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on Entrepreneurship |
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Issue of 2013‒11‒09
four papers chosen by Marcus Dejardin University of Namur and Universite' Catholique de Louvain |
| By: | Paige Ouimet; Rebecca Zarutskie |
| Abstract: | Young firms disproportionately employ young workers, controlling for firm size, industry, geography and time. The same positive correlation between young firms and young employees holds when we look just at new hires. On average, young employees in young firms earn higher wages than young employees in older firms. Further, young employees disproportionately join young firms with greater innovation potential and that exhibit higher growth, conditional on survival. These facts are consistent with the argument that the skills, risk tolerance, and career dynamics of young workers are contributing factors to their disproportionate share of employment in young firms. Finally, we show that an increase in the regional supply of young workers is positively related to the rate of new firm creation, especially in high tech industries, suggesting a causal link between the supply of young workers and new firm creation. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-75&r=ent |
| By: | François Gourio; Nicolas Roys |
| Abstract: | In France, firms with 50 employees or more face substantially more regulation than firms with less than 50. As a result, the size distribution of firms is visibly distorted: there are many firms with exactly 49 employees. We model the regulation as the combination of a sunk cost that must be paid the first time the firm reaches 50 employees, and a payroll tax that is paid each period thereafter when the firm operates with more than 50 employees. We estimate the model using indirect inference by fitting the discontinuity of the size distribution. The key finding is that the regulation is equivalent to a combination of a sunk cost approximately equal to about one year of an average employee salary, and a small payroll tax of 0.04%. Our structural model fits well the discontinuity in the size distribution. Removing the regulation improves labor allocation across firms, leading in steady-state to an increase in output per worker slightly less than 0.3%, holding the number of firms fixed. However, if firm entry is elastic, the steady-state gains are an order of magnitude smaller. |
| Keywords: | Employment (Economic theory) ; Wages |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2013-11&r=ent |
| By: | Kuntchev, Veselin; Ramalho, Rita; Rodriguez-Meza, Jorge; Yang, Judy S. |
| Abstract: | Using a unique firm level data set -- the Enterprise Surveys -- this paper develops a new measure of credit-constrained status for firms using hard data instead of perceptions data. The paper classifies firms into four ordinal categories: Not Credit Constrained, Maybe Credit Constrained, Partially Credit Constrained, and Fully Credit Constrained to understand the characteristics of the firms that fall into each group. Comparable data from the Enterprise Surveys for 116 countries are used to look at the relationship between firm size and credit-constrained status. First, the analysis finds that small and medium enterprises are more likely to be credit constrained (either partially or fully) than large firms. Furthermore, small and medium enterprises finance their working capital and investments mainly through trade credit and informal sources of finance. These two results hold to a large extent in all the regions of the developing world. Second, although size is a significant predictor of the probability of being credit constrained, firm age is not. Third, high-performing firms, as measured by labor productivity, are less likely to be credit constrained. This result applies to all firms but is not as strong for small firms as it is for large and medium firms. Finally, in countries with high private credit-to-gross domestic product ratios, firms are less likely to be credit constrained. Given the importance of access to credit for firm growth and efficiency, this paper confirms that throughout the developing world access to credit is inversely related to firm size but positively related to productivity and financial deepening in the country. |
| Keywords: | Access to Finance,Banks&Banking Reform,Bankruptcy and Resolution of Financial Distress,Microfinance,Investment and Investment Climate |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6670&r=ent |
| By: | Miguel García-Posada (Banco de España-Eurosystem); Juan S. Mora-Sanguinetti (Banco de España-Eurosystem) |
| Abstract: | Small businesses, the majority of Spanish fi rms, rarely fi le for formal bankruptcy, and this has been the case even during the current economic crisis. This suggests that bankruptcy law has a limited role to play in the distress of small fi rms. We propose an explanation based on two premises: (i) bankruptcy procedures are more costly and drawn out than the main alternative procedure, the mortgage foreclosure; (ii) personal bankruptcy law is unattractive to the individual debtor. Empirical analyses on a large micro data sample of Spanish, French and UK fi rms corroborate our hypothesis. It is important to note that these results are based on data that do not yet capture the impact of recent reforms of the Spanish insolvency framework. |
| Keywords: | bankruptcy, mortgage, insolvency |
| JEL: | G33 G21 K0 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1315&r=ent |