Job flows in Italian SMEs: a longitudinal analysis of growth, size and age

The paper proposes an empirical investigation of job flows for continuing manufacturing firms in Italy from 1996 to 2004 using high quality data on work forces and other characteristics of the firm. The magnitude of the job flows for small and medium-sized limited liability companies in Italy is lower than what observed in Anglo-Saxon countries, but it is still in line with evidence for firms in the Euro area. Second, the magnitude of job flows significantly shrunk in the aftermath of the economic downturn in 2001. Firms fared worse than in the late nineties and the labour market became less efficient in allocating job flows. Third, gross job creation and gross job destruction decrease as firm get larger, but when added to compute an indicator of net employment growth, size does not seem to affect firms’ expansion. On the contrary, age significantly hinges on the growth opportunities of small and medium-sized enterprises. The econometric analysis corroborates the major findings of our descriptive investigation referring to the role of size and age. In particular, it shows that classification methods used to define size classes strongly influence the estimated relationship between growth and size industrial regimes play a role in shaping job flows. Our result show that firms in supplier dominated industries fared significantly lower than enterprises in other sectors during the sample period

Supergravity and matrix theory do not disagree on multi-graviton scattering

We compare the amplitudes for the long-distance scattering of three gravitons in eleven dimensional supergravity and matrix theory at finite N. We show that the leading supergravity term arises from loop contributions to the matrix theory effective action that are not required to vanish by supersymmetry. We evaluate in detail one type of diagram---the setting sun with only massive propagators---reproducing the supergravity behavior.Comment: 10 pages, 1 eps figure, it requires JHEP.cl

Assessing the economic impact of public industrial policies: an empirical investigation on subsidies.

Empirical literature findings do not provide a clear-cut interpretation of the effects of public aid on firms’ performances. We contribute to this literature analysing the effects of public regional subsidies on investment using a new dataset covering all the firms in the Italian province of Trento, along with a record of public aid granted in the last 15 years. We find permanent positive effects of aid on firms’ size, but no effect is found on factor substitution, nor on technical change. Moreover, subsidies do not improve either profitability or productivity. These results help better define the scope for local aid.regional policy; public subsidies; propensity score matching

Organizational capabilities and industry dynamics: a computational model.

In this paper we propose a model of bounded rational organizations that addresses the role of organizational capabilities in shaping firm size, growth rates and profitability. Our approach aims at reconciling the logic behind stochastic models of firm growth with the notion of organizational capabilities as drivers of economic performance. We extend the stochastic framework by incorporating behavioural assumptions on: (a) the interactions between the firm and the business environment; and (b) the mechanism by which firms sense and seize business opportunities. In our perspective, the degree of concurrence between the substance and organization of the firm and the context in which it operates will directly influence its profitability and indirectly (through costly mutations of the organizational structure) drive its growth. Despite its simple nature the model is able to capture well known regularities about industry dynamics. It generates firm size distributions that are skewed and heterogeneous across different scenarios. Moreover, our results suggest that the higher the selective power of the firm's organizational capabilities, the more the steady state distribution deviates from a log normal. Besides, the distribution of growth rates has a tent-shaped form which is consistent with the pattern described in empirical studies. The distribution of opportunities per firm is also skewed suggesting that a very few entities account for a large fraction of business opportunities arising throughout the simulation period. Finally, the interaction between the external environment and the internal structure of the firms also influences the heterogeneity in the value of the opportunities they capture.organizational capabilities; firm size distribution; growth rates; simulation model

Job flows in Italian SMEs: a longitudinal analysis of growth, size and age.

The paper proposes an empirical investigation of job flows for continuing manufacturing firms in Italy from 1996 to 2004 using high quality data on work forces and other characteristics of the firm. The magnitude of the job flows for small and medium-sized limited liability companies in Italy is lower than what observed in Anglo-Saxon countries, but it is still in line with evidence for firms in the Euro area. Second, the magnitude of job flows significantly shrunk in the aftermath of the economic downturn in 2001. Firms fared worse than in the late nineties and the labour market became less efficient in allocating job flows. Third, gross job creation and gross job destruction decrease as firm get larger, but when added to compute an indicator of net employment growth, size does not seem to affect firms' expansion. On the contrary, age significantly hinges on the growth opportunities of small and medium-sized enterprises. The econometric analysis corroborates the major findings of our descriptive investigation referring to the role of size and age. In particular, it shows that classification methods used to define size classes strongly influence the estimated relationship between growth and size industrial regimes play a role in shaping job flows. Our result show that firms in supplier dominated industries fared significantly lower than enterprises in other sectors during the sample period.job creation; job destruction; persistence of jobs; firm growth

Towards an Evolutionary Interpretation of Aggregate Labor Market Regularities

Three well-known aggregate regularities (i.e. Beveridge, Wage, and Okun's curves) seem to provide a quite complete picture of the interplay between labor market macro-dynamics and business cycle. Nevertheless, existing theoretical literature still lacks micro-founded models which are able to jointly account for these three crucial stylized facts. In this paper, we present an agent-based, evolutionary, model trying to formalize from the bottom up individual behaviors and interactions in both product and labor markets. We describe as endogenous processes both vacancy and wage setting, as well as matching and bargaining, demand and price formation. Firms enjoy labor productivity improvements (technological progress) and are selected on the base of their revealed competitiveness (which is also affected by their hiring- and wage-setting behaviors). Simulations show that the model is able to robustly reproduce Beveridge, Wage and Okun's curves under quite broad behavioral and institutional settings. Moreover, the system generates endogenously an Okun's coefficient greater than one even if individual firms employ production functions exhibiting constant returns to labor. Montecarlo simulations also indicate that statistically detectable shifts in Okun's and Beveridge curves emerge as the result of changes in institutional, behavioral, and technological parameters. Finally, the model generates quite sharp predictions about how system parameters affect aggregate performance (i.e. average GDP growth) and its volatility.Labor Markets, Dynamics, Aggregate Regularities, Beveridge Curve, Okun Curve, Wage Curve, Matching Models

Labor market dynamics and institutions: An evolutionary approach

We analyse labor market dynamics with an agent based model, which replicates a set of stylized facts in the labor market as well as aggregate regularities. We are able to reproduce the Beveridge curve, job creation and destruction flows, a persistent unemployment level, and wages stickiness. On the aggregate level, we observe a self-enforcing process of real income growth and average productivity growth. Model simulations allow us study the role of dynamic interactions among agents -individuals and firms- in a changing environment shaped by institutions. The key features are the microfoundations of the processes governing the labor market, such as job search by individuals, and matching and bargaining among firms and potential employees

How Do Organizational Capabilities Shape Industry Dynamics ?

This paper aims to reconcile the logic behind stochastic models of firm growth and the notion of organizational capabilities as drivers of economic performance. In the proposed behavioral model of bounded rational firms, two mechanisms drive growth: independent stochastic growth of individual opportunities and the process by which firms capture new opportunities. To extend the stochastic framework, this research incorporates behavioral assumptions about the interactions between the firm and the business environment and the mechanism by which firms sense and seize business opportunities. The model generates statistical regularities in firm size, growth rates, and profit differentials between firms that are consistent with observed patterns in real-world settings. The greater the selective power of organizational capabilities, the more the steady-state distribution of firm size appears to deviate from log normality, which provides a potential explanation of various observed departures from the Law of Proportionate Effect. With regard to firm diversity, the distribution of opportunities per firm is skewed; just a few entities account for most of the business opportunities that arise during the simulation period. Moreover, the interaction between the external environment and the internal structure of firms influences heterogeneity in the value of the opportunities that they capture, as well as the persistence of long-run profits.Organizational Capabilities; Firm Size Distribution; Growth Rates; Profitability