Documents size of enterprise 43 results

"Somewhat surprisingly, cross-country empirical evidence (at least in the cross section) does not seem to support the predictions of standard models that economies with stricter regulations on hiring and firing should have a lower pace of job reallocation. One problem in exploring these issues empirically has been the difficulty of comparing countries on the basis of harmonized measures of job reallocation. A related problem is that there may be unobserved measurement errors or other factors accounting for differences in job reallocation across countries. This paper overcomes these challenges by using harmonized measures of job creation and destruction in a sample of 16 industrial and emerging economies, exploiting the country, industry and firm size dimensions. The analysis of variance in the paper shows that firm size effects are a dominant factor in accounting for the variation in the pace of job reallocation across country, industry and size cells. However, even after controlling for industry and size effects there remain significant differences in job flows across countries that could reflect differences in labor market regulations. We use the harmonized data to explore this hypothesis with a difference-in-difference approach. We find strong and robust evidence that stringent hiring and firing regulations tend to reduce the pace of job reallocation."

"In this paper we investigate whether a relaxation in seniority rules (the “last-in-first-out” principle) had any effect on firms' employment behaviour. Seniority rules exist in several countries, but consequences of seniority rules on firms' employment behaviour have not been examined previously. The “last-in-first-out” principle in Sweden was reformed in January 2001 such that employers with ten or fewer employees were allowed to exempt two workers from the seniority rule. Using an employer–employee unbalanced panel data for the period 1996–2005, we find that both hires and separations increased in small firms relative to large firms by 5%. This also implies that there were no effects on firms' net employment. Our results show that firms reacted to changes in the seniority rules, but we argue that the effects are not overwhelmingly large."

"The relationship between a firm's size and its productivity level varies considerably across OECD countries, suggesting that some countries are more successful at channelling resources to high productivity firms than others. In this paper, we examine the extent to which these differences depend on regulations affecting product, labour and credit markets, and assess their relevance for aggregate productivity. To this purpose, we exploit a decomposition of industry productivity into a moment of the firm productivity distribution (the unweighted mean), and a moment of the joint distribution with firm size (the covariance between productivity and market shares – allocative efficiency). We apply such decomposition to a cross section of more than 800 country-industry cells and estimate the relevance of regulation policies for each of the two terms exploiting cross-industry differences in exposure to the policy. Our results suggest that there is an economically and statistically robust negative relationship between policy-induced frictions and productivity, though the specific channel depends on the policy considered. In the case of employment protection legislation, product market regulations (including barriers to entry and bankruptcy legislation) and restrictions on foreign direct investment, this is largely traceable to the worsening of allocative efficiency (i.e. a lower correspondence between a firm's size and its productivity level). By contrast, the adverse impact of financial market under-development on aggregate productivity tends to arise through shifts in the firm productivity distribution (i.e. a lower unweighted mean). Furthermore, stringent regulations are more disruptive to resource allocation in more innovative sectors."

"The rise in inequality between the 1970s and the 1990s and the persistent gap in pay between large and small employers are two of the most robust findings in the study of labor markets. Mainstream economists focus on differences in observable and unobservable skills to explain both the overall rising inequality and the size–wage gap. In this paper we model how increasing returns to skill can affect the size–wage gap both with constant sorting and with size-biased, skill-biased technological change (e.g. if large firms always had access to computers, but small firms gained access to computers with the rise of affordable personal computers).We analyze the Current Population Surveys from 1979 to 1993 to determine whether large and small employers are converging in terms of mean wages (the employer size–wage effect), wage structures by occupation and education, characteristics of employees, and wage structures by region. We find mixed evidence of convergence and no consistent support for any single version of human capital theory."

"Economists have long assumed that all information and communication technologies affect the performance of firms in similar ways. Enterprise and Resource Planning Software connecting sales, marketing, inventory and accounts, affected performance in the same way as a Virtual Private Network that allowed working from home or a website that created opportunities for e-commerce. Newer theoretical evidence has shown that this is not the case: technologies that affect the communication of information affect the management and organisation of firms in ways that are distinct from technologies that make it easier to store and process information. The next step was to find empirical evidence that either supported or refuted this new view.



In this GEP working paper GEP internal fellow Richard Kneller along with two former Nottingham PhD students, Tim De Stefano and Jonathan Timmis, both now at the OECD, provide for the first time evidence for the ways that communication-ICT affect the performance of firms. To do so free from concerns about endogeneity bias they use an instrumental variable approach that relies on differences in firms' access to one particular communication-ICT, namely broadband internet. These differences arise because this technology is delivered using the telephone network and different telephone exchanges were enabled for broadband at different times and the speed of connection slows the further one is located away from the exchange. They show that, after placing various restrictions on the sample, instruments based on the timing of ADSL broadband enablement and the cable distance to the local telephone exchange satisfy the conditions for instrument relevancy and validity for some types of ICT. They find in turn, that communication-ICT causally affects firm size (captured by either sales or employment) but not productivity."

"As the Japanese government seeks to encourage greater implementation of restricted regular employment systems, it is important to ascertain the current developments regarding such forms of employment. Focusing particularly on the differences that arise depending on company size, this paper investigates the attributes of restricted regular employees and factors determining wages and satisfaction levels. The analysis results show that restricted regular employment is helping companies to provide more flexible ways of working, as reflected by the fact that women who are caring for and raising children tend to work as regular employees with restrictions on their working hours. The results also suggest that as many large companies have multiple places of business and need employees to be prepared for the possibility of personnel transfers—particularly those that involve moving to a new place of work—their approach to forms of employment that restrict such transfers may involve lowering wages. The findings also indicate that in small and medium-sized companies, which may need to operate with a comparatively limited number of staff and may therefore assign a wide scope of work duties to each employee, placing restrictions on scope of work duties allows employees to concentrate on certain types of work and in turn increases their levels of job satisfaction. "

"Observationally equivalent workers are paid higher wages in larger firms. This fact is often named as the "firm-size wage gap" and is regarded as a key empirical puzzle. Using micro-level data from Turkey, we document a new stylized fact: the firm-size wage gap is more pronounced for informal (unregistered) jobs than for formal (registered) jobs. To explain this fact, we develop a two-stage wage-posting game with market imperfections and segmented markets, the solution to which produces wages as a function of firm size in a well-defined subgame-perfect equilibrium. The model proposes two explanations. First, taxes on formal employment generate a wedge between formal and informal size wage gaps. Thus, government policy can potentially affect the magnitude of the firm-size wage gaps. The second explanation features a market-based framework with strategic interactions. Relative to small firms, large firms typically post higher wages for both formal and informal jobs they open. A high-wage formal job attracts a larger pool of applicants than a high-wage informal job. The larger pool of applicants for the formal job, in turn, allows the firm to somewhat lower the initial wage offer, while this second-round effect is negligible for informal jobs. As a result, size differentials are lower in formal jobs than informal jobs. We argue that the observed patterns in the use of social connections in job search and heterogeneity in job preferences can be used to justify the validity of this second mechanism."

"We examine how within-firm skill premia–wage differentials associated with jobs involving different skill requirements–vary both across firms and over time. Our firm-level results mirror patterns found in aggregate wage trends, except that we find them with regard to increases in firm size. In particular, we find that wage differentials between high- and either medium- or low-skill jobs increase with firm size, while those between medium- and low-skill jobs are either invariant to firm size or, if anything, slightly decreasing. We find the same pattern within firms over time, suggesting that rising wage inequality–even nuanced patterns, such as divergent trends in upper- and lower-tail inequality–may be related to firm growth. We explore two possible channels: i) wages associated with “routine” job tasks are relatively lower in larger firms due to a higher degree of automation in these firms, and ii) larger firms pay relatively lower entry-level managerial wages in return for providing better career opportunities. Lastly, we document a strong and positive relation between within-country variation in firm growth and rising wage inequality for a broad set of developed countries. In fact, our results suggest that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in employment by the largest firms in the economy."

"Drawing from confidential firm-level balance sheets for 17 European countries (13 Euro-Area), the paper documents the newly expanded database of cross-country comparable competitiveness-related indicators built by the Competitiveness Research Network (CompNet). The new database provides information on the distribution of labour productivity, TFP, ULC or size of firms in detailed 2-digit industries but also within broad macrosectors or considering the full economy. Most importantly, the expanded database includes detailed information on critical determinants of competitiveness such as the financial position of the firm, its exporting intensity, employment creation or price-cost margins. Both the distribution of all those variables, within each industry, but also their joint analysis with the productivity of the firm provides critical insights to both policy-makers and researchers regarding aggregate trends dynamics. The current database comprises 17 EU countries, with information for 56 industries, including both manufacturing and services, over the period 1995-2012. The paper aims at analysing the structure and characteristics of this novel database, pointing out a number of results that are relevant to study productivity developments and its drivers. For instance, by using covariances between productivity and employment the paper shows that the drop in employment which occurred during the recent crisis appears to have had “cleansing effects” on EU economies, as it seems to have accelerated resource reallocation towards the most productive firms, particularly in economies under stress. Lastly, this paper will be complemented by four forthcoming papers, each providing an in-depth description and methodological overview of each of the main groups of CompNet indicators (financial, trade-related, product and labour market)."