Firm Dynamics: Employment Growth Rates of Small Versus Large Firms in Canada
In: The Canadian Economy in Transition Research Paper No. 25
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In: The Canadian Economy in Transition Research Paper No. 25
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Working paper
Many indicators (OECD 1994) show that the Italian labour market is characterised by a strong pro-workers and pro-unions legislation. This is usually interpreted as a high degree of rigidity. It is known that, in response to shocks, firms in rigid labour markets tend to trade workers adjustment off individual working hours adjustment (Abraham-Houseman (1994)). We analyse this trade-off for the Italian large industrial firms, using the Kalman filter to get the impulse-response functions of employment and working hours to permanent and temporary shocks. We find that in the first 80s the terms of the trade off have changed, and employment has become more responsive to shocks. Firms seem thus to have circumvented the regulation: after the pro-workers "institutional push" of the '70s, a process of capital/labour substitution has allowed them to re-form their profit margins and to minimise the labour input. Institutions have tried t o incentivate new hirings reducing the bias in favour of workers. Consequently, a deregulation process started in 1983-84 is changing the Italian labour market. Nonetheless, deregulation per se is unlikely to cause new hirings in an environment where the labour input has been minimised.
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Many indicators (OECD 1994) show that the Italian labour market is characterised by a strong pro-workers and pro-unions legislation. This is usually interpreted as a high degree of rigidity. It is known that, in response to shocks, firms in rigid labour markets tend to trade workers adjustment off individual working hours adjustment (Abraham-Houseman (1994)). We analyse this trade-off for the Italian large industrial firms, using the Kalman filter to get the impulse-response functions of employment and working hours to permanent and temporary shocks. We find that in the first 80s the terms of the trade off have changed, and employment has become more responsive to shocks. Firms seem thus to have circumvented the regulation: after the pro-workers "institutional push" of the '70s, a process of capital/labour substitution has allowed them to re-form their profit margins and to minimise the labour input. Institutions have tried t o incentivate new hirings reducing the bias in favour of workers. Consequently, a deregulation process started in 1983-84 is changing the Italian labour market. Nonetheless, deregulation per se is unlikely to cause new hirings in an environment where the labour input has been minimised.
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We investigate the characteristics of manufacturing firms in India that generate better quality employment and the relationship between quality employment and firm performance using multiple measures of employment quality. Larger firms tend to generally provide better quality employment opportunities even after controlling for aspects related to employee skills. The organizational structure of firms matters, with government, private, and cooperative firms generally in terms of providing higher quality employment and better compensation measures, but lower quality employment in terms of gender equality. Overall, employment compensation does lead to higher profit, labor productivity, and capital productivity. However, providing more direct employment appears to constrain profits and productivity while increases in gender equality tend to have a negative effect on labor productivity.
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In: Routledge Library Editions: International Business
This book is a study of the economics of the large international firm, but is at the same time a study of one of the world's most important industries. International firms face difficult problems in attempting to deal with the conflicts between their own interest as world-wide economic organisations on the one hand, that of the countries in which they operate on the other, and with the conflicts of interest among the countries which are related to the international policies of the firms. The author analyses the underlying problems and points to possible solutions. When it was first publishe
In: Administrative science quarterly: ASQ ; dedicated to advancing the understanding of administration through empirical investigation and theoretical analysis, Band 46, Heft 2, S. 351-353
ISSN: 0001-8392
In: Annals of Public and Cooperative Economics, Band 45, Heft 1, S. 59-68
ISSN: 1467-8292
SUMMARYWith the increase in the rate of inflation in recent years, most economists have probably come to accept the need for price control, even though they might oppose it in more normal circumstances. However the view is still very wide‐ spread ‐among economists and probably among politicians and the general public – that for an effective system of price control to exist, it is only necessary to control the prices charged by large firms. It is believed that smaller firms will then follow suit, either because they are forced to by the competition of large firms or for some other reason. Recent experience in the U.K. seems to refute this thesis conclusively. It is in the sectors in which small firms predominate that prices rose most rapidly during the two or three years preceding the imposition of price control; this has continued since price control was imposed in November 1972. No explanation of this is attempted, but it is argued that if price control is to be effective it must be extended to all firms irrespective of size. This would raise administrative problems, but it is suggested that these could be dealt with. The character of inflation, like other aspects of the economic situation, can change rapidly. It is possible that with the introduction of the three‐day week in British industry in February 1974 (as a consequence of the miners'strike) and the continued rise in import prices (especially the price of oil) the high profits which characterised the years 1971, 1972 and 1973 in Britain will prove to be temporary. However the basic point remains. During these years, the rise in profits added significantly to the increase in retail prices, and this rise took place not only in sectors where large firms are found but also in sectors characterised by the predominance of small and medium‐size firms.
In: IMF Working Papers
Strong growth in investment made a key contribution to the economic recovery in Argentina earlier this decade. The paper uses firm-level data to assess changes in financing constraints and the linkages between real investment at the firm level and macroeconomic developments in the real exchange rate and real interest rates. It concludes that several factors explain the performance of investment, including the real exchange rate, the cost of borrowing as well as an easing of financing constraints
In: Journal of international development: the journal of the Development Studies Association, Band 16, Heft 1, S. 45-61
ISSN: 1099-1328
AbstractThis paper uses two firm level surveys, the National Enterprise (NE) survey and the Greater Johannesburg Metropolitan Area (GJMA) survey, to explore the implications of globalization for employment in South Africa. These relationships are explored using cross‐tabulations and estimated labour demand functions. The paper finds that rising import penetration negatively affected employment in large firms, but not small firms. Relatively large declines in employment also occurred within export firms, despite improvements in export competitiveness and export growth through trade liberalization. Finally, the study finds that skill‐biased and trade‐induced technological change, as reflected in increased use of computers, foreign investment and the importation of raw material inputs, have raised the skill intensity of production. Copyright © 2004 John Wiley & Sons, Ltd.
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In: Economic commentary, S. 1-4
ISSN: 0428-1276
How to best manage the failure of systemically important financial firms was the theme of a conference at which the latest research on the issue was presented. Here we summarize that research, the discussions that it sparked, and the areas where considerable work remains.
This paper aims to determine whether countries where large firms are very dominant have less entrepreneurial activities. There is anecdotal evidence that the continued decline in the business dynamism or the number of start-ups in the United States is said to be partly attributed to large firms. One key explanation is that the regulatory environment tends to favor existing large firms - an environment that allows near monopolies and a protection of tiny entrepreneurial elite. Using the Global Entrepreneurship Monitor (GEM) data together with the World Bank - International Finance Corporation's MSME country indicators, I empirically test whether large firm dominance influences entrepreneurial activities as well as intentions. Using fixed effects regression analysis on unbalanced panel of 40 countries over the period 2002-2007, I found that the entrepreneurship potential of a country is potentially at risk if the growth of large firms' stake in the economy is left unchallenged. In particular, a one percentage point increase in the share of large firms to total employment is associated with 0.35 percentage point lower total early-stage entrepreneurial activity rate, holding other factors constant. Also, worth noting is the sensitivity of entrepreneurial intentions to large firm dominance. A one percentage point increase in the share of large firms to total employment dampens (i.e., by 0.56 percentage point) intentions of latent entrepreneurs to start a business within the next 3 years, other factors remaining constant. This second-order effect of large firm dominance depends heavily on the country's institutions. Thus, it is critical for governments to foster a dynamic system that guarantees free competition and rewards creativity. Likewise, it is necessary to review and amend policies that seem to favor large firms that compromise the establishment as well as growth of smaller enterprises.
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