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on Business Economics |
| By: | KAWAKUBO Takafumi; SUZUKI Takafumi |
| Abstract: | How are supply chains formed and restructured over time? This paper investigates firm-to-firm transaction network dynamics from theoretical and empirical perspectives, exploiting large-scale firm-level transaction data from Japan. First, we provide basic facts which show substantial churning in supply chains over time, even after excluding the cases where either supplier or customer firms exit from the market. Second, we empirically find that productivity positive assortative matching between firms exists. Firms are more likely to keep trading with more productive firms and instead stop trading with less productive ones. Alternatively, more productive firms start new transactions with more productive business partners. Lastly, we build a theoretical framework to rationalize these findings. Both supplier and customer firms are heterogeneous and choose their trading partners with a many-to-many matching framework. We derive the implications for supply chain formation and restructuring in response to productivity shocks. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22073&r= |
| By: | Fabling, Richard (Independent Researcher); Maré, David C. (Motu Economic and Public Policy Research Trust); Stevens, Philip |
| Abstract: | We use linked employer-employee microdata for New Zealand to examine the relationship between firm-level productivity, wages and workforce composition. Jointly estimating production functions and firm- level wage bill equations, we compare migrant workers with NZ-born workers, through the lens of a derived "productivity-wage gap" that captures the difference in relative contribution to output and the wage bill. Whether we look at all industries using a common production function, or separately estimate results for the five largest sectors, we find that skilled and long-term migrants make contributions to output that exceed moderately-skilled NZ-born workers, with that higher contribution likely being due to a mix of skill differences and/or effort which is largely reflected in higher wages. Conversely, migrants that are not on skilled visas are associated with lower output and lower wages than moderately-skilled NZ-born, also consistent with a skills/effort narrative. The share of employment for long-term migrants has grown over time (from 2005 to 2019) and we show that their relative contribution to output appears to be increasing over the same period. Finally, we present tentative evidence that high-skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which is suggestive of complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms. |
| Keywords: | migrant labour, firm productivity, worker sorting, wage determinants, quality-adjusted labour input |
| JEL: | D24 J15 J31 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15482&r= |
| By: | Antelo, Manel; Bru, Lluís |
| Abstract: | In a differentiated Stackelberg duopoly, we explore the licensing behaviour of an inside patent holder owning a cost-reducing innovation and that may play as a leader or follower in setting the output level in the marketplace. We find that, regardless of whether the licensor is the leader or the follower, the licensing contract always involves royalties: per-unit or ad-valorem (depending on the degree of product differentiation and the size of the innovation) when the licensor is the leading firm, and per-unit royalties (alone or combined with a fixed payment) when it is the follower. We also show that, as compared to the pre-licensing context, licensing by a market follower is never welfare reducing, and licensing by a market leader is only welfare reducing when the products are very close substitutes. |
| Keywords: | Stackelberg industry, licensing, differentiated products, per-unit and ad-valorem royalties, welfare |
| JEL: | L13 L24 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114181&r= |
| By: | Alfaro-Ureña, Alonso; Manelici, Isabela; Vasquez Carvajal, Jose |
| Abstract: | We study the effects of becoming a supplier to multinational corporations (MNCs) using tax data tracking firm-to-firm transactions in Costa Rica. Event-study estimates reveal that domestic firms experience strong and persistent gains in performance after supplying to a first MNC buyer. Four years after, domestic firms employ 26% more workers and have a 4 to 9% higher total factor productivity (TFP). These effects are unlikely to be explained by demand effects or changes in tax compliance. Moreover, suppliers experience a large drop in their sales to all other buyers except the first MNC buyer in the year of the event, followed by a gradual recovery. The dynamics of adjustment in sales to others suggests that firms face short-run capacity constraints that relax over time. Four years later, the sales to others grow by 20%. Most of this growth comes from the acquisition of new buyers, which tend to be “better buyers” (e.g., larger and with more stable supplier relationships). Finally, we collected survey data from domestic firms and MNCs to provide further insights into the wide-ranging benefits of supplying to MNCs. According to our surveys, these benefits range from better managerial practices to a better reputation. |
| JEL: | F14 F23 O12 D24 |
| Date: | 2021–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:112758&r= |
| By: | Ashish Arora; Wesley M. Cohen; Honggi Lee; Divya Sebastian |
| Abstract: | Do large firms produce more valuable inventions, and if so, why? After confirming that large firms indeed produce more valuable inventions, we consider two possible sources: a superior ability to invent, or a superior ability to extract value from their inventions. We develop a simple model that discriminates between the two explanations. Using a sample of 2,786 public corporations, and measures of both patent quality and patent value, we find that, while average invention value rises with size, average invention quality declines, suggesting, per our model, that the large firm advantage is not due to superior inventive capability, but due to the superior ability to extract value. We provide evidence suggesting that this superior ability to extract value is due to greater commercialization capabilities of larger firms. |
| JEL: | O31 O32 O33 O34 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30354&r= |
| By: | Andrew Caplin; Minjoon Lee; Søren Leth-Petersen; Johan Saeverud; Matthew D. Shapiro |
| Abstract: | How worker productivity evolves with tenure and experience is central to economics, shaping, for example, life-cycle earnings and the losses from involuntary job separation. Yet, worker-level productivity is hard to identify from observational data. This paper introduces direct measurement of worker productivity in a firm survey designed to separate the role of on-the-job tenure from total experience in determining productivity growth. Several findings emerge concerning the initial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistent with wages not being allocative period-by-period. (2) Previous experience is a substitute, but a far less than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs in the extent to which previous experience substitutes for tenure. The survey makes use of administrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters not measured in the survey. |
| JEL: | J24 J30 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30342&r= |
| By: | Amodio, Francesco (McGill University); Medina, Pamela (University of Toronto); Morlacco, Monica (University of Southern California) |
| Abstract: | This paper shows that self-employment opportunities shape the market power of employers in low-income countries, with implications for industrial development. Using data from Peru, we document substantial employer concentration and high self-employment rates across manufacturing local labor markets. Where employer concentration is higher, wages are lower, and self-employment is more prevalent but less remunerative. To interpret these facts, we build a general equilibrium model where labor market power in each market arises from (i) strategic interactions among employers and (ii) sorting of heterogeneous workers across wage work and self-employment. We structurally estimate the model and quantify the relevance of these mechanisms for rent-sharing between workers and firms and for the effect of policies promoting manufacturing wage employment. We show that changes in concentration magnify the pass-through of productivity and profitability shocks to wages, but worker sorting across wage and self-employment mitigates these effects. We find that policies that increase firm productivity are more effective in expanding wage employment and increasing workers' earnings than other interventions that improve workers' skills or decrease firm entry cost. |
| Keywords: | labor market power, monopsony, self-employment, sorting, development |
| JEL: | J2 J3 J42 L10 O14 O54 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15477&r= |