scholarly journals INVESTIGATING NONNEUTRALITY IN A STATE‐DEPENDENT PRICING MODEL WITH FIRM‐LEVEL PRODUCTIVITY SHOCKS

2020 ◽  
Vol 61 (1) ◽  
pp. 159-188 ◽  
Author(s):  
Michael Dotsey ◽  
Alexander L. Wolman
Keyword(s):  
Pricing Model ◽  
Firm Level ◽  
Productivity Shocks ◽  
State Dependent ◽  
State Dependent Pricing

scholarly journals The Phillips Curve Under State-dependent Pricing

2004 ◽  
Author(s):  
Hasan Bakhshi ◽  
Hashmat Khan ◽  
Barbara Rudolf
Keyword(s):  
Phillips Curve ◽  
State Dependent ◽  
State Dependent Pricing

scholarly journals Creative Destruction and Uncertainty

2019 ◽  
Vol 18 (4) ◽  
pp. 1814-1843
Author(s):  
Petr Sedláček
Keyword(s):  
Firm Dynamics ◽  
Creative Destruction ◽  
Technology Shocks ◽  
Dynamics Model ◽  
Vector Autoregressions ◽  
Firm Level ◽  
Productivity Shocks ◽  
Technology Growth ◽  
Structural Vector ◽  
Dot Com

Abstract Uncertainty rises in recessions. But does uncertainty cause downturns or vice versa? This paper argues that counter-cyclical uncertainty fluctuations are a by-product of technology growth. In a firm dynamics model with endogenous technology adoption, faster technology growth widens the dispersion of firm-level productivity shocks, a benchmark uncertainty measure. Moreover, faster technology growth spurs a creative destruction process, generates a temporary downturn, and renders uncertainty counter-cyclical. Estimates from structural vector autoregressions (VARs) on U.S. data confirm the model’s predictions. On average, 1/4 of the cyclical variation in uncertainty is driven by technology shocks. This fraction rises to 2/3 around the “dot-com” bubble.

STATE DEPENDENT PRICING AND BUSINESS CYCLE ASYMMETRIES

2007 ◽  
Vol 48 (1) ◽  
pp. 281-310 ◽  
Author(s):  
Michael B. Devereux ◽  
Henry E. Siu
Keyword(s):  
Business Cycle ◽  
State Dependent ◽  
State Dependent Pricing

scholarly journals Aggregation and Optimization with State-Dependent Pricing: A Comment

Econometrica ◽  
2006 ◽  
Vol 74 (2) ◽  
pp. 565-573 ◽  
Author(s):  
Vladislav Damjanovic ◽  
Charles Nolan
Keyword(s):  
State Dependent ◽  
State Dependent Pricing

Gender discrimination and firms’ profit: evidence from Brazil

2016 ◽  
Vol 43 (5) ◽  
pp. 801-814 ◽  
Author(s):  
Wenjun Liu ◽  
Tomokazu Nomura ◽  
Shoji Nishijima
Keyword(s):  
Labour Market ◽  
Gender Discrimination ◽  
Firm Characteristics ◽  
Firm Level ◽  
Productivity Shocks ◽  
Content Type ◽  
Discrimination Model ◽  
Level Data ◽  
Female Employees ◽  
Positive Effect

Purpose This paper investigates discrimination against women within the Brazilian labour market using firm-level data from the World Bank Investment Climate Survey. The purpose of this paper is to determine whether the female employees in the Brazilian labour market are paid less than their productivity warrants due to the existence of discrimination. Design/methodology/approach Based on employer discrimination model proposed by Becker (1971) that considered the proportion of female employees as a proxy for the extent of discrimination, the authors estimate the profit function using OLS analysis, and regress it on the proportion of female employees and other firm characteristics. To address the endogeneity problem caused by unobservable productivity shocks, the authors employed the methods proposed by Olley and Pakes (1996) and Levinsohn and Petrin (2003), respectively. Findings The results indicate that the proportion of female employees has positive effect on firms’ profit in 2002, but has no effect in 2007. This finding gives evidence of the existence of discrimination against female employees within the Brazilian labour market in the early 2000s, while the gender discrimination was reduced overtime. Originality/value This paper’s main contribution is to provide an approach that differs from that of previous research to determine whether discrimination exists within the Brazilian labour market. This paper also provides policy insights for Brazilian labour market.

Assessing education’s contribution to productivity using firm-level evidence

2014 ◽  
Vol 35 (8) ◽  
pp. 1116-1139 ◽  
Author(s):  
Lara Lebedinski ◽  
Vincent Vandenberghe
Keyword(s):  
Human Capital ◽  
Causal Effect ◽  
Labour Productivity ◽  
Firm Level ◽  
Productivity Shocks ◽  
Content Type ◽  
Labour Costs ◽  
Short Run ◽  
Time Invariant ◽  
Heterogeneity Bias

Purpose – There is plenty of individual-level evidence, based on the estimation of Mincerian equations, showing that better-educated individuals earn more. This is usually interpreted as a proof that education raises labour productivity. Some macroeconomists, analysing cross-country time series, also support the idea that the continuous expansion of education has contributed positively to growth. Surprisingly, most economists with an interest in human capital have neglected the level of the firm to study the education-productivity-wage nexus. And the few published works considering firm-level evidence are lacking a proper strategy to cope with the endogeneity problem inherent to the estimation production and wage functions. The purpose of this paper is to aim at providing estimates of the causal effect of education on productivity and wage labour costs. Design/methodology/approach – This paper taps into a rich, firm-level, Belgian panel database that contains information on productivity, labour cost and the workforce’s educational attainment to deliver estimates of the causal effect of education on productivity and wage/labour costs. Therefore, it exclusively resorts to within firm changes to deal with time-invariant heterogeneity bias. What is more, it addresses the risk of simultaneity bias (endogeneity of firms’ education-mix choices in the short run) using the structural approach suggested by Ackerberg et al. (2006), alongside more traditional system-GMM methods (Blundell and Bond, 1998) where lagged values of labour inputs are used as instruments. Findings – Results suggest that human capital, in particular larger shares of university-educated workers inside firms, translate into significantly higher firm-level labour productivity, and that labour costs are relatively well aligned on education-driven labour productivity differences. In other words, the authors find evidence that the Mincerian relationship between education and individual wages is driven by a strong positive link between education and firm-level productivity. Originality/value – Surprisingly, most economists with an interest in human capital have neglected the level of the firm to study the education-productivity-pay nexus. Other characteristics of the workforce, like gender or age have been much more investigated at the level of the firm by industrial or labour economists (Hellerstein et al., 1999; Aubert and Crépon, 2003; Hellerstein and Neumark, 2007; Vandenberghe, 2011a, b, 2012; Rigo et al., 2012; Dostie, 2011; van Ours and Stoeldraijer, 2011). At present, the small literature based on firm-level evidence provides some suggestive evidence of the link between education, productivity and pay at the level of firms. Examples are Hægeland and Klette (1999); Haltiwanger et al. (1999). Other notable papers examining a similar question are Galindo-Rueda and Haskel (2005), Prskawetz et al. (2007) and Turcotte and Whewell Rennison (2004). But, despite offering plausible and intuitive results, many of the above studies essentially rely on cross-sectional evidence and most of them do not tackle the two crucial aspects of the endogeneity problem affecting the estimation of production and wage functions (Griliches and Mairesse, 1995): first, heterogeneity bias (unobserved time-invariant determinants of firms’ productivity that may be correlated to the workforce structure) and second, simultaneity bias (endogeneity in input choice, in the short-run, that includes the workforce mix of the firm). While the authors know that labour productivity is highly heterogeneous across firms (Syverson, 2011), only Haltiwanger et al. (1999) control for firm level-unobservables using firm-fixed effects. The problem of simultaneity has also generally been overlooked. Certain short-term productivity shocks affecting the choice of labour inputs, can be anticipated by the firms and influence their employment decision and thus the workforce mix. Yet these shocks and the resulting decisions by firms’ manager are unobservable by the econometrician. Hægeland and Klette (1999) try to solve this problem by proxying productivity shocks with intermediate goods, but their methodology inspired by Levinsohn and Petrin (2003) suffers from serious identification issues due to collinearity between labour and intermediate goods (Ackerberg et al., 2006).

Zipf's Law, Pareto's Law, and the Evolution of Top Incomes in the United States

2017 ◽  
Vol 9 (3) ◽  
pp. 36-71 ◽  
Author(s):  
Shuhei Aoki ◽  
Makoto Nirei
Keyword(s):  
United States ◽  
Income Distribution ◽  
The United States ◽  
Zipf’S Law ◽  
Tax Rates ◽  
Firm Level ◽  
Productivity Shocks ◽  
Zipf's Law ◽  
Top Incomes ◽  
Pareto’S Law

We construct a tractable neoclassical growth model that generates Pareto's law of income distribution and Zipf's law of the firm size distribution from idiosyncratic, firm-level productivity shocks. Executives and entrepreneurs invest in risk-free assets, as well as their own firms' risky stocks, through which their wealth and income depend on firm-level shocks. By using the model, we evaluate how changes in tax rates can account for the evolution of top incomes in the United States. The model matches the decline in the Pareto exponent of the income distribution and the trend of the top 1 percent income share in recent decades. (JEL D31, H24, L11)

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