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on Entrepreneurship |
| By: | Frijters, Paul (University of Queensland); Kong, Tao (Australian National University); Meng, Xin (Australian National University) |
| Abstract: | We use a unique data of representative migrants and urban local workers in 15 Chinese cities to investigate entrepreneurship and credit constraints under labour market discrimination. We divide self employed into prefer to be self-employed and prefer to have a salaried job but cannot find one; and divide salaried workers into want-to-be entrepreneurs and happy-to-be salaried workers. Over 40 percent of migrant workers are either currently or want-to-be entrepreneurs. Both groups are very similar in terms of risk taking preferences and network size. Want-to-be entrepreneurs however suffer from credit constraints identified by negative financial shocks in the year before. Our back-of-envelope calculation reveals that overcoming the current level of credit constraints may be worth 2% of GDP per year direct earnings increases. |
| Keywords: | entrepreneurs, credit constraints, migration, China |
| JEL: | L26 J14 J70 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5967&r=ent |
| By: | Bilbiie, Florin Ovidiu; Ghironi, Fabio; Melitz, Marc J |
| Abstract: | This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle. Economic expansions induce higher entry rates by prospective entrants subject to irreversible investment costs. The sluggish response of the number of producers (due to sunk entry costs and a time-to-build lag) generates a new and potentially important endogenous propagation mechanism for real business cycle models. The return to investment (corresponding to the creation of new productive units) determines household saving decisions, producer entry, and the allocation of labor across sectors. The model performs at least as well as the benchmark real business cycle model with respect to the implied second-moment properties of key macroeconomic aggregates. In addition, our framework jointly predicts procyclical product variety and procyclical profits even for preference specifications that imply countercyclical markups. When we include physical capital, the model can simultaneously reproduce most of the variance of GDP, hours worked, and total investment found in the data. |
| Keywords: | business cycle propagation; entry; markups; product creation; profits; variety |
| JEL: | E20 E32 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8564&r=ent |
| By: | Gianmarco I.P. Ottaviano |
| Abstract: | This paper investigates the role that the entry and exit of heterogeneous firms plays in shaping aggregate fluctuations in economic activity. In so doing, it develops a dynamic stochastic general equilibrium model in which procyclical entry and countercyclical exit along a real business cycle lead to endogenous cyclical movements in average firm productivity. These movements stem from a composition effect due to the reallocation of market shares among firms with different levels of efficiency and affect the propagation of exogenous technological shocks. Numerical analysis suggests that existing models with representative firms may overstate the actual role of procyclical entry and exit in imperfectly competitive markets as a propagation mechanism of exogenous technology shocks. The reason is that procyclical entry and countercyclical exit disproportionately involve less efficiency firms whose impact on aggregate economic activity is hampered by their smaller size. |
| JEL: | E20 E32 L11 L16 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17433&r=ent |
| By: | Tor Jacobson; Jesper Lindé; Kasper Roszbach |
| Abstract: | This paper studies the relationship between macroeconomic fluctuations and corporate defaults while conditioning on industry affiliation and an extensive set of firm-specific factors. By using a panel data set for virtually all incorporated Swedish businesses over 1990-2009, a period which includes a full-scale banking crisis, we find strong evidence for a substantial and stable impact from aggregate fluctuations on business defaults. A standard logit model with financial ratios augmented with macroeconomic factors can account surprisingly well for the outburst in business defaults during the banking crisis, as well as the subsequent fluctuations in default frequencies. Moreover, the effects of macroeconomic variables differ across industries in an economically intuitive way. Out-of-sample evaluations show that our approach is superior to models that exclude macro information and standard well-fitting time-series models. Our analysis shows that firm-specific factors are useful in ranking firms' relative riskiness, but that macroeconomic factors are necessary to understand fluctuations in the absolute risk level. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1029&r=ent |
| By: | Ceren Ozgen (Department of Spatial Economics, VU University Amsterdam) |
| Abstract: | Due to the growth in international migration in recent decades, the workforce of firms in host countries has become considerably more diverse, both demographically and culturally. It is an important question for firms and for governments to ask whether there are some productivity-enhancing externalities gained from this growing diversity within firms. In recent years migration research has demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level. However, there is a dearth of research on the links between innovation and migrant diversity at the firm level. In this paper we construct and analyse a unique linked employer-employee micro-dataset of 4582 firms, based on survey and administrative data obtained from Statistics Netherlands. Excluding firms in the hospitality industry and other industries that employ low-skilled migrants, we use the local number of restaurants with foreign cuisines and the historical presence of migrant communities as valid instruments of endogenous migrant settlement. We find that firms in which foreigners account for a relatively large share of employment are somewhat less innovative. However, there is strong evidence that firms that employ a more diverse foreign workforce are more innovative, particularly in terms of product innovations. |
| Keywords: | immigration, innovation, cultural diversity, knowledge spillovers, linked employer-employee data, Netherlands |
| JEL: | F22 O31 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2011013&r=ent |