State antitrust enforcement in the US and implications for small business entry and relocation

This article examines the impact of the important, yet little studied, state-level antitrust enforcement activity on entry and relocation behaviour by small US firms. Feinberg and Husted (2011) have shown that this enforcement, especially nonhorizontal cases, may be viewed by potential entrants as a negative aspect of the state business climate. However, they did not pursue a more disaggregate analysis of small firm entry behaviour; nor did they investigate different responses between manufacturing, wholesaling and retailing firms. Another related issue is the extent to which state cases filed in tandem with federal investigations have the same impact on establishment entry as do purely ‘independent’ cases. These considerations are dealt with in this article. The author uses annual state-level data from the Statistics of US Business to examine entry and relocation reactions to state antitrust enforcement by firms within three small-business categories: 1–19 employees; 20–99 employees; 100–499 employees. Generally speaking, the smallest retail and wholesale firms seem to favour vigorous antitrust activity, especially enforcement targeted against cartel behaviour by suppliers. The largest small-firm retailers and wholesalers (those with 100–499 employees) seem somewhat threatened by such activity, especially the more controversial nonhorizontal enforcement. However, it must be acknowledged that the effects on entry or relocation of small firms – both positive and negative – are quite small.     

Employment adjustment in the global crisis

This paper analyzes the employment adjustment of domestic, foreign and state‐owned companies before and during the global crisis. Using Hungarian firm‐level data for the period between 2006 and 2012 and matching foreign and state‐owned firms to domestic enterprises by industry and employment, it finds that the net job creation rate is similar in domestic and state‐owned firms while it is larger by 3.5 percent in foreign‐owned enterprises before the crisis. Domestic and foreign‐owned firms react to the crisis in very similar fashion by dropping net job creation by about 4 percentage points. Contrary to this behaviour, state‐owned enterprises do not decrease net job creation in some, and increase it by 3.5‐6 percent in other regressions.     

Scale effects found!

A key feature of early endogenous growth models is their prediction of scale effects – the larger the economy, as measured by population, the number of firms or employment, the faster the economy should grow. However, empirical work has failed to support the existence of scale effects. As a result, much human capital has been expended in order to ‘fix’ this problem by eliminating scale effects in endogenous growth models. We contend that econometric techniques used in the empirical search for scale effects are inconsistent with growth theory. Using data from US states and an econometric technique that better matches growth theory by allowing each economy to have its own steady state, we provide empirical support for the existence of scale effects. Results call into question the need to reformulate the first models of endogenous growth.     

With a little help from our friends: The effect of USAID assistance on SME growth in a transition economy

Using survey data on Macedonian firms that participated in USAID programs providing technical and financial assistance for small and medium-sized enterprises (SMEs) and on firms that did not, we estimate the effectiveness of such assistance in increasing the growth of employment in the assisted firms. We control for selection bias in program participation and use both kernel and caliper propensity score matching to estimate the excess growth of employment in assisted firms. We find that assistance programs raised employment growth by 16-20 percentage points in the first year after assistance and by 26-30 points by the third year.     

Industrial structure and jobless growth in transition economies

When does employment growth mirror aggregate growth? Applying a two sector model, where productivity growth differs across sectors of production, this article is concerned with a feature characterising a number of transition economies: a divergence between production and employment growth. In our framework the industrial structure that allows employment growth to mirror output growth is endogenous, and related to a number of industry- and economy-wide characteristics. The article shows how the critical industrial structure necessary for avoiding ‘jobless growth’ is context-specific, questioning a ‘one size fits all’ policy approach when aiming to fulfil the Europe 2020 Strategy.     

The micro-firm health insurance hypothesis

The objective of this study is to investigate the ‘micro-firm health insurance hypothesis’, a hypothesis that the greater the percentage of domestic firms that are ‘very small’, i.e. have four or fewer employees, the greater the percentage of the US population that will be without health insurance. The focus of this study is based on the premise that very small firms (as defined), ‘micro-firms’, which constitute 58.6% of all private sector firms in the US, face bargaining-power, financial, and competitive constraints that tend to limit their ability to provide group health insurance benefits to their employees, with the result being that employees at very small firms are relatively more likely than employees at larger firms to be without a health insurance fringe benefit. Weighted Least Squares (WLS) estimates provide strong empirical support for the hypothesis.     

Public R&D subsidies,outside private support,and employment growth

In the aftermath of the passage of the American Recovery and Reinvestment Act of 2009, the employment effects of public subsidies have been scrutinized because of new emphasis on public accountability and transparency. In this paper, we investigate conditions in which public subsidies of research and development (R&D) in small firms stimulate employment growth. We find, based on an empirical analysis of employment growth induced by US Department of Defense Small Business Innovation Research program awards, that the stimulated employment growth is greater under two conditions: one, the presence of outside investors providing additional funding for the R&D and, two, when an exceptional amount of intellectual property is created by the publicly subsidized R&D. In addition to outside investors, other firms that make commercial agreements with the subsidized firm appear important for the employment growth of the subsidized firm. Cooperation between the small business doing the R&D and other firms is an important determinant of the commercial success of the technologies created with the support of public funds.     

Entry,market turbulence and industry employment growth

This paper investigates the relationship between industrial dynamics in terms of firm entry, market turbulence and employment growth. Do entry of firms, the composition of industry dynamics (net entry) and market turbulence (entry and exit) influence industrial employment growth? This paper provides an empirical investigation, using unique data for 42 disaggregated Swedish industrial sectors during the period 1997–2001. It is hypothesised that the importance of entering firms, net entry and market turbulence may differ significantly across industries. A quantile regression method is used in order to detect industrial differences in the response to industrial employment growth. The empirical evidence shows that, on the one hand, firm entry and market turbulence have a positive effect on employment for fast growing industries and that the effect is larger for high growth industries. On the other hand, the composition of industry dynamics in terms of net entry rates has a more dispersed effect across all industries, even though the effect of net entry is larger for high growth industries.     

Regulating away competition: the effect of regulation on entrepreneurship and employment

Many scholars have worried that regulation deters entrepreneurship because it increases the cost of entry, reduces innovation in the regulated industry, and benefits large firms because they can overcome the costs of complying with regulations more easily than smaller firms. Using novel data on the extent of US federal regulations by industry and data on firm births and employment from the Statistics of US Businesses, we run fixed effects regressions to show that more-regulated industries experienced fewer new firm births and slower employment growth in the period 1998–2011. Large firms may even successfully lobby government officials to increase regulations to raise their smaller rivals’ costs. We also find that regulations inhibit employment growth in all firms and that large firms are less likely to exit a heavily regulated industry than small firms.     

Reviving and assessing the Kuznets law on innovation

We apply a panel vector autoregression model to a firm-level longitudinal database to observe the co-evolution of sales growth, employment growth, profits growth and the growth of research and development (R&;D) expenditure. Contrary to expectations, profit growth seems to have little detectable association with subsequent R&;D investment. Instead, firms appear to increase their total R&;D expenditure following growth in sales and employment. In a sense, firms behave ‘as if’ they aim for a roughly constant ratio of R&;D to employment (or sales). We observe heterogeneous effects for growing or shrinking firms, however, suggesting that firms are less willing to reduce their R&;D levels following a negative growth shock than they are willing to increase R&;D after a positive shock.     

Impact of Chinese growth and trade on labor in developed countries

This paper examines the impacts of growth in China's economy and trade on the skill premium of labor in developed countries. We utilize a unique global dataset that disaggregates workers by occupations to identify impacts across labor categories with different skill sets, complementing the widely used GTAP Data Base in the CGE framework offered by the GTAP model. To study the impacts of China's fast-paced growth, we model the counterfactual, i.e., what if China grew and opened at a more modest rate; we then compare this baseline with China's actual growth. Results indicate that a strong rise in manufacturing exports from China to the US impacts output and employment in the US. The US shifts its production away from light manufacturing sectors to more service-oriented sectors that also tend to engage higher skilled labor. There is a small decrease in the real wages of unskilled labor and a rise in the real wages of skilled labor. Interestingly, not all categories of unskilled labor lose, rather those that are more directly linked with manufacturing sectors are impacted; unskilled ‘service and shop workers’ and the unskilled ‘agricultural workers, machine operators, assemblers, craft workers, and others’ observe a small decline in real wages, while the impact on unskilled ‘clerks’ is insignificant. For all categories of skilled workers, there is an increase in real wages primarily driven by the shift in production to services and high-skilled labor intensive categories, resulting in the rising skill premium. Hence disaggregating the labor data provides greater depth on the understanding of the differential impacts on domestic workers resulting from trade, and thereby guides policy on how these differential impacts can be smoothed through redistribution of benefits. Consistent with other study findings, there is a positive impact on overall growth and welfare in the US, EU and Australasia.     

The puzzle on the causality of the productivity and employment growth: evidence from firm-level data

This article analyses the causality between the firm’s employment and productivity growth based on the population of manufacturing firms registered in Slovenia in the 1994–2003 period. By using the system GMM estimator, we show that the employment–productivity growth trade-off does not exist. Moreover, we find significant complementarities between employment and productivity growth, mostly driven by SMEs and firms from high-tech industries. Accordingly, we argue that the job-creation policy and productivity-promoting policy are complementary rather than trade-offs and that policymakers should focus on the optimal policy mix that provides the highest aggregate effect with regard to all growth aspects. Further, significant differences among the factors of employment and productivity growth suggest that job-creation policy measures are most successful when targeted at younger export-oriented firms with high total factor productivity levels and capital-intensive production. Meanwhile, the outcome of policy measures aimed at promoting productivity increases with a firm’s capital intensity and size up to the threshold employment level and with the intensity of market competition.     

Employment and output effects of federal regulations on small business

This paper examines the disparate impact of US federal regulations on small businesses. Using a two-sector dynamic general equilibrium model, we obtained two implications of higher regulation on small firms that have yet to be empirically tested in the published literature. First, as regulations increase, small firms’ share of employment shrinks. Second, as regulations rise, small firms’ share of total output falls. Using a panel of industry-specific US regulatory restrictions, we found that a 10% increase in federal regulations was associated with an approximate 0.8% reduction in small firms’ share of industry employment and a nearly 1.5% decline in small firms’ share of industry output.     

Testing the principle of ‘growth of the fitter’: The relationship between profits and firm growth

This paper is an empirical investigation of the evolutionary principle of ‘growth of the fitter’. Previous studies suggest that growth does not discriminate between firms according to their fitness, when this latter is proxied by productivity. We use the profit rate (operating surplus/value added) as a proxy for fitness and explore its influence on subsequent growth rates by tracking 8405 French manufacturing firms over the period 1996–2004. We overcome problems of unobserved firm-specific effects, persistence and endogeneity by using the ‘system GMM’ estimator developed by Blundell and Bond [Blundell, R., Bond, S., 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics 87, 115–143]. Whilst non-parametric plots do not reveal any obvious relationship between profit rates and subsequent growth, regression analysis identifies a small positive influence. Considering the reciprocal influence of growth on profit rates, positive and significant results suggest that ‘Penrose effects’ are not a dominant feature of firm dynamics.     

University research alliances,absorptive capacity,and the contribution of startups to employment growth

This paper examines how university research alliances and other cooperative links with universities contribute to startup employment growth. We argue that ‘scientific absorptive capacity’ at the startup is critical for reaping the benefits from university research alliances, but not necessarily for other university connections. We also estimate the aggregate employment contribution from startup firms and attribute those employment gains to university research alliances and other university connections. We find significant contributions to employment growth from university research alliances and other university connections, but scientific absorptive capacity is critical for university research alliances. Only 7% of the startup population maintained a university research alliance, but among these firms, 3.4% of their total jobs created were attributable to their alliances. These results suggest that university connections are quite important for job growth and university research alliances contributed substantially to job creation for those firms that had such alliances.     

The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data

A large number of articles have analysed ‘the one constant’ in the economic effects of trade unions, namely that collective bargaining reduces employment growth by 2–4% points per year. Evidence is, however, mostly related to Anglo‐Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked‐employer‐employee data for Germany, we find a negative correlation between being covered by a sector‐wide bargaining agreement or firm‐level contract and employment growth of about 1% point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross‐section data might be driven by selection.     

Sources of Canadian economic growth

We apply modern ideas‐oriented growth accounting, based on the semi‐endogenous growth theory of Jones (2002), to compare the sources of Canadian and US economic growth between 1981–2014. This framework allows us to distinguish between transition dynamics and steady state growth as well as quantify their respective contributions. We find that the bulk of the 1.1 percentage points total average Canadian growth rate of output per hour has been due to transitional factors, mainly capital intensity and domestic human capital growth driven by educational attainment. The growth in excess ideas (total ideas growth minus steady state growth) has contributed a small share of 0.06 percentage points. Two features stand out in comparison to the US growth experience over the same period. First, over a full percentage point of the average US growth of 1.64% is due to excess ideas growth. Second, the “constant growth view” that reconciles large sources of transitional growth with relatively stable average growth is not supported in Canada. We estimate a relatively low elasticity of output with respect to world research effort as the reason behind the small share of R&D‐oriented sources of Canadian growth.     

国有企业改制对就业的影响——来自11个城市的证据

在20世纪90年代中后期,中国工业企业的就业规模大幅度下降,许多人认为,企业改制是其主要原因。本文通过对11个城市386家企业从1995年到2001年的面板数据的研究,评估了企业改制对就业的影响。我们的面板数据回归结果显示,和一般印象相反,改制显著地减缓了就业的下降趋势。我们还发现,改制对企业的就业增长有持续的和递增的积极作用。即使在控制了企业的绩效、就业条件、资产结构以及改制前就业历史之后,我们仍然得到相同的结论。另外,我们还使用了倾向分值匹配基础上的差分内差分方法对我们的结果进行了验证,也得到了相似的结论。     

Employment growth and innovation at the firm level

We analyze the influence of innovation on growth rates of employment in 859 Dutch manufacturing firms over the period 1983–1988. Whereas the (growth of the) R&D intensity of firms has a slightly negative impact on employment, we find that firms with a high share of product-related R&D (as a proxi of R&D related to industrial activities in an early stage of the life cycle) experienced an above average growth of employment. The same holds for firms which directed their R&D towards information technology. Smaller firms have, ceteris paribus, substantially higher growth rates of employment than their larger counterparts. Against our expectations, R&D cooperation has no significant impact on employment growth. The same holds for activities in the fields of biotechnology and new materials.