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on Business Economics |
| By: | Philippe Askenazy (CMH - Centre Maurice Halbwachs - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique); Thomas Breda (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Vladimir Pecheu (AMU - Aix Marseille Université) |
| Abstract: | The existence of a peak at 49 employees in the firm size distribution in France, followed by a permanent decrease in the number of firms has been the starting point of political discourses and academic studies on the cost of size-dependent regulations at 50-employee. These features of the distribution are visible when firm size is declared by employers in fiscal data but not when it is reconstructed from individual-level social security data. This working paper explores these differences both from statistical and institutional viewpoints. It provides evidence showing that a large proportion of employers manipulate the firm size they declare in their fiscal documents. This manipulation generates the particular shape of the size distribution in the fiscal data. We discuss the rationale for such behavior: the key point is that the under-declaration in fiscal data is not subject to substantial sanctions and it can allow firms not to comply with the labor law. Event studies and comparisons of firms below and above the 50-employee threshold suggest that this threshold may only have limited effects on firm performance or growth potential. Consequently the welfare costs of the regulations at 50-employee might be smaller than what was found by some of the studies that assume a perfect compliance with the law. |
| Keywords: | Regulations,Firm size,Firm dynamics,Economic cost,Noncompliance Regulations,Non-compliance |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03614750&r= |
| By: | Jan De Loecker; Tim Obermeier; John Van Reenen |
| Abstract: | In the last few decades, dramatic changes have been documented in the US business landscape. These include rising productivity and pay dispersion between firms, higher aggregate markups (of price over variable costs), growing dominance of big companies ("superstar firms"), a fall in the labour share of GDP and a decline in business dynamism. We review the existing literature and present a new analysis using comprehensive firm level panel data, to show that qualitatively, these trends are also apparent in the UK. This similarity suggests that common trends in technology (or globalisation) have been the driving force behind these changes, rather than country-specific institutions (such as weaker US antitrust enforcement). Since (at least) the mid-1990s, there has been a large increase in UK firm-level inequality (especially in the upper tails) of productivity, wages, markups, and labour shares. Of course, inequality between firms is much less of a concern than inequality between people. However, it can signal economic problems, such as a slowdown in the diffusion of ideas between leading and laggard firms and can foster higher wage inequality. Indeed, there has been little aggregate UK productivity growth since the Global Financial Crisis, and this has been a serious drag on median and mean real wages. We suggest a simple theoretical framework for understanding some of these trends and quantitatively analyse why, despite increasing markups, the, the UK labour share has not fallen as sharply as that in the US. Finally, we suggest some policy options in response to these worrying trends, include modernising competition rules to deal with the growth of superstar firms and strengthening worker bargaining power. |
| Keywords: | firms inequality, financial crisis |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1838&r= |
| By: | Rhodes, Andrew; Zhou, Jidong |
| Abstract: | We study personalized pricing (or first-degree price discrimination) in a general oligopoly model. In the short-run, when the market structure is fixed, the impact of personalized pricing hinges on the degree of market coverage (i.e., how many consumers buy). If coverage is high (e.g., because the production cost is low, or the number of firms is large), personalized pricing intensifies competition and so harms firms but benefits consumers, whereas the opposite is true if coverage is low. However in the long-run, when the market structure is endogenous, personalized pricing always benefits consumers because it induces the socially optimal level of firm entry. We also study the asymmetric case where some firms can use consumer data to price discriminate while others cannot, and show it can be worse for consumers than when either all or no firms can personalize prices. |
| Keywords: | personalized pricing, competition, price discrimination, consumer data |
| JEL: | D43 D82 L13 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112988&r= |
| By: | Dong, Xinwei (University of Tokyo); Hyslop, Dean (Motu Economic and Public Policy Research Trust); Kawaguchi, Daiji (University of Tokyo) |
| Abstract: | Firms frequently provide general skill training to workers at the firm's cost. Theories proposed that labor market frictions entails wage compression, larger productivity gain than wage growth to skill acquisition, and motivates a firm to offer opportunities for skill acquisition, but few studies directly test the hypothesis. We use unusually rich data from a temporary help service firm that records both workers' wages and their productivity as measured by the fees charged to client firms. We first document that the firm provides upfront training, and show that both workers' tenure and the initial fee charged to clients are positively related to the length of training, but the initial wage paid to workers is not. We then demonstrate that the fees charged to clients grow faster over workers' tenure than the wages paid to workers. Finally, we find that about one-quarter of the fee growth is associated with client quality upgrading, but that workers receive none of this growth. Each of these results are consistent with wage compression that skills acquired through training and learning-by-doing increases productivity more than wages. |
| Keywords: | training, general skill, temporary help service agency, productivity, wages |
| JEL: | J24 J42 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15309&r= |
| By: | Sabina Szymczak (Gdansk University of Technology, Gdansk, Poland); Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland) |
| Abstract: | The study confronts the joint effects of foreign ownership and its involvement in global value chains (GVC) on the productivity performance of firms from a catching-up country (Poland) and a leader economy (Germany). Domestic owned firms are less productive than foreign ones, which is particularly true at low GVC participation levels. However, as GVC involvement increases, the foreign ownership productivity premium decreases, leading to productivity catching up between foreign and domestic owned firms. This mechanism is similar in Poland and Germany. However, in the leader country (Germany), domestically-owned firms' productivity performance is more stable along the GVC distribution. |
| Keywords: | GVC, FDI, productivity, firms, Amadeus database |
| JEL: | F23 F21 F61 D24 D22 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:gdk:wpaper:69&r= |
| By: | Philippe Choné; Laurent Linnemer |
| Abstract: | We study the behavior of a firm that consistently maximizes a misspecified profit function. We provide an equilibrium concept where the misspecification error remains undetected. We examine the uniqueness and stability of the equilibria. The model of the price-taking firm belongs to this class. In one of these models, the cost-taking firm, the equilibrium price increases with fixed costs. The behavioural price can be lower or higher than the rational price, meaning consumers can benefit from the lack of rationality. Finally in a long-run perspective where the cost is endogenous, we show that the behavioral and rational firms end with the same level of output. |
| Keywords: | behavioural model of a firm, misspecified profit function, fixed costs |
| JEL: | L12 L21 L23 L25 M41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9718&r= |
| By: | Jackie M.L. Chan; Michael Irlacher; Michael Koch (Aarhus University) |
| Abstract: | This paper investigates the effects of mergers on the product mix of multiproduct firms. Thus, we open the black box of post-merger efficiency improvements to reveal a new margin of adjustment along the product dimension. We analyze horizontal mergers in a theoretical model where oligopolistic firms employ a flexible manufacturing technology and allocate assets between differentiated varieties. After a merger, acquirers drop products from their consolidated domestic product portfolio and reallocate assets towards core varieties. We further demonstrate that such merger-induced efficiency gains imply greater activity in foreign markets. Using detailed Danish register data, we document novel facts regarding mergers and multiproduct firms and find empirical evidence strongly supporting the model’s predictions. Our results show that the number of domestic products of the post-merger acquirer falls relative to the sum of the premerger acquirer and target, that skewness of domestic sales rises towards core products, and that export activity increases. |
| Keywords: | Multiproduct firms; Horizontal mergers; Flexible manufacturing; Exports; Product mix; Event Study |
| JEL: | F12 F14 G34 L22 L25 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2022-03&r= |
| By: | Arun Gupta; Horacio Sapriza; Vladimir Yankov |
| Abstract: | Our paper studies the role of the collateral channel for bank credit using confidential bank-firm-loan data. We estimate that for a 1 percent increase in collateral values, firms pledging real estate collateral experience a 12 basis point higher growth in bank lending with higher sensitivities for more credit constrained firms. Higher real estate values boost firm capital expenditures and lead to lower unemployment and higher employment growth and business creation. Our estimates imply that as much as 37 percent of employment growth over the period from 2013 to 2019 can be attributed to the relaxation of borrowing constraints. |
| Keywords: | Collateral channel; Firm borrowing constraints; Bank credit allocation; Corporate investment; Macro-finance; Transmission mechanism |
| JEL: | E44 G21 |
| Date: | 2022–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2022-24&r= |
| By: | Yang Li; Frank Neffke |
| Abstract: | A large body of research has documented that the size and growth of an industry in a city or region depends on the local size of related industries. However, there is no consensus on how to best measure, either the relatedness between industries, or how well a particular industry fits a local economy as a whole. In this paper, we perform a structured search over tens of thousands of specifications to identify optimal – in terms of out-of-sample predictions – ways to construct these quantities, using a dataset that allows us to derive relatedness from co-occurrence patterns of industries in establishments, firms, regions and countries. We find that these di |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2208&r= |