Tariff reductions and labor demand elasticities : evidence from Chinese firm-level data

International production fragmentation has been a global trend for decades, becoming especially important in Asia where the manufacturing process is fragmented into stages and dispersed around the region. This paper examines the effects of input and output tariff reductions on labor demand elasticities at the firm level. For this purpose, we consider a simple heterogenous firm model in which firms are allowed to export their products and to use imported intermediate inputs. The model predicts that only productive firms can use imported intermediate inputs (outsourcing) and tend to have larger constant-output labor demand elasticities. Input tariff reductions would lower the factor shares of labor for these productive firms and raise conditional labor demand elasticities further. We test these empirical predictions, constructing Chinese firm-level panel data over the 2000--2006 period. Controlling for potential tariff endogeneity by instruments, our empirical studies generally support these predictions.

Why do oil importers diversify their import sources politically? : evidence from U.S. firm-level data

International politics affects oil trade. But why? We construct a firm-level dataset for all U.S. oil-importing companies over 1986-2008 to examine what kinds of firms are more responsive to change in "political distance" between the U.S. and her trading partners, measured by divergence in their UN General Assembly voting patterns. Consistent with previous macro evidence, we first show that individual firms diversify their oil imports politically, even after controlling for unobserved firm heterogeneity. We conjecture that the political pattern of oil imports from these individual firms is driven by hold-up risks, because oil trade is often associated with backward vertical FDI. To test this hold-up risk hypothesis, we investigate heterogeneity in responses by matching transaction-level import data with firm-level worldwide reserves. Our results show that long-run oil import decisions are indeed more elastic for firms with oil reserves overseas than those without, although the reverse is true in the short run. We interpret this empirical regularity as that while firms trade in the spot market can adjust their imports immediately, vertically-integrated firms with investment overseas tend to commit to term contracts in the short run even though they are more responsive to changes in international politics in the long run.

Financial fragility, trade credit and contagion effects during the crisis: a spatial econometric approach to firm-level data

The number of distressed manufacturing firms increased sharply during recessionary phase 2009-13. Financial indebtness traditionally plays a key role in assessing firm solvency but contagion effects that originate from the supply chain are usually neglected in literature. Firm interconnections, captured via the trade credit channel, represent a primary vehicle of individual shocks’ propagation, especially during an economic downturn, when liquidity tensions arise. A representative sample of 11,920 Italian manufacturing firms is considered to model a two-step econometric design, where chain reactions in terms of trade credit accumulation (i.e. default of payments to suppliers) are primarily analyzed by resorting to a spatial autoregressive approach (SAR). Spatial interactions are modeled based on a unique dataset of firm-to-firm transactions registered before the outbreak of the crisis. The second step in instead a binary outcome model where trade credit chains are considered together with data on the bank-firm relationship to assess determinants of distress likelihoods in 2009-13. Results show that outstanding trade debt is affected by the liquidity position of a firm and by positive spatial effects. Trade credit chain reactions are found to exert, in turn, a positive impact on distress likelihoods during the crisis. The latter effect is comparable in magnitude to the one exerted by individual financial rigidity, and stresses the importance to include complex interactions between firms in the analysis of the solvency behavior.

Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching. Factor Markets Working Paper No. 3, September 2011

Drawing on a unique, farm-level panel dataset with 37,409 observations and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the Central and Eastern European transition countries. We find that farms are asymmetrically credit constrained with respect to inputs. Farm use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per €1,000 of additional credit. Our estimates also suggest that farm access to credit increases total factor productivity up to 1.9% per €1,000 of additional credit, indicating that an improvement in access to credit results in an adjustment in the relative input intensities on farms. This finding is further supported by a negative effect of better access to credit on labour, suggesting that these two are substitutes. Interestingly, farms are found not to be credit constrained with respect to land.

Syllabus for low level performance for the qualifying examination in computer science /

"April, 1970"

Financial liberalization and dynamics of firm-level financing and investment decisions in the Southeast Asian countries

This thesis examines the dynamics of firm-level financing and investment decisions for six Southeast Asian countries. The study provides empirical evidence on the impacts of changes in the firm-level financing decisions during the period of financial liberalization by considering the debt and equity financing decisions of a set of non-financial firms. The empirical results show that firms in Indonesia, Pakistan, and South Korea have relatively faster speed of adjustment than other Southeast Asian countries to attain optimal debt and equity ratios in response to banking sector and stock market liberalization. In addition, contrary to widely held belief that firms adjust their financial ratios to industry levels, the results indicate that industry factors do not significantly impact on the speed of capital structure adjustments. This study also shows that non-linear estimation methods are more appropriate than linear estimation methods for capturing changes in capital structure. The empirical results also show that international stock market integration of these countries has significantly reduced the equity risk premium as well as the firm-level cost of equity capital. Thus stock market liberalization is associated with a decrease in the cost of equity capital of the firms. Developments in the securities markets infrastructure have also reduced the cost of equity capital. However, with increased integration there is the possibility of capital outflows from the emerging markets, which might reverse the pattern of decrease in cost of capital in these markets.

Does human capital endowment of FDI recipient countries really matter? Evidence from cross-country firm level data

The stylized literature on foreign direct investment suggests that developing countries should invest in the human capital of their labour force in order to attract foreign direct investment. However, if educational quality in developing country is uncertain such that formal education is a noisy signal of human capital, it might be rational for multinational enterprises to focus more on job-specific training than on formal education of the labour force. Using cross-country data from the textiles and garments industry, we demonstrate that training indeed has greater impact on firm efficiency in developing countries than formal education of the work force.

When does leverage hurt productivity growth? A firm-level analysis:a firm-level analysis

In the wake of the global financial crisis, several macroeconomic contributions have highlighted the risks of excessive credit expansion. In particular, too much finance can have a negative impact on growth. We examine the microeconomic foundations of this argument, positing a non-monotonic relationship between leverage and firm-level productivity growth in the spirit of the trade-off theory of capital structure. A threshold regression model estimated on a sample of Central and Eastern European countries confirms that TFP growth increases with leverage until the latter reaches a critical threshold beyond which leverage lowers TFP growth. This estimate can provide guidance to firms and policy makers on identifying "excessive" leverage. We find similar non-monotonic relationships between leverage and proxies for firm value. Our results are a first step in bridging the gap between the literature on optimal capital structure and the wider macro literature on the finance-growth nexus. © 2012 Elsevier Ltd.

Investing in conflict zones:a firm-level analysis

The purpose of this paper is to examine, using panel data econometric techniques, the determinants of a firm’s strategy to invest in a conflict location. To the best of our knowledge this has not been done before. We use a large database of firm-level data that includes 2858 multinational firms that have a subsidiary in a developing country (during 1999-2006). Out of these firms 290 are classified as having a subsidiary in a conflict location. The choice of a conflict location is based on data from the Inter Country Risk Guide (ICRG). We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations. We have four hypotheses: (1) Firms with concentrated ownership are more likely to invest in a conflict region; (2) Firms from countries with weaker institutions are more likely to invest in conflict regions; (3) Firms and Countries with less concern over corporate social responsibility are more likely to invest in conflict countries; and (4) that there is large sector level differences in the propensity to invest in a conflict region. The results suggest that all of these hypotheses can be confirmed.

Impact of high-performance work systems on individual- and branch-level performance:test of a multilevel model of intermediate linkages

We proposed and tested a multilevel model, underpinned by empowerment theory, that examines the processes linking high-performance work systems (HPWS) and performance outcomes at the individual and organizational levels of analyses. Data were obtained from 37 branches of 2 banking institutions in Ghana. Results of hierarchical regression analysis revealed that branch-level HPWS relates to empowerment climate. Additionally, results of hierarchical linear modeling that examined the hypothesized cross-level relationships revealed 3 salient findings. First, experienced HPWS and empowerment climate partially mediate the influence of branch-level HPWS on psychological empowerment. Second, psychological empowerment partially mediates the influence of empowerment climate and experienced HPWS on service performance. Third, service orientation moderates the psychological empowerment-service performance relationship such that the relationship is stronger for those high rather than low in service orientation. Last, ordinary least squares regression results revealed that branch-level HPWS influences branch-level market performance through cross-level and individual-level influences on service performance that emerges at the branch level as aggregated service performance. © 2011 American Psychological Association.

R&D and productivity:using UK firm-level data to inform policy

The UK's business R&D (BERD) to GDP ratio is low compared to other leading economies, and the ratio has declined over the 1990s. This paper uses data on 719 large UK firms to analyse the link between R&D and productivity during 1989-2000. The results indicate that UK returns to R&D are similar to returns in other leading economies and have been relatively stable over the 1990s. The analysis suggests that the low BERD to GDP ratio in the UK is unlikely to be due to direct financial or human capital constraints (as these imply finding relatively high rates of return). © Springer Science+Business Media, LLC 2009.

Does human capital endowment of foreign direct investment recipient countries really matter? evidence from cross-country firm level data

The stylized literature on foreign direct investment (FDI) suggests that developing countries should invest in the human capital of their labor force in order to attract FDI. However, if educational quality in developing country is uncertain such that formal education is a noisy signal of human capital, it might be rational for multinational enterprises to focus more on job-specific training than on formal education of the labor force. Using cross-country data from the textiles and garments industry, we demonstrate that training indeed has a greater impact on firm efficiency in developing countries than formal education of the workforce. © 2013 John Wiley & Sons Ltd.