Between-Firm Redistribution of Profit in Competitive Industries: Why Labor Market Policies May Not Work

Empirical studies document differences in firms' response to the introduction of various labor market policies. In particular, large and mature firms tend to participate more actively in targeted employment subsidy programs (under which firms receive subsidies for hiring disadvantaged workers). This paper offers an explanation for this phenomenon and argues that it might have important consequences for policy making. Namely, such behavior of firms may indicate that large and mature firms benefit from the introduction of a new subsidy program, while small and young firms incur indirect costs. In this case, the policy implicitly redistributes profit from young to mature firms and may discourage startups if the entry into the industry is competitive. The resulting decrease in the number of operating firms is likely to have a significant impact on the policy's outcomes. These effects become more pronounced as heterogeneity between young and mature firms increasesfirm dynamics, labor market policies

Risk Taking by Entrepreneurs

Entrepreneurs bear substantial risk, but empirical evidence shows no sign of a positive premium. This paper develops a theory of endogenous entrepreneurial risk taking that explains why self-financed entrepreneurs may find it optimal to invest into risky projects offering no risk premium. The model has also a number of implications for firm dynamics supported by empirical evidence, such as a positive correlation between survival, size, and firm age.occupational choice, risk taking, firm dynamics, borrowing constraints.

Determination of Cerium in Filtrates After Sorption by Stripping Voltammetry on Solid Electrodes

Разработана методика определения церия (III) в водных растворах методом инверсионной вольтамперометрии на графитовом электроде в виде малорастворимого соединения. Зависимость аналитического сигнала церия (III) от его концентрации в растворе линейна в диапазоне 0.5–10 мг/л и описывается уравнением I = (0.56±0.03)с + (0.54±0.10) [коэффициент корреляции > 0.99]. Предел обнаружения церия (III) составляет 0.1 мг/л. Методом «введено-найдено» показано отсутствие значимой систематической погрешности. С использованием разработанной методики определено содержание церия в фильтратах после его сорбцииА stripping voltammetry method was developed for the determination of cerium (III) on graphite electrode as a poorly soluble compound in filtrate after sorption. The cerium (III) concentration presents a good linear relationship over the range of 0.5–10 mg/l. Its linear equation is I = (0.56±0.03)с + + (0.54±0.10), with a correlation coefficient >0.99. The detection limit of cerium (III) is 0.1 mg/l. The absence of a significant systematic error is shown by the added-found method. Using the developed technique, the concentration of cerium (III) in the filtrates after sorption has been determine

Financial constraints and economic development: the role of innovative investment

This paper argues that accounting for firms' endogenous productivity growth plays an important role in understanding the link between financial and economic development. First, using a simple analytically tractable model, it shows that incorporating endogenous investment in firm productivity into the model amplifies the negative impact of firm financing constraints on economic development, as long as the models with endogenous and exogenous productivity growth are calibrated to match the same data on firm size dynamics and firm owners' income. Second, the paper embeds productivity investment into an otherwise standard variation of the Bewley-Aiyagary-Hugget model used in the existing literature to evaluate the impact of borrowing constraints on economic development. It compares the effects of firm financing constraints in the two models, with endogenous and exogenous firm productivity growth, calibrated in such a way that they are observationally equivalent in the benchmark unconstrained environment. The main result is that the impact on financing constraints on measured TFP and GDP is significantly bigger in the model in which the evolution of firm productivity is endogenous. While measured TFP and GDP fall by 5% and 28% in the model with exogenous productivity growth, they fall by 13% and 37%, respectively, in the model in which firm productivity grows endogenously

Unemployment, firm dynamics, and targeted employment subsidies

This paper shows that the impact of targeted employment subsidies depends not only on the subsidy rate, but also on the structure of the production sector

Between-Firm Redistribution of Profit in Competitive Industries: Why Labor Market Policies May Not Work

Empirical studies document differences in firms' response to the introduction of various labor market policies. In particular, large and mature firms tend to participate more actively in targeted employment subsidy programs (under which firms receive subsidies for hiring disadvantaged workers). This paper offers an explanation for this phenomenon and argues that it might have important consequences for policy making. Namely, such behavior of firms may indicate that large and mature firms benefit from the introduction of a new subsidy program, while small and young firms incur indirect costs. In this case, the policy implicitly redistributes profit from young to mature firms and may discourage startups if the entry into the industry is competitive. The resulting decrease in the number of operating firms is likely to have a significant impact on the policy's outcomes. These effects become more pronounced as heterogeneity between young and mature firms increases.

Partnerships versus Corporations: Moral Hazard, Sorting, and Ownership Structure

Team production takes advantage of technological complementarities but comes with the cost of free-ridership. When workers differ in skills, the choice of sorting pattern may be associated with a nontrivial trade-off between exploiting the technological complementarities and minimizing the cost of free-ridership. This paper demonstrates that whether such a trade-off arises depends (i) on how the power of incentives required for effort provision varies with workers’ types, and (ii) on whether the workers are organized for production in partnerships or in corporations. These results have implications for how production is organized in different industries—in partnerships or in corporations. (JEL D21, D82, G32, M12, M54

Sorting expertise

We analyze the optimal sorting of experts who differ in their ability to acquire information, into production teams. Once a team is formed, experts individually acquire information about the joint project, communicate the information they acquired, and then engage in team production. Misalignment of preferences at the production stage creates incentives for belief manipulation at the communication stage. We show that the cost associated with misaligned incentives is minimized if experts of similar abilities are placed in the same team. Consequently, surplus maximization may lead to non-diversified teams, even if in the absence of misaligned incentives optimal sorting is negative assortative. Thus, our analysis provides a novel rationale for creation of non-diversified teams of experts