productivity"
Laszlo Halpern, IEHAS, CEU, CEPR
Miklos Koren, Princeton
Adam Szeidl, UC Berkeley
Abstract: A model with heterogenous firms, where producers import or purchase domestically varieties of intermediate inputs is estimated using product-level import data for a panel of Hungarian manufacturing firms for 1992-2001. Imports affect firm productivity through expanding variety and improved input quality. The model leads to a production function where the total factor productivity (TFP) of a firm depends on the share of inputs imported. Imports are responsible for 30% of the growth in aggregate TFP. Half of this effect is through imports advancing firm level productivity, the other half comes from the reallocation of capital and labor to importers.
URL: http://miklos.koren.hu/research/imports
Haltiwanger, John
"Keynote Address Title: "Top Ten Questions for Understanding Firm Dynamics and Productivity""
John Haltiwanger,
Abstract:
Haskel, Jonathan
"Productivity Growth, Knowledge Flows and Spillovers"
Gustavo Crespi, IDRC
Chiara Criscuolo, CEP, LSE
Jonathan E. Haskel, Queen Mary, University of London; CeRiBA, CEPR and IZA
Matthew Slaughter, Tuck School of Business, Dartmouth College and NBER
Abstract: This paper explores the role of knowledge flows and productivity growth by linking direct
survey data on knowledge flows to firm-level data on TFP growth. Our data measure the
information flows often considered important, especially by policy-makers, such as from within
the firm and from suppliers, customers, and competitors. We examine (a) what are the
empirically important sources of knowledge flows? (b) to what extent do such flows contribute
to TFP growth? (c) do such flows constitute a spillover of free knowledge? (d) how do such
flows correspond to suggested spillover sources, such as multinational or R&D presence? We
find that: (a) the main sources of knowledge are competitors; suppliers; and plants that belong to
the same business group ; (b) these three flows together account for about 50% of TFP growth;
(c) the main “free” information flow spillover is from competitors; and (d) multinational
presence contributes to this spillover.
URL: http://87.230.13.240/bin/viewfile/CERIBA/KnowledgeFlows?rev=1;filename=prod_information_spillovers_f
Hazans, Mihails
"Firms, People, Agglomeration, and Migration: Evidence from Latvia"
Mihails Hazans, University of Latvia
Jos N. van Ommeren, Free University of Amsterdam
Abstract: The paper uses panel data (1996-2005) of all Latvian enterprises to revisit an old question: Do firms follow people, or do people follow firms? We have found a strong evidence for that firm’s demand for labor (measured by number of workers) reacts positively to demographic changes at the NUTS 3 region or municipality level, expressed either as population growth rate or as net migration (instrumented with natural increase, as well as marriage and divorce rates). As one could expect, in the service sector the effect is stronger than for manufacturing firms. Results are confirmed (i) in the classic fixed-effects framework; (ii) in the Arellano-Bond dynamic panel-data framework; (iii) in the multilevel mixed (random coefficients) framework. We also look at a number of related issues, including effects of agglomeration on productivity and probability of exit. Finally, we outline a research program aimed to investigate how the processes of formation and dissipation of clusters of firms and populations are related to each other.
Heinbach, Wolf Dieter
"To Bind or Not to Bind Collectively? Decomposition of Bargained Wage Differences Using Counterfactual Distributions"
Wolf Dieter Heinbach, IAW Tuebingen, University of Hohenheim, Stuttgart
Markus Spindler, University of Hohenheim, Stuttgart, IAW Tuebingen
Abstract: Collective bargaining agreements still play an important role in the German wage setting
system. Both existing theoretical and empirical studies find that collective bargaining
leads to higher wages compared to individually agreed ones. However, the impact of collective
bargaining on the wage level may be very different along the wage distribution.
As unions aim at compressing the wage distribution, one might expect that for covered
workers’ wages in the lower part of the distribution workers’ individual characteristics
may be less important than the coverage by a collective contract. In contrast, the relative
importance of workers’ individual characteristics may rise in the upper part of the wage
distribution, whereas the overall wage difference might decline. Using the newly available
German Structure of Earnings Survey (GSES) 1995 and 2001, a cross-sectional linked
employer-employee-dataset from German official statistics, this study analyses the difference
between collectively and individually agreed wages using a Machado/Mata (2005)
decomposition type technique.
URL: http://www.iaw.edu/pdf/dp2007-36.pdf
Hijzen, Alexander
"Do Multinational Firms Provide Better Working Conditions Than Their Domestic Counterparts? A Comparative Analysis for Four Countries"
Alexander Hijzen, OECD and GEP, University of Nottingham
Pedro Martins, Queen Mary, University of London
Richard Upward, University of Nottingham and GEP
Abstract: This paper analyses to what extent working conditions in foreign-owned firms differ from those in their domestic counterparts using linked employee-employer data for Brazil, Germany, Portugal and the UK. The role of foreign ownership for working conditions is identified by focusing on changes in ownership status as a result of either cross-border acquisitions or worker movements. In order to overcome the problem of selection bias that is associated with the non-random nature of firm acquisitions and worker movements the study makes use of propensity score matching in combination with difference in differences methods. In doing so it makes two main contributions to the literature. First, while previous work concentrates on the role of foreign ownership for wages the present paper broadens the focus to other conditions of work such as hours of work, job stability and unionization. Second, using a standardized methodology this study provides internationally comparable evidence on wages and working conditions in multinational firms based on linked employer-employee data.
Huttunen, Kristiina
"Regional Mobility and Worker Displacement"
Kristiina Huttunen, Labour Institute for Economic Research
Jarle Møen, Norwegian School of Economics and Business Administration
Kjell G. Salvanes, Norwegian School of Economics and Business Administration
Abstract: The aim of this paper is twofold. First, the paper examines the effect of job displacement on the regional mobility of workers. Second, it studies how the earnings and employment losses of displaced workers are affected by worker's decision to migrate from the region. We use employer-employee data for the whole Norwegian economy over a 20 year period. We are also able to match information about spouses' labor market position and the age structure of children as well as the residence location of parents and siblings. We find that job displacement significantly increases the probability to move from the region. Geographic mobility has a positive effect on displaced workers' earnings. We also find that family ties have a great importance on worker’s mobility decision.
Ilmakunnas, Pekka
"Age and Other Diversity at Work: Productivity and Wage Gains? An Analysis with Finnish Employer-employee Data"
Pekka Ilmakunnas, Helsinki School of Economics
Seija Ilmakunnas, Government Institute for Economic Research (VATT)
Abstract: We examine whether firms and their employees benefit from age and other kinds of diversity. At the plant level, we explain productivity with work force characteristics. There is evidence that age diversity is positively and educational diversity negatively related to productivity, but the age profile of productivity is rather flat. Individual gains are evaluated by estimating earnings equations, where the explanatory variables include individual demographic variables, plant level average work force characteristics and variables that describe the individuals’ relative position in the age, seniority, education, and gender structure of the plant. The age, tenure, and educational dispersion effects seem to be fairly modest, compared to the effects of the average levels of the characteristics or measures of the relative position of the individuals. It therefore seems that the gains from age diversity or costs of educational diversity experienced at the plant level are not fully transmitted to the individual level.
URL: http://www.hse.fi/NR/rdonlyres/09E8DDD6-3CDC-45DF-9F1B-BC00E6101010/0/ilmakunnas_CAED2008.pdf
Jarmin, Ron
"Private Equity and Employment"
Steven J. Davis, University of Chicago and NBER
John Haltiwanger, University of Maryland and NBER
Ron Jarmin, U.S. Census Bureau
Josh Lerner, Harvard University and NBER
Javier Miranda, U.S. Census Bureau
Abstract: The impact of private equity on employment arouses considerable controversy. Labor groups concerned about the fortunes of workers employed at buyout firms contend private equity firms destroy jobs. By contrast private equity associations and other groups have released a number of recent studies that claim positive effects of private equity on employment following the takeover. In this paper we conduct a comprehensive examination of the impact of private equity buyouts on the employment outcomes of firms that are taken over by these investment firms. We focus the analysis on two different dimensions. First, what are the employment outcomes of workers employed at establishments existing at the time of the buyout? Second, what is growth performance of the firm following the buyout? We conduct the analysis using a unique linked dataset covering the universe of US firms and information regarding US buyout operations between 1980 and 2005. We find targeted establishments exhibit net employment contraction, higher job destruction and establishment exit relative to controls.
However, targeted firms exhibit higher greenfield entry and more acquisition and divestiture.
URL: http://www.ces.census.gov/index.php/ces/cespapers?search_where=d2hlcmUgaWQ9MTAxODEz
Jarmin, Ron
"Business Formation and Dynamics by Business Age: Results from the New Business Demography Statistics"
Abstract: We examine a new set of annual business statistics generated from the Census Bureau’s Longitudinal Business Database (LBD). These statistics provide information on business and employment dynamics including establishment entry and exit and job creation and destruction from 1976 onward and cover all private non-farm businesses in the US. We exploit the LBD’s ability to track both establishment and firm activity to examine business and employment dynamics of young small businesses versus old and large businesses. Some striking patterns emerge from the analysis. We find 1) that on average the positive net growth of jobs in the U.S. economy is accounted for the substantial positive contribution of business formation (new firms) offset by the contraction of existing firms; 2) for young firms there is an "up or out" dynamic with very high rates of net growth for surviving establishments accompanied by very high rates of job destruction from establishment exit; and 3) we find that net growth rates are lower for small businesses relative to larger businesses, holding firm age constant.
URL: http://www.econ.umd.edu/~haltiwan/bds_paper_CAED_may2008_may20.pdf
Jonas, Philipp
"Do Big Boxes Hurt Mom and Pops? Wal-Mart and the Size Distribution of Retail Establishments in U.S. Counties"
John S. Earle, Upjohn Institute for Employment Research and CEU
Philipp Jonas, Kalamazoo Valley Community College
Abstract: Big Box Stores, physically large chain stores, have drawn substantial criticism for their impact on local retail markets. Local activism and negative press have focused their attention on opposing the continued rapid expansion of Wal-Mart into American communities. We estimate the impact of an additional Wal-Mart entering on the number of microbusinesses in competing and complementary industries at the county level. This study uses data from the County Business Patterns (CBP) published by the U.S. Census from 1970 through 1997 on the number of establishments by size category and Standard Industrial Classification (SIC), and county population. Wal-Mart provided dates and locations of all store openings for our sample as part of the “Wal-Mart Facts” campaign. We matched these addresses to counties using a combination of the ESRI Arcview Geographic Information System (GIS) and satellite imagery of the Google Earth software. We conclude that each additional Wal-Mart store results in the net loss of 11 competing microbusinesses in a difference-in-differences specification. These results are robust to allowing for heterogeneous residuals across and serial correlation within counties.
Kambayashi, Ryo
"Deferred Compensation: Evidence from Employer-Employee Matched Data from Japan"
Kyoji Fukao, Institute of Economic Research, Hitotsubashi University
Ryo Kambayashi, Institute of Economic Research, Hitotsubashi University
Daiji Kawaguchi, Faculty of Economics, Hitotsubashi University
Hyeog Ug Kwon, Faculty of Economics, Nihon University
Young Gak Kim, Graduate School of Economics, Hitotsubashi University
Izumi Yokoyama, Graduate School of Economics, University of Michigan
Abstract: Wage increases, along with job tenure, are one of the most robust empirical regularities found in labor economics. Several theories explain these empirical regularities, and such theories offer sharp empirical predictions for the relation between productivity-tenure and wage-tenure profiles. The human capital model, with cost and benefit sharing between workers and employers, predicts a steeper productivity-tenure profile than wage-tenure profile. The matching quality model predicts that the two profiles will overlap. Theories
that involve the information asymmetry between employers and employees
predict a steeper wage-tenure profile than productivity-tenure profile to induce workers’ effort and enhance efficiency. This paper first estimate the establishment-level production function using the total wage bill as a measure of labor input using employer-employee matched data from Japan. After conditioning on the total wage bill, those establishments with more of aged workers produce less. Then we estimate the productivity-tenure profile and the wage-tenure profile by estimating the plant-level production function and the wage equation. These estimations offer a comprehensive test for the relative applicability of the two theories on the wage-tenure profile. Estimation results indicate a steeper wage-tenure profile than productivity-tenure profile and point to the relative importance of the deferred wage payment contract.
URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2006/pdf/D06-187.pdf
Kátay, Gábor
"Do Firms Provide Wage Insurance Against Shocks? - Evidence from Hungary"
Gábor Kátay, Magyar Nemzeti Bank
Abstract: In this paper I address the question to what extent wages are affected by product market uncertainty. Implicit contract models imply that it is Pareto optimal for risk neutral firms to provide insurance to risk averse workers against shocks. Using matched employer-employee dataset, I adopt the estimation strategy proposed by Guiso et al. (2005) to evaluate wage responses to both permanent and transitory shocks in Hungary and compared my results to similar studies on Italian and Portuguese datasets. I found that firms do insure workers against product market uncertainties, but the magnitude of the wage response differs depending on the nature of the shock. Broadly speaking, the wage response to permanent shocks is twice as high as the response to transitory shocks. Comparing my results to the two other studies, the main difference lies in the elasticity of wages to transitory shocks. Unlike these previous findings, my results show that full insurance to transitory shocks is rejected. A set of factors support the reason for this difference, such as tighter borrowing constraints for firms, the continuously restructuring economic environment with hardly predictable future path of the shocks, or the highly flexible labour market institutions in EU-comparison.
Klimek, Shawn
"The Dynamics of Market Structure and Market Size in Two Health Services Industries"
Abstract: The relationship between the size of a market and the competitiveness of the market has been of long-standing interest to IO economists. Empirical studies have used the relationship between the size of the geographic market and both the number of firms in the market and the average sales of the firms to draw inferences about the degree of competition in the market. This paper extends this framework to incorporate the analysis of entry and exit flows. A key implication of recent entry and exit models is that current market structure will likely depend upon history of past participation. The paper explores these issues empirically by examining producer dynamics for two health service industries, dentistry and chiropractic services. We find that the number of potential entrants and past number of incumbent firms are correlated with current market structure. The empirical results also show that as market size increases the number of firms rises less than proportionately, firm size increases, and average productivity increases. However, the magnitude of the correlations are sensitive to the inclusion of the market history variables.
URL: http://www.ces.census.gov/index.php/ces/cespapers?down_key=101799
Korkeamäki, Ossi
"Disability Pension and Labor Demand"
Tomi Kyyrä, Government Institute for Economic Research
Ossi Korkeamäki, Government Institute for Economic Research
Abstract: Early retirement is often a more attractive way to terminate the employment relationship of an older employee than a dismissal into unemployment. However, early retirement can become expensive for the employer owing to experience-rating of the early retirement cost. We study whether the employers use disability pensions as a way to reduce their workforce. Although receipt of disability pension is conditional on a medical assessment, almost one-fifth of people aged 55 to 64 were on a disability pension in 2001. Compared to other OECD countries, the incidence is particularly high in Finland. Employers are liable for a large fraction of disability pension expenditures via partially experience-rated employer contributions. This experience rated cost share varies also with firm size, and the relationship was changed in our observation period. We use a linked employer-employee data to identify separating workers ending up in unemployment, outside the labor force and in other firms. Likewise, we decompose the hiring flow of firms into workers hired from unemployment, other firms, and nonparticipation. Using panel-data models for individual transitions, we study how the disability risk of older employees depends on the changes in the employer’s workforce, hiring and separation flows.
Kramarz, Francis
"An Anatomy of International Trade: Evidence from French Firms"
Jonathan Eaton, NYU
Samuel S. Kortum, University of Chicago
Francis Kramarz, crest
Abstract: We examine the cross section of sales of French manufacturing firms in 113 destinations, including France itself. Several regularities stand out: (1) The number of French firms selling to a market, relative to French market share, increases with market size. (2) Average sales in France rise very systematically with selling to less popular markets and to more markets. (3) Sales distributions are very similar across markets of very different size and extent of French participation. We adopt a model of firm heterogeneity and export participation which we estimate to match moments of the French data using the method of simulated moments. The results imply that nearly half the variation across firms that we see both in market entry can be attributed to a single dimension of underlying firm heterogeneity, efficiency. Conditional on entry underlying efficiency accounts for a much smaller variation in sales in any given market.
Laroche, Patrice
"Unions and Workplace Performance in Britain and France"
Alex Bryson, Policy Studies Institute, London
John Forth, National Institute of Economic and Social Research, London
Patrice Laroche, Nancy University
Abstract: Britain has a largely voluntarist system of workplace union representation and collective bargaining. The institutional setting in France has historically been quite different. We examine several hypotheses regarding the effects of unions on workplace performance in the two countries using data from the 2004 Workplace Employment Relations Survey (for Britain) and the 2004 REPONSE survey (for France). The surveys employed very similar methodologies and can both provide nationally representative samples of private sector workplaces with 20 or more employees. The survey questionnaires contain many consistent measures of workplace characteristics and employment practices, as well as consistent evaluations of workplace performance. We are therefore able to construct analyses of the impact of union bargaining on workplace performance that can be compared with confidence across the two countries. We find that union bargaining does have a detrimental impact on workplace performance in both countries. However, we find that the performance penalty is greater in Britain than in France, something which may be due to differences between non-union workplaces in the two countries. Our third hypothesis also finds little support, perhaps because union density is more salient in France than the institutional framework would suggest.
Lazareva, Olga
"Emerging Boards of Directors: Board Behavior, Functions and Firm Performance"
Olga Lazareva, CEFIR, Moscow and SSE
Tuomo Summanen, KPMG
Abstract: Bulk of the empirical studies on corporate boards analyze boards in an institutional environment of dispersed ownership, i.e. mainly in the USA and UK. In this paper we investigate the role that corporate boards play in an environment with highly concentrated ownership and weak institutional environment, using new data from a survey of board members in Russian firms. First, we sketch a simple typology of Russian boards. Second, we show how board characteristics and ownership structure of a firm are correlated with the relative importance of different board functions. We provide evidence that in Russian firms advisory role of boards, i.e. their role in formulating a strategy, seems to be more important than monitoring role. Since large owners have strong incentives to monitor management directly, the monitoring role of the board is reduced. Finally, we test the effect of board’s involvement in strategic issues on firm performance and find it to be insignificant.
URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1102473
Lindh, Thomas
"Labor Productivity, Age and Education in Swedish Mining and Manufacturing 1985-1996"
Björn Andersson, Central Bank of Sweden
Thomas Lindh, Institute for Futures Studies
Abstract: We study the productivity effects of changes in the education and age composition of the labor force in Swedish manufacturing over the eleven years 1985-1996. Our data allow us to examine the composition of the workforce with respect to demographics and education at each plant. Education and age correlate due to cohort effects since the younger workers
have higher education. This makes identification of education effects precarious. We investigate this problem by conditioning on the age composition. The population for the plant data is all workplaces within mining and manufacturing in Sweden. For the years 1985-1996 there are educational and demographic data on the individuals working in manufacturing that can be matched to the plant data. Unfortunately, our data lack technological information at the individual level but our focus is on the plant rather than the individual. In our data a straight regression of plant productivity on education shares at the plant level indicate that upgrading from secondary to tertiary education is associated with a decrease in productivity. There are a number of difficulties in identifying plant level effects on productivity.
URL: http://web.comhem.se/thomas_lindh/ageduccaed.pdf
Lovász, Anna
"Competition and the Gender Wage Gap: New Evidence from Linked Employer-Employee Data in Hungary, 1986-2003"
Anna Lovász, University of Washington, Labor Project, Central European University
Abstract: The overall gender wage gap fell from .31 to .15 between 1986 and 2003 following the transition to a free market in Hungary. During the same
time period, firms faced increased competition from both new domestic and foreign firms due to the rapid liberalization measures
implemented by the government. Becker’s (1957) model of employer taste
discrimination implies that employers that discriminate against women may be forced out of the market by competition in the long run, leading to a fall in the gender wage gap. I test this implication using data from the Hungarian Wage and Earnings Survey covering 1986-2003. I estimate the effect of variation in various measures of product market
competition, including trade variables, on the within-firm endowment-adjusted gender wage gap, making use of the fact that I am able to follow firms over time. The estimates show a significant negative relationship between product market competition and the within-firm gender wage gap.
Magazzini, Laura
"Who’s Doing What in Pharmaceutical R&D?"
Laura Magazzini, University of Verona, Department of Economics
Fabio Pammolli, IMT, Lucca Institute for Advanced Studies
Massimo Riccaboni, University of Florence
Abstract: The decision to invest in R&D is driven by a multiple set of factors and incentives, being the result of the interplay between the advances spanning from basic science, institutional variables, and economic factors, namely market growth and size. Despite the theoretical attention and importance attached to this issue, little empirical evidence is provided on the role of demand and science in affecting the rate and direction of technological progress. In this paper we investigate the pharmaceutical industry, asking what drives R&D investments in specific therapeutic submarkets. The analysis builds on data from a proprietary database (www.databiotech.com) comprising information about the economic and scientific activity of the private and public organizations active in the bio-pharmaceutical industry all over the world. We aim here at analyzing the likelihood of entry at the firm level into previously unexplored (by the firm) therapeutic markets as a function of the characteristics of the targeted pathology, controlling for firm capabilities, both at the firm level and at the therapeutic market levels. The available data and the econometric set up allows us to characterize the R&D efforts undertaken by biopharmaceutical companies and institutions over the last twenty years.
Maliranta, Mika
"Training and Hiring Strategies to Improve Firm Performance"
Mika Maliranta, ETLA
Rita Asplund, ETLA
Abstract: We study how upgrading the skills of the personnel affects a firm’s performance. Two different strategies are examined: 1) providing formal training and 2) strategic recruitment and separation policy. The use of register-based longitudinal employer-employee data supplemented with a survey on vocational training provides an opportunity to shed fresh light on the issue and allows us to address the usual econometric problems. We find that internally (but not externally) organized training stimulates subsequent growth of performance but only when combined with the implementation of new process or product technology. Hiring highly skilled workers is initially costly to firms but is productivity-enhancing in the long run.
URL: http://www.etla.fi/files/1875_Dp1105.pdf
Marinov, Rosen
"Competitive Pressure in Transition: A Role for Trade and Competition Policies?"
Rosen Marinov, Graduate Institute of International Studies
Abstract: This paper investigates the effects of trade reforms and antitrust enforcement on the pricing behavior of firms, shedding light on the respective contributions of these policy instruments to the shaping of competitive markets. To this end, we use a rich panel data set of more than 25,000 manufacturing firms from Bulgaria, the Czech Republic, Estonia, Hungary, Poland, the Slovak Republic and Slovenia, spanning a five-year period. We find a positive and statistically significant relationship between domestic firms' mark-ups and industry protection, as reflected in MFN and trade-weighted import tariffs. The toughness of competition policy enforcement, captured by the number of final instance decisions delivered by national antitrust authorities and an index developed by the EBRD, has a negative impact of greater magnitude than import penetration. We also test for the significance of enacting major legislative amendments with regard to competition policy in the studied countries, as well as for differential effects in export-oriented and import-competing industries.
URL: http://hei.unige.ch/sections/ec/pdfs/Working_papers/HEIWP06-2006.pdf
Martin, Ralf
"Climate Policy and the Business Sector - An Econometric Evaluation of the UK Climate Change Levy"
Ralf Martin, Centre for Economic Performance, London School of Economics
Ulrich Wagner, Earth Institute, Columbia University
Abstract: This study provides the first quantitative assessment of the UK climate change levy (CCL) and the climate change agreements (CCA) at the level of individual firms. Using firm level data from the UK Office of National Statistics we econometrically evaluate the impact of this policy package on firm level energy consumption and other aspects of firm performance. We exploit a number of institutional idiosyncrasies to construct econometric instruments addressing endogeneity problems that arise in such an analysis.
Martins, Pedro
"Foreign Ownership, Employment and Wages in Brazil"
Pedro Martins, Queen Mary, University of London
Luiz Alberto Esteves, Universidade Federal do Parana; Universita di Sienna
Abstract: How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved
worker differences, we examine not only foreign acquisitions but also divestments (when domestic investors acquire foreign firms). We also consider the wage implications of worker mobility, both from foreign to domestic firms and vice-versa. We find that
both types of changes of firm ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels (i.e. following or not the same workers). However, divestments are related to large job cuts, unlike acquisitions. Moreover, while movers from foreign to domestic firms typically take wage cuts when they move, movers from domestic to foreign firms tend to maintain or increase their pay.
Martins, Pedro
"Dismissals for Cause: The Difference that Just Eight Paragraphs Can Make"
Pedro Martins, Queen Mary, University of London
Abstract: This paper provides evidence about the effects of dismissals-for-cause requirements, a specific component of employment protection legislation that has received little attention despite its potential relevance. We study a quasi-natural experiment generated by a law introduced in Portugal in 1989: out of the 12 paragraphs in the law that dictated the costly procedure required for dismissals for cause, eight did not apply to firms employing 20 or fewer workers. Using detailed matched employer-employee longitudinal data and difference-in-differences matching methods, we examine the impact of that differentiated change in firing costs upon several variables, measured from 1991 to 1999. Unlike predicted by theory, we do not find robust evidence of effects on worker flows. However, firm performance improves considerably while wages fall. Overall, the results suggest that firing costs of the type studied here decrease workers’ effort and increase their bargaining power.
Megginson, William
"The Financial Impact of Sovereign Wealth Fund Investments in Listed Companies"
Veljko Fotak, University of Oklahoma
William Megginson, Universite Paris Dauphine and University of Oklahoma
Abstract: This paper initiates empirical research on the financial impact and wealth effects of Sovereign Wealth Fund (SWF) investments in the stock of listed companies around the world. These have recently gained media attention because of concerns about their large size (USD 2.5 trillion, and growing extremely rapidly), high growth rates and lack of transparency. We analyze asset allocation by fund and find a mean abnormal reaction of circa 1% to equity acquisitions by SWFs. We note that SWFs are typically long term investors who, due to both political pressures and size of holdings, are often unwilling to quickly unwind their positions. However, 6-month abnormal returns of SWFs average negative 6.63%, suggesting equity acquisitions by SWFs could have a negative impact on management incentives and likely lead to deteriorating firm performance.
URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1108585
Motohashi, Kazuyuki
"IT, R&D and Productivity in China"
Kazuyuki Motohashi, University of Tokyo and RIETI
Abstract: This paper analyzes the impact of IT and R&D on the productivity of Chinese manufacturing firms by using large-scale firm level data sets from 1996 to 2005. In China, state owned enterprise reform has started in the late 1990’s, which provides economic incentive for Chinese large corporations to gain its productivity and performance. IT and R&D are major drivers of firm level productivity, and this paper is a first attempt of investigating interaction of IT and R&D investment in Chinese firms in process of enterprise reform, and complementarity of IT and R&D for productivity growth. During the period of enterprise reforms, substantial numbers of state owned enterprises have been converted to limited ownership or stock holding companies. Although these firms’ major shares are still owned by the government, they have faced pressure from capital market better performance as well. Therefore, it is found that such ownership change firms have higher marginal rate of return from IT and R&D, as compared to state owned enterprises which does not have ownership change.
Murakozy, Balazs
"What Makes a Successful Export?"
Holger Görg, Christian-Albrechts-Universität and Institut für Weltwirtschaft, Kiel
Richard Kneller, University of Nottingham
Balazs Murakozy, CEU, IE-HAS
Abstract: We analyse a very rich and unique panel database which provides information on exports at the firm-product level. A stylised fact in the data is that many firms add as well as drop products from the export mix in any given year. Motivated by recent theory we investigate what determines the survival of products in the export mix. We find evidence that is consistent with the view that characteristics of the product as well as that of the firm matter, which suggests that there are firm- as well as firm-product specific competencies that are important for shaping firms’ export mix.
URL: www.cepr.org/pubs/dps/DP6614.asp.asp
Nicholls, Tom
"Peripherality and the Impact of SME Takeovers"
James Foreman-Peck, Cardiff Business School
Tom Nicholls, Cardiff Business School
Abstract: If large companies buy small dynamic enterprises, and move them to the headquarters’ location or elsewhere, the process could suppress regional, or dependent, economy income and productivity. We investigate this hypothesis by analysing around 2 million observations of the UK enterprise-level Business Structure Database. Contrary to the experience of large firms, more productive small businesses are more subject to takeover. In addition, SMEs that have been acquired are also more likely to both exit and relocate to another region. This last finding however cuts both ways; a peripheral region or country may receive post-merger companies as well as lose them. With the exception of the core of London and the South East, British regions achieve an approximate numerical balance of relocations from SME takeovers.
URL: http://www.cf.ac.uk/carbs/research/centres_units/wired/Peripherality_and_the_Impact_of_SME_Takeovers
Noel, Michael
"Strategic Patenting and Software Innovation"
Michael Noel, University of California San Diego
Mark Schankerman, London School of Economics and CEPR
Abstract: Strategic patenting is widely believed to raise the costs of innovating, especially in industries characterised by cumulative innovation. This paper studies the effects of strategic patenting on R&D, patenting and market value in the computer software industry. We focus on two key aspects: patent portfolio size which affects bargaining power in patent disputes, and the fragmentation of patent rights (patent thickets) which increases the transaction costs of enforcement. We develop a model that incorporates both effects, together with R&D spillovers. Using panel data for the period 1980-99, we find evidence that both strategic patenting and R&D spillovers strongly affect innovation and market value of software firms.
URL: http://www.econ.ucsd.edu/~mdnoel/research/thickets.pdf
Origo, Federica
"Workplace Flexibility and Institutions in Great Britain and Italy: New Evidence from Establishment-Level Panel Data"
Federica Origo, Department of Economics "Hyman P. Minsky", Università di Bergamo
Abstract: This paper studies the determinants of the joint adoption of three forms of quantitative flexibility (employment, wage and working time flexibility) at the workplace, paying attention to the role of labour market institutions (namely, employment regulation, unions and local bargaining). To better understand the role of country-specific institutional features, we compare the adoption of quantitative flexibility in Italy and Great Britain, two EU countries characterized by quite different product and labour market regulation. Empirical analysis based on establishment-level panel data for the two countries shows that the probability of adopting any forms of flexibility is highly influenced by both firm characteristics and institutional variables. Furthermore, even if the number of flexible work arrangements is relatively higher in Great Britain than Italy, the countries differ substantially for the actual flexibility mix mostly adopted in the workplace. Since some combinations of flexible work arrangements are more frequent than others, our results suggest that both policy makers and social partners should be aware that incentives or restrictions to specific forms of flexibility are likely to produce effects also on the use of other flexible work arrangements.
Ottaviano, Gianmarco
"The Internationalization of European Firms: New Facts Based on Firm-level Evidence"
Thierry Mayer, University of Paris, PSE, CEPII and CEPR
Gianmarco IP Ottaviano, University of Bologna, FEEM, Bruegel and CEPR
Abstract: This is the first report of the project European Firms and International Markets (EFIM). The aim of EFIM is to constitute a network of European research centres that work on policy relevant questions that are best treated using firm-level trade and FDI data: What are the features of European firms that successfully compete in international markets? What policies can further foster their performance? What policies can promote the participation of other European firms that are currently excluded from international markets? How can European firms best cope with the adjustment required by globalization? What policies can smooth that adjustments?
URL: http://www.bruegel.org/Public/Publication_detail.php?publicationID=5678&findParent=true
Pages, Carmen
"Investment Climate and Employment Growth: The Impact of Access to Finance, Corruption and Regulations Across Firms"
Reyes Aterido, World Bank
Mary Hallward-Driemeier, World Bank
Carmen Pages, InterAmerican Development Bank
Abstract: Using firm level data on 70,000 enterprises in 107 countries, this paper finds important effects of access to finance, business regulations, corruption, and to a lesser extent, infrastructure bottlenecks in explaining patterns of job creation at the firm level. The paper focuses on how the impact of the investment climate varies across sizes of firms. The differences across size categories come from two sources. First, objective conditions of the business environment do vary systematically by firm types. Micro and small firms have less access to formal finance, pay more in bribes than do larger firms, and face greater interruptions in infrastructure services. Larger firms spend significantly more time dealing with officials and red tape. Second, even controlling for these differences in objective conditions, there is evidence of significant non-linearities in their impact on employment growth. The results suggest strong composition effects: A weak business environment shifts downward the size distribution of firms. In the case of finance and business regulations this occurs by reducing the employment growth of all firms, particularly micro and small firms. On the other hand, corruption and poor access to infrastructure reduce employment growth by affecting the growth of medium size and large firms. With significant differences between firms with less than 10 employees and SMEs, these results indicate significant reforms are needed to spur micro firms to grow into the ranks of the SMEs.
URL: http://www.iadb.org/res/pub_desc.cfm?pub_id=WP-626
Pesola, Hanna
"Labour Market Transitions Following Foreign Acquisitions"
Hanna Pesola, Helsinki School of Economics
Abstract: This paper analyses employee flows in firms subject to foreign acquisitions using a large Finnish linked employer-employee data set. The results show that in the year following a foreign acquisition, the job separation hazard for employees of industrial sector firms increases on average by 20% with the probability of changing jobs increasing more than the probability of moving to non-employment. Foreign acquisitions do not appear to affect the job separation hazard of service sector employees in the first year following the acquisition, but two years later the probability of leaving the firm increases by 16%. The effects of foreign acquisitions do not vary by individual characteristics in either sector. Domestic mergers increase the job separation hazard in both the service and industrial sectors for most employees, but the impact is larger in the industrial sector. In both sectors the effects of the merger fade after the first year. Following purely domestic mergers the more educated and older an employee is, the more likely it is that they leave the firm.
URL: http://www.hse.fi/NR/rdonlyres/FF752C6F-7E1B-47FA-9C5A-4D1E614129E4/0/Pesola_CAED08_upd.pdf
Petit, Héloïse
"Firm’s Investment in Human Resources and Labour Mobility Patterns: Evidence from French Linked Employer Employee Data"
Héloïse Petit, Centre d Etudes de l Emploi and CES Université Paris I
Abstract: What is the impact of a firm’s wage and training policies on worker mobility? Several studies have put forward the link between the high level of pay (direct or indirect) and the reduced mobility of workers. We propose to test such hypothesis on French data and see how it combines with a firm’s profile regarding training expenses. We then study the link between investment in human resources (through wages and/or training) and mobility patterns in French establishments.
Two types of sources are mobilised in order to compute linked employer-employee data: the first one is a survey concerning establishments (the 2004-2005 REPONSE survey) and the second are administrative data giving information on worker mobility patterns (the DMMO) and wage patterns (the DADS).
Petrin, Amil
"Job Security Does Affect Economic Efficiency: Theory, A New Statistic, and Evidence from Chile"
Amil Petrin, University of Minnesota
Jagadeesh Sivadasan, University of Michigan
Abstract: In theory job security provisions
can be completely undone by efficient contracts.
The extensive empirical macro- and micro-level
evidence on the impact of these provisions is largely inconclusive.
We argue that the weak evidence is a consequence of
the weak power of statistics used, which is suggested by
a dynamic theory of plant-level labor demand that we develop.
This model speaks clearly on one issue: firing costs drive a
wedge between the marginal revenue product of labor and its marginal cost (wage).
We examine changes in this gap as our test statistic.
It is easy to compute and has a welfare interpretation.
We use census data of Chilean manufacturing firms for the years 1979-1996
to look for real effects induced by
two significant increases in the costs of dismissing employees.
The traditional statistics provide weak evidence in
our data (too). In contrast, for both blue and white collar workers
we find large and statistically significant
increases in the mean and variance of the within-firm
gap between the marginal revenue product of labor and
the wage, and no evidence that gaps increase for
inputs that are not directly affected by the firing costs.
URL: http://www.econ.umn.edu/~petrin/research/FiringCosts.pdf
Petrin, Amil
"Measuring Aggregate Productivity Growth Using Plant-level Data"
Amil Petrin, University of Minnesota
James Levinsohn, University of Michigan
Abstract: We define aggregate productivity growth (APG) as the change in aggregated final demand minus the change in the aggregated cost of primary inputs. APG is an indicator of the change in potential aggregate consumption holding total primary input use constant.
We show how to aggregate plant-level data to APG, and how to use plant-level data to decompose APG into technical efficiency and reallocation components.
URL: http://www.econ.umn.edu/~petrin/research/measure_prod.pdf
Polanec, Sašo
"Dynamic Olley-Pakes Decomposition with Entry and Exit"
Marc J. Melitz, Princeton University
Sašo Polanec, University of Ljubljana
Abstract: This paper shows that widely used decompositions of the change in aggregate productivity index into contributions of different drivers of growth tend to underestimate the contribution of reallocation between surviving firms and overestimate the contribution of entering firms. Building on the cross-sectional decomposition proposed by Olley and Pakes (1996), we propose a new decomposition that remedies this problem. The proposed decomposition expresses its components in terms of moments of joint size and productivity distributions for three sets of firms: survivors, entrants and exitors. Each of these sets of firms contributes to the change of aggregate productivity in a direct way by improving the average productivity and indirectly by improving the covariance between productivity and market shares. Using Slovenian manufacturing data, we compare the results of different decompositions and find that new decomposition gives more realistic estimates of direct and indirect contributions of entering, exiting and surviving firms.
Polanec, Sašo
"Export Strategies of New Exporters"
Jože P. Damijan, Princeton University
Èrt Kostevc, University of Ljubljana
Sašo Polanec, University of Ljubljana
Abstract: Standard trade models with heterogeneous firms assume that first-time and continuing exporters share distributional features in terms of size, productivity and foreign markets penetration. In these models firms adjust production for domestic and foreign markets instantaneously to reflect their productivity. This paper uses a panel of new Slovenian exporters in manufacturing sector to document significant differences between new and continuing exporters in terms of size and foreign market penetration. We show that new exporters face additional market specific uncertainties. We find that new exporters start suppling only a range of the total number of products that firms produce. Typical new exporter sells one product to one foreign market and subsequently expands along both intensive and extensive margins in terms of products and markets. Our results also suggest large fixed entry cost to foreign markets and much smaller costs of penetration with additional products. Lastly, we find that firms are most likely to follow the expansion pattern of existing exporters. These findings challenge the existing trade models with heterogeneous firms and suggest extensions that would be consistent with observed sequencing in expansion in foreign markets.
Riggs, T. Lynn
"The Role of Local Poverty Rates on the Location of Traditional and Non-Traditional Lenders"
T. Lynn Riggs, U.S. Bureau of the Census, Center for Economic Studies
Abstract: While entrepreneurs and new business entry have long been viewed as key components to a healthy economy, new evidence suggests that new business entry is a key factor in local economic growth. Financing for small businesses, then, seems crucial to promoting economic growth and development. Major legal, technological, and structural changes over the last 30 years in the financial services sector, especially banking, have radically changed this industry and have caused concern about the impact of these changes on business, especially new business lending. During the 1990s, the two major changes that caused the most concern about increased constraints on commercial lending were 1) bank mergers and acquisitions greatly increased concentration in the industry, and 2) the number of small community banks (typically defined as having less than $1 billion in assets) fell dramatically. The latter was especially troubling since small community banks have, in the past, accounted for a disproportionate share of bank loans to small businesses. (Alton and Seirra, 2003) The impact of the former is less clear – both theory and evidence appear mixed as to whether or not increased concentration will promote new business lending and economic growth. (Cetorelli, 2001; Petersen and Rajan, 1995; Collender, 2001; Collender and Shaffer, 2002, Zarutskie, 2003; Avery and Samolyk, 2003)
Rigó, Mariann
"Estimating Union - Non-union Wage Differential in Hungary"
Mariann Rigó, Central European University
Abstract: This paper estimates the wage impact of trade unions in Hungary. I use linked employer-employee panel data covering 1992 - 2005 and including information on 15,936 firms with more than 2,000 status switches of wage
agreement. The data offer the opportunity to control for some forms of selection bias of firms into union status. I estimate numerous
regression specifications varying the scope of the explanatory variables and the level of aggregation (firm-level vs. individual-level). In the firm-level regressions the raw wage gap of 33 percent falls to 8.6 percent after controlling for observable firm characteristics, and to 4.7 percent when including firm-level heterogeneity. The estimates on the individual-level database show a 26 percent raw wage gap, which decreases to 7 percent after controlling for individual and firm-level
characteristics and to 2 percent when including firm-level unobservables.
Ritchie, Felix
"Microdata Access"
Felix Ritchie, Office for Natioanl Statistics
Abstract: This paper reviews current practice in providing access to microdata, particularly business microdata.
Sanderson, Lynda
"Export Market Choice for New Zealand Firms"
Lynda Sanderson, Reserve Bank of New Zealand, University of Waikato Population Studies Centre
Richard Fabling, Reserve Bank of New Zealand, Motu Economic and Public Policy Research
Arthur Grimes, Motu Econoimc and Public Policy Research; University of Waikato
Abstract: In this paper we examine product and market choices of New Zealand exporters, using an enterprise level dataset which links firm performance measures with detailed data on merchandise trade. We focus our enquiry not on the broad question of what determines a firm’s ability to export, but on the subsequent question: given that a firm has the ability to export, what determines the choices they make about what to export and where to? We simultaneously consider firm-, market- and product-level determinants of export market entry. Focusing on a sample of firms with observed exports, we control for standard characteristics such as industry and past performance, as well as more novel measures such as general and specific prior export and import market experience and assistance from central government. The market determinants we consider include the macroeconomic performance of destination countries, exchange rate movements and demonstration effects from the export behaviour of other firms.
URL: http://rfabling.googlepages.com/CAED2008ExportmarketchoiceofNZfirms.pdf
Schank, Thorsten
"Foreign-owned Plants and Job Security"
Martyn Andrews, University of Manchester
Lutz Bellmann, Institute for Employment Research
Thorsten Schank, University of Erlangen-Nuremberg
Richard Upward, University of Nottingham
Abstract: We investigate the hypothesis that workers in foreign-owned establishments face greater job insecurity. Using linked employer employee data from Germany, we examine whether foreign-owned establishments are more likely to exit production, and whether workers in foreign-owned establishments face higher separation rates, net of establishment exit. We find that, after controlling for the different characteristics of foreign and domestic establishments, foreign establishments have higher exit rates and higher separation rates, but the effect is quantitatively small. In contrast, foreign-owned establishments which do not export appear to have considerably higher exit rates and separation rates.
URL: www.gep.org.uk/shared/shared_levpublications/Research_Papers/2007/07_36.pdf
Schivardi, Fabiano
"Entry Barriers in Retail Trade"
Fabiano Schivardi, University of Caligary
Eliana Viviano, Bank of Italy
Abstract: The 1998 reform of the Italy's retail trade sector delegated the regulation of entry
of large stores to the regional governments. We use the local variation in regulation to
determine the effects of entry barriers on firms' performance for a representative sample
of retailers. We address the endogeneity of entry barriers through local fixed effects and
using political variables as instruments. We also control for differences in trends and for
area-wide shocks. We find that entry barriers are associated with substantially larger
profit margins and substantially lower productivity of incumbent firms. Liberalizing
entry has a positive effect on investment in ICT. Consistently, more stringent entry
regulation results in higher inflation: lower productivity coupled with larger margins
results in higher consumer prices.
URL: http://digilander.libero.it/fschivardi/images/schivardiviviano.pdf
Schmidt, Tobias
"Non-technological and Technological Innovation: Strange Bedfellows?"
Tobias Schmidt, Deutsche Bundesbank
Christian Rammer, ZEW Mannheim
Abstract: Non-technological innovation is an important element of firms’ innovation activities that both supplements and complements technological innovation, i.e. the introduction of new products and new processes. We analyse the spread of non-technological innovation in firms, their relation to technological innovation, and their effects on firm performance and success with product and process innovation, using data from the German Community Innovation Survey conducted in 2005 (German CIS 4). Non-technological innovation is defined as the introduction of new organisational methods or the introduction of new marketing methods. We find that the determinants of a firm’s propensity to introduce technological and non-technological innovations are very similar and that both types are closely related. There are only small effects of non-technological innovation on a firm’ profit margin, which contrasts with the strong effects to be found from technological innovation. However, non-technological innovation spurs success with product and process innovation in terms of sales with market novelties and cost reductions from new processes.
URL: ftp://ftp.zew.de/pub/zew-docs/dp/dp07052.pdf
Schmieder, Johannes
"Hiring Policies and Labor Costs in New Establishments"
Johannes F. Schmieder, Columbia University
Abstract: This paper investigates heterogeneity in hiring policies and labor costs between young and old establishments. I show that wages for similar workers in newly founded establishments are 12 percent higher than wages in older establishments. I estimate the age - wage relationship using a unique linked employer-employee panel dataset from Germany that follows workers and establishments over time. The effect of establishment age on wage remains strongly negative after controlling for a wealth of detailed establishment and worker characteristics. About 35 percent of the differential is explained by selection of more productive workers into younger establishments. The remaining differential is likely compensating for the high risk of unemployment in young establishment. This is consistent with the effect being strongest in manufacturing where firm specific capital is most important and job loss very costly. The findings imply that the existing literature overstates total factor productivity of new establishments when labor input is measured in hours, while underestimating productivity when labor input is measured as the total wage bill.
URL: http://www.columbia.edu/~jfs2106/research/workingpaper_estabage.pdf
Schwellnus, Cyrille
"The Intensive and Extensive Margins of Market Segmentation"
Isabelle Méjean, Ecole Polytéchnique, France
Cyrille Schwellnus, CEPII, Paris
Abstract: In this paper we use data on French export prices at the
disaggregated firm and product level to evaluate the effect of
economic integration on price convergence. We use the European
integration `experiment' and firm-level data on export prices to
distinguish between two possible margins of adjustment: At the
intensive margin economic integration induces different pricing
strategies within the firm, whereas at the extensive margin it
affects the composition of firms with different pricing
strategies. In our sample price convergence is 40 percent faster
in the European Union than in an appropriately defined control
group. 30 percent of this effect can be attributed to the fact
that a higher share of firms with a low propensity to price
discriminate serve European markets.
URL: http://mejean.isabelle.googlepages.com/publications
Secchi, Angelo
"Productivity, Profitability and Growth: An Empirical Analysis of Firm Dynamics"
Giulio Bottazzi, Scuola Superiore Sant'Anna
Marco Grazzi, Scuola Superiore Sant'Anna
Angelo Secchi, University of Pisa
Federico Tamagni, Scuola Superiore Sant'Anna
Abstract:
Serrano-Velarde, Nicolas
"The Financing Structure of Corporate R&D - Evidence from Regression Discontinuity Design"
Nicolas Serrano-Velarde, European University Institute
Abstract: I study the effect of a R&D subsidy on the investment and financing decisions of recipient firms. Locally unbiased identification is achieved using Regression Discontinuity Design. Empirical results are consistent with a stylized model of self-certification in which managers are unequal in their ability to understand and process information about their own R&D activities. In this setting, the subsidy acts as a certification device within firms in which managers are biased against R&D activities and will trigger an increase in private R&D investment driven by internal funding. The subsidy will have no informational content for managers well aware about the quality of their R&D. They will use the subsidy as a risk sharing device and substitute public funds for costly external finance.
URL: http://www.eui.eu/Personal/Researchers/Serrano-Velarde/Docs/Financing_Structure.pdf
Sjöholm, Fredrik
"FDI and Employment in Indonesia"
Robert E. Lipsey, National Bureau of Economic Research
Fredrik Sjöholm, The Research Institute of Industrial Economics
Abstract: The lack of modern sector employment is a major problem in most developing countries. Foreign firms are typically relatively large with high productivity and good access to foreign markets, and might therefore be better at creating jobs than domestic firms are. However, there is not much previous research on the issue. We examine employment growth in Indonesia in a large panel of plants between 1975 and 1999. Our results suggest that employment growth is relatively high in foreign firms. Moreover, there is a selection effect in that foreign firms acquire relatively large domestic firms but growth in employment still increases after the acquisition. The employment effect seems to be primarily caused by change of ownership rather than by the acquisition itself. Domestic acquisitions of foreign owned plants result in a smaller effect on employment. Finally, it is primarily employment of blue-collar workers that increase after a foreign acquisition, whereas the effect on white-collar employment is marginal
URL: http://www.ifn.se/files/lipseysjoholm_CAED.pdf
Slootmaekers, Veerle
"The Missing Link Between Financial Constraints and Productivity"
Marialuz Moreno Badia, International Monetary Fund
Veerle Slootmaekers, Catholic University of Leuven
Abstract: This paper provides new evidence on the link between finance and firm-level productivity focusing on the case of Estonia. We contribute to the literature in two important respects: (1) we look explicitly at the role of financial constraints; and (2) we develop a methodology that corrects for the misspecification problems of previous studies. Our results indicate that young and highly indebted firms tend to be more financially constrained. Overall, a large number of firms shows some degree of financial constraints, with firms in the primary sector being the most constrained. More importantly, we find that financial constraints do not lower productivity for most sectors with the exception of R&D, where the dampening effect of financial constraints on productivity is remarkably large. These results are robust to a variety of sensitivity tests.
URL: http://www.econ.kuleuven.be/public/ndaab50/conference/Moreno_Slootmaekers-Financing_constraints.pdf
Smeets, Valerie
"Mergers of Equals and Unequals"
Mike Gibbs, Graduate School of Business, University of Chicago
Kathryn Ierulli, Graduate School of Business, University of Chicago
Valerie Smeets, Aarhus School of Business, Aarhus University
Abstract: We study post-merger organizational integration. Our basic question is whether there is evidence of conflict between employees from the two merging firms. Conflict can arise for several reasons, including firm-specific human capital, corporate culture, power, or favoritism. A competing hypothesis is that firms enjoy organizational synergies from mergers, because of the benefits of a more diverse workforce. We examine this issue using a sample of Danish merg-ers. Controlling for other effects, employees from the acquiring firm fare better than employees from the acquired firm, suggesting that they have greater power in the newly merged hierarchy. As a separate effect, the more that ei-ther firm dominates the other in number of employees (at the firm or plant level), the better do its employees fare compared to employees from the other firm. This suggests that majority / minority status is also important to assimi-lation of workers, much as in ethnic conflicts. Greater overlap of operations decreases turnover. This is inconsistent with the view that workers of the two firms may be substitutes for each other. Our findings are least consistent with the views that post-merger organizational dynamics are driven by economies of scale or scope, or the benefits of workforce diversity. They are most consistent with the view that more similar workers (in terms of either firm- or industry-specific human capital) are easier to integrate post merger, and that conflict caused by integration is a seri-ous cost of implementation of mergers.
URL: http://www.valeriesmeets.com/webpage/Mergers_May2008.doc
Stankov, Petar
"Deregulation for All, Performance from Some: Do Small and Large Firms React Differently to Deregulation in the CEE?"
Petar Stankov, CERGE-EI, Prague, the Czech Republic; UNWE, Sofia, Bulgaria
Abstract: Empirical studies using samples of large firms report a positive causality between deregulation and investment, while firm-level evidence from a sample of mainly small firms finds a weak causality, if any at all. One possible explanation for the difference in these findings is that deregulation affects small and large firms differently. However, the literature investigating the differential impact of deregulation on small and large firms demonstrates no consensus on those effects either, which constitutes a deregulation policy challenge. The goal of this project is two-fold: first, we construct a simple model for the effect of deregulation on firms with different size/market power. The preliminary results from the model suggest that there is a differential effect of deregulation on firms with different market power. Second, based on these findings, we enter the empirical debate with a firm-level sample containing both subpopulations of small and large firms and we aim to confirm or confront the hypothesis that small and large firms behave differently after deregulation. The main contribution of our preliminary work is to find a differential impact of deregulation, and more specifically, that firms with more market power suffer less from deregulation.
Steingress, Walter
"Foreign Direct Investment, Financial Constraints and Growth in China (joint work with Hylke Vandenbussche)"
Abstract: In this paper we use a unique micro-level data-set of
Chinese firms to test for the impact of financial constraints faced
by private Chinese firms. Our results clearly show that private
Chinese firms are credit constrained, whereas Foreign Invested
Enterprises (FIEs) and State-Owned Chinese firms (SOEs) do not face
such constraints. The empirical evidence presented in this paper
seems to confirm the "political pecking order" theory developed by
Huang [2004] who argues that the "Chinese growth miracle" was
predominantly triggered by a lack of credit of domestic private
Chinese firms that were consequently forced to "sell out" to foreign
firms in order to grow further. By using information on ownership
changes, we show that indeed having access to foreign capital
decreases financial constraints. Our results also highlight the
importance of controlling for the concentration of state owned firms
within an industry and regional heterogeneity. In addition we shed
some further light on the impact of bank relationship and credit
allocation on the behavior of private firms within China.
URL: http://www.econ.kuleuven.be/public/n06071/steingressvandenbussche.pdf
Stepanov, Sergey
"Corporate Governance, Ownership Structures and Investment in Transition Economies: The Case of Russia, Ukraine and Kyrgyzstan"
Olga Lazareva, CEFIR (Moscow) and Stockholm School of Economics
Andrei Rachinsky, MTS (Moscow)
Sergey Stepanov, New Economic School and CEFIR
Abstract: In this paper we analyze interrelations between ownership structures, corporate governance and investment in Russia, Ukraine and Kyrgyzstan. In contrast to most empirical papers on corporate governance, we study companies with little exposure to public financial markets. Our empirical analysis is based on two years of data obtained through large-scale surveys of firms. Ukrainian companies appear to have the best corporate governance practices, while Russian companies – the worst. We find that the relationship between ownership concentration and corporate governance is non-linear. In Russia, the relationship between the share of the largest non-state shareholder and corpor