scholarly journals Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy

2016 ◽  
Vol 106 (3) ◽  
pp. 625-663 ◽  
Author(s):  
A. Kerem Coşar ◽  
Nezih Guner ◽  
James Tybout
Keyword(s):  
Wage Inequality ◽  
Open Economy ◽  
National Income ◽  
Firm Dynamics ◽  
Job Turnover ◽  
Firm Level ◽  
Firing Costs ◽  
Level Data ◽  
Wage Distributions ◽  
Trade Frictions

This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows and wages. Counterfactual experiments imply that Colombia's integration with global product markets increased its national income at the expense of higher unemployment, greater wage inequality, and increased firm-level volatility. In contrast, contemporaneous labor market reforms dampened the increase in unemployment and aggregate job turnover. The results speak more generally to the effects of globalization on labor markets. (JEL F13, F16, F66, J31, J63, O15, O19)

scholarly journals Heterogeneous Markups, Growth, and Endogenous Misallocation

Econometrica ◽  
2020 ◽  
Vol 88 (5) ◽  
pp. 2037-2073 ◽  
Author(s):  
Michael Peters
Keyword(s):  
United States ◽  
Market Power ◽  
Productivity Growth ◽  
Firm Dynamics ◽  
The United States ◽  
Equilibrium Outcome ◽  
Firm Level ◽  
Competitive Effects ◽  
Level Data ◽  
Firm Level Data

Markups vary systematically across firms and are a source of misallocation. This paper develops a tractable model of firm dynamics where firms' market power is endogenous and the distribution of markups emerges as an equilibrium outcome. Monopoly power is the result of a process of forward‐looking, risky accumulation: firms invest in productivity growth to increase markups in their existing products but are stochastically replaced by more efficient competitors. Creative destruction therefore has pro‐competitive effects because faster churn gives firms less time to accumulate market power. In an application to firm‐level data from Indonesia, the model predicts that, relative to the United States, misallocation is more severe and firms are substantially smaller. To explain these patterns, the model suggests an important role for frictions that prevent existing firms from entering new markets. Differences in entry costs for new firms are less important.

scholarly journals The Role of Startups in Structural Transformation

2016 ◽  
Vol 106 (5) ◽  
pp. 219-223 ◽  
Author(s):  
Robert C. Dent ◽  
Fatih Karahan ◽  
Benjamin Pugsley ◽  
Ayşegül Şahin
Keyword(s):  
Life Cycle ◽  
Structural Transformation ◽  
Firm Dynamics ◽  
Firm Level ◽  
The Past ◽  
Level Data ◽  
Firm Level Data ◽  
The U.S

The U.S. economy has been going through a striking structural transformation--the secular reallocation of employment across sectors--over the past several decades. We propose a decomposition framework to assess the contributions of various margins of firm dynamics to this shift. Using firm-level data, we find that at least 50 percent of the adjustment has been taking place along the entry margin, due to sectors receiving different shares of startup employment than their employment shares. The rest is mostly due to life cycle differences across sectors. Declining overall entry has a small but growing effect of dampening structural transformation.

scholarly journals GVC and wage dispersion. Firm-level evidence from employee?employer database

Equilibrium ◽  
2021 ◽  
Vol 16 (2) ◽  
pp. 357-375
Author(s):  
Dagmara Nikulin ◽  
Joanna Wolszczak-Derlacz ◽  
Aleksandra Parteka
Keyword(s):  
Wage Inequality ◽  
Value Added ◽  
Research Area ◽  
Firm Level ◽  
Level Data ◽  
Research Gap ◽  
Micro Level ◽  
Sector Type ◽  
Sample Heterogeneity ◽  
Wage Inequalities

Research background: Wage inequalities are still part of an interesting policy-oriented research area. Given the developments in international trade models (heterogeneity of firms) and increasing availability of micro-level data, more and more attention is paid to wage differences observed within and be-tween firms. Purpose of the article: The aim of the paper is to address the research gap concerning limited cross-country evidence on a nexus of wage inequality?global value chains (GVCs), analysed from the perspective of wage inequality components within and between firms. Methods: This paper uses a large employee?employer database derived from the European Structure of Earnings Survey (SES), combined with sector-level indicators of GVC involvement based on the World Input-Output Database (WIOD). As a result, a rich database covering more than 7.5 million observations is created. The regression-based decomposition modelling technique developed by Fiorio and Jenkins (2010) is used to identify the contributions of different factors to wage inequalities, focusing on the components within and between firms. Findings & value added: The analysis presented in this paper aimed to show the contribution of GVC involvement, among various other factors, to the observed inequality of wages. Due to the use of a rich database that merges employer and employee data, the effects materialised with respect to different types of wages could be analysed separately, in particular components between and within firms. The general conclusion from the regression-based decomposition in log wages is that GVCs contribute marginally to the observed wage inequality in the European sample analysed in this paper. Some differences confronting the components within and between firms (the latter dominates) are observed; there is also certain intra sample heterogeneity in the estimated results (e.g. due to sector type or country group), but the general result is robust.

scholarly journals Don't Put All Your Eggs in Foreign Baskets

Económica ◽  
2020 ◽  
Vol 66 ◽  
pp. 016
Author(s):  
Santiago Camara
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Financial Crises ◽  
Small Open Economy ◽  
Balance Sheet ◽  
Firm Level ◽  
Present Evidence ◽  
Exporting Firms ◽  
Balance Sheet Effects ◽  
Level Data

I analyze the sluggish response of exports during and after financial crises using firm level data for two countries-episodes: Argentina 2001 and Peru 1998 crises. I find that both incumbent exporting firms do not expand and that there’s no significant entry of new exporting firms. Furthermore, I present evidence that suggests that the export elasticity to the real exchange rate is asymmetric, smaller for depreciations than for appreciations. I build and estimate a DSGE model for a small open economy where exporting entrepreneurs are subject to financial frictions and balance sheet effects in order to try and explain these stylized facts. Although these frictions decrease the response of exports to movements in the exchange rate, I use computational exercises to show that they are not enough to explain the empirical results.

scholarly journals Supervised Learning for the Prediction of Firm Dynamics

2021 ◽  
pp. 19-41
Author(s):  
Falco J. Bargagli-Stoffi ◽  
Jan Niederreiter ◽  
Massimo Riccaboni
Keyword(s):  
Supervised Learning ◽  
Financial Distress ◽  
Firm Dynamics ◽  
High Dimensional ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Research Questions ◽  
And Performance ◽  
Company Growth

AbstractThanks to the increasing availability of granular, yet high-dimensional, firm level data, machine learning (ML) algorithms have been successfully applied to address multiple research questions related to firm dynamics. Especially supervised learning (SL), the branch of ML dealing with the prediction of labelled outcomes, has been used to better predict firms’ performance. In this chapter, we will illustrate a series of SL approaches to be used for prediction tasks, relevant at different stages of the company life cycle. The stages we will focus on are (1) startup and innovation, (2) growth and performance of companies, and (3) firms’ exit from the market. First, we review SL implementations to predict successful startups and R&D projects. Next, we describe how SL tools can be used to analyze company growth and performance. Finally, we review SL applications to better forecast financial distress and company failure. In the concluding section, we extend the discussion of SL methods in the light of targeted policies, result interpretability, and causality.

Implicit Taxes Amid Race to the Bottom in a Global Tax Game

2020 ◽  
Vol 27 (2) ◽  
pp. 42
Author(s):  
Igor Semenenko ◽  
Junwook Yoo ◽  
Parporn Akathaporn
Keyword(s):  
Capital Mobility ◽  
Tax Rates ◽  
Corporate Tax ◽  
Firm Level ◽  
Race To The Bottom ◽  
Tax Subsidy ◽  
Tax Subsidies ◽  
Level Data ◽  
Tax Returns ◽  
Tax Hypothesis

Growing tax competition among national governments in the presence of capital mobility distorts equilibrium in the international corporate tax market. This paper is related to the literature that examines impact of international tax policies on corporate accounting statements. Employing international firm-level data, this study revisits the race-to-the-bottom hypothesis and documents that tax exemptions lowering effective tax rates relative to statutory rates increase pre-tax returns. This finding directly contradicts the implicit tax hypothesis documented by Wilkie (1992), who provided empirical evidence on inverse relationship between pre-tax return and tax subsidy. We also find evidences that relative importance of permanent versus timing component depends on the geography and that decline in corporate tax rates reduces impact of tax subsidies on profitability. Our findings suggest that tax subsidies play a different role than in 1968-1985, which was examined by Wilkie (1992). These results are consistent with the race-to-the-bottom hypothesis and income shifting explanation

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