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on Network Economics |
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Issue of 2019‒01‒14
four papers chosen by Pedro CL Souza Pontifícia Universidade Católica do Rio de Janeiro |
| By: | Tania Babina; Sabrina T. Howell |
| Abstract: | This paper documents that corporate R&D investment increases employee departures to entrepreneurship. We use U.S. Census data, and instrument for R&D with its tax credit-induced cost. The ideas or skills that spill into startups seem to benefit from focused, high-powered incentives; for example, R&D-induced startups are much more likely to receive venture capital. The effect also seems to reflect ideas or skills that are poor complements to the firm’s assets. As human capital is inalienable and portable, and startups are crucial to economic growth, R&D-induced labor reallocation to startups appears to be a novel channel of R&D spillovers. |
| JEL: | G3 O3 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25360&r=all |
| By: | Renaud Bourlès (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Yann Bramoullé (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Eduardo Perez-Richet (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris, CEPR) |
| Abstract: | We provide the first analysis of the risk-sharing implications of altruism networks. Agents are embedded in a fixed network and care about each other. We study whether altruistic transfers help smooth consumption and how this depends on the shape of the network. We identify two benchmarks where altruism networks generate efficient insurance: for any shock when the network of perfect altruism is strongly connected and for any small shock when the network of transfers is weakly connected. We show that the extent of informal insurance depends on the average path length of the altruism network and that small shocks are partially insured by endogenous risk-sharing communities. We uncover complex structural effects. Under iid incomes, central agents tend to be better insured, the consumption correlation between two agents is positive and tends to decrease with network distance, and a new link can decrease or increase the consumption variance of indirect neighbors. Overall, we show that altruism in networks has a first-order impact on risk and generates specific patterns of consumption smoothing. |
| Keywords: | altruism,networks,risk sharing,informal insurance |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01943862&r=all |
| By: | Andrew B. Bernard; Emmanuel Dhyne; Glenn Magerman; Kalina Manova; Andreas Moxnes |
| Abstract: | This paper quantifies the origins of firm size heterogeneity when firms are interconnected in a production network. Using the universe of buyer-supplier relationships in Belgium, the paper develops a set of stylized facts that motivate a model in which firms buy inputs from upstream suppliers and sell to downstream buyers and final demand. Larger firm size can come from high production capability, more or better buyers and suppliers, and/or better matches between buyers and suppliers. Downstream factors explain the vast majority of firm size heterogeneity. Firms with higher production capability have greater market shares among their customers, but also higher input costs and fewer customers. As a result, high production capability firms have lower sales unconditionally and higher sales conditional on their input prices. Counterfactual analysis suggests that the production network accounts for more than half of firm size dispersion. Taken together, our results suggest that multiple firm attributes underpin their success or failure, and that models with only one source of firm heterogeneity fail to capture the majority of firm size dispersion. |
| Keywords: | production networks, productivity, firm size heterogeneity |
| JEL: | F10 F12 F16 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1592&r=all |
| By: | Muduli, Silu; Dash, Shridhar Kumar |
| Abstract: | Paper models lender’s decision based on project riskiness, trust from borrower’s socioeconomic network, and social cost of default for the borrower. The paper suggests a methodology to estimate aggregate level of trustworthiness of borrower in socio-economic network. Our model links the social cost of default to credit default. A relatively safer project executed by a borrower with lower social cost of default is likely to be a willful defaulter. Similarly, relatively safer project executed by a borrower with high social cost of default is likely to pay-back the loan. |
| Keywords: | Social Economic Network,Trust,Credit Risk |
| JEL: | D85 G21 L14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:190918&r=all |