the determination of r d empirical evidence on the role of unions abstract this paper examines the empirical evidence of the role of union bargaining on innovation we review the existing empirical evidence and emphasis some of the problems with the theoretical assumptions we outline a simple model of strategic rd b the union bargains only over wages

economic reform and informal wage a general equilibrium analysis abstract we attempt to trace the consequences of liberal economic policies on informal wage in a general equilibrium model with formal informal labor markets wage differential vertical linkage and restricted capital movement in particular we show that the informal wage representing income for a vast segment of unskilled labor may actually increase even if more people are employed in the informal segment this also confirms that a contraction in the formal sector employment and the consequent expansion in the informal segment do not necessarily imply impoverishment of the existing set of informal workers

union bargaining power subcontracting and innovation we show that if a firm can subcontract production to an informal sector an increase in union power may either increase or decrease innovation an increase in union power makes the firm worse off irrespective of its effect on innovation however in contrast to the usual belief an increase in union power may increase consumer surplus and decrease union utility by affecting innovation thus suggesting that a union may not want to be too powerful an increase in union power may create an ambiguous effect on social welfare our analysis provides new insights to the relation between union power and innovation

democratization contracts and comparative advantage abstract we study how the international spread of democracy shaped the comparative advantage of countries using data on the third wave of democratization between 1976 and 2000 we find that democratizing countries shifted their exports towards more contract intensive goods that require a larger portion of relationship specific inputs this shift is observed on the intensive margin volumes of industry level exports as well as the extensive margin of trade number of goods a country exports using an instrumental variable strategy based on democracy waves alternative proxy variables and subsamples suggests that the effects of democratization on trade specialization are causal

price adjustment policies and firm size i introduction by the fall of 2009 several state departments of transportation in the united states adopted price adjustment policies to mitigate significant fluctuations in the cost of oil based inputs in government procurement price escalation in oil based materials such as asphalt binder or fuel was the main cause behind the trend firms increased bids to offset higher input prices adversely affecting procurement costs damnjanovic et al 2008 because inputs like asphalt experienced significant cost increases e g the price of alphalt increased by 31 in 2005 alone it is not surprising that contractors in general and small firms in particular struggled with construction budgets in response to the growing uncertainty many states introduced price adjustment policies for related inputs effectively dampening losses and profits at times of unanticipated cost fluctuations 1 while the latter part of last decade saw notable oil price price deviates beyond a certain range of the baseline index increases in the recent months firms enjoyed cost savings a percentage of which can be passed on to departments of transportation with the establishment of this policy going beyond industries directly impacted by uncertainty in oil prices the provisions investigated in this paper are common in defense contracting and were added to the health care law in what came to be known as risk corridors 2 as an example the department of defense has embedded such provisions in fixed price contracts with economic price adjustment fpepa these measures are designed to limit contractors exposure to economic uncertainty and market volatility prevalent in long term fixed price arrangements 3 in the same spirit the regional greenhouse gas initiative an emission permit trading program involving nine northeastern states in the united states held down price escalations by placing a price collar on allowances that limits variability we investigate the effect of the price adjustment policy on firm bidding behavior and competition intensity in road construction in oklahoma which can offer insights on the effectiveness of implementing such policies across industries we use data on public construction auctions to study the effect of this policy on firms of different sizes where size heterogeneity is a defining characteristic of the market cho 1986 the construction industry displays market concentration featuring a small number of strong contenders from the pool of over 150 participants in our sample the 11 firms that won most frequently were awarded over a quarter of auctioned projects and more than 38 of contracted value compared with the manufacturing sector surveyed in audretsch and mahmood 1995 a notably higher percentage of new construction companies end up failing many undersized and startup builders compete on the margin and have a low chance of making it to the list of long term players the literature has identified a strong correlation between firm size and financial solvency in association with firm survival and growth see brito and mello 1995 and hubbard 1998 in what follows we frame our empirical analysis with a theoretical model highlighting this connection as noted by gertler and gilchrist 1994 and martinelli 1997 there are asymmetric changes in firms borrowing costs when financial constraints are tightening in the face of uncertainty and they depend on the level of capital accumulation as a result high volatility in input prices is likely to reinforce the imbalance among competitors of different sizes 4 price adjustment policies help to level the playing field between small and large firms without invoking differential treatment toward a group finally there has been considerable interest in the literature in various policies that departments of transportation around the country use to help small businesses such as bid preference policies and setasides see for instance the work of denes 1997 marion 2009 krasnokutskaya and seim 2011 and athey coey and levin 2013

regulation of entry labor market institutions and the informal sector abstract this paper develops a two sector matching model that incorporates the main features of latin american labor markets it has an innovation in its matching structure that makes it more consistent with some key stylized facts of the informal sector in these countries the model is numerically solved using brazilian data and several policy simulations are performed reducing formal sector s entry cost significantly reduces the size of the informal sector and improves overall labor market performance increasing enforcement significantly reduces informality but has strong adverse effects on unemployment and welfare thus the results indicate that the tradeoff between lower informal employment and higher unemployment rates is not present when one looks at policies that aim at reducing the costs of being formal as opposed to policies that simply increase the costs of being informal

unionization incomplete contracting and capital investment this article examines empirically the hypothesis that incomplete contracts and resulting opportunistic behavior over the return to sunk assets reduces investment union firm contracts are incomplete because they 1 do not prevent all actions aimed at changing the existing contract 2 cover a relatively short time period and 3 do not extend to union members yet to be hired the primary response of firms is to reduce investment in specific durable assets and also to reduce employment growth and increase debt the authors find fairly strong evidence of these effects in a sample of large publicly traded firms using firm specific measures of unionization copyright 1993 by university of chicago press

the survival of new plants start up conditions and post entry evolution abstract this paper examines the longevity of entrants we find size to be an important determinant of the chances of survival this being particularly relevant to de novo entrants as compared with entry by established firms current size is also found to be a better predictor of failure than initial size moreover our findings indicate that after controlling for size differences past growth matters for survival suggesting a partial adjustment process for firm size in the post entry period finally new plants are more likely to live longer if they enter growing industries or industries with little entry activity

financial market imperfections and productivity growth abstract this paper examines the impact of financial market imperfections on long term productivity growth it focuses on failures in markets for the sale of equity securities and hence on the failure of markets which help firms diversify the risks of real investment the paper examines separately situations in which productivity growth is driven by learning by doing in general a multiplicity of steady state growth paths exist with different growth rates along each path the particular path followed by any single economy and hence the growth rate of that economy will depend significantly on policy interventions which mitigate effects of financial market failures

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

the survival and growth of new establishments in sweden 1987 1995 the aim of the study is to examine the survival of new establishments and to identify factors affecting their survival probability and their employment growth this study uses a unique data set on all new establishments that were created in sweden 1987 and 1988 with the exception of the construction industry the results show among others that i new establishments face a high risk of closing down ii the probability of establishment survival increases with the age and size of the establishment iii variables that are assumed to measure access to resources being a part of a multi unit firm and being new due to merger or dispersal have a positive effect on survival iv the number of employees at the start up year has a negative effect on the employment growth and v demographic and educational factors are important in explaining survival and growth

financial constraints and firm post entry performance abstract firms finance production by internally generated funds and external loans the benefits of leverage however come with a cost this cost is related to the uncertainty banks face about the firm s quality and output price as time evolves banks learn about the firm and adjust the terms of the loan contract because of this firms do not have equal access to credit small young firms face greater binding debt constraints than more mature firms with well known prospects the firm survival rate as well as the firm rate of growth are therefore important issues in analyzing firm post entry performance

asymmetric information and the new theory of the firm financial constraints and risk behavior this paper summarizes recent developments in the theory of the firm that have arisen in examining the implications of imperfect information it shows that a wide range of these models have similar implications for the likely reaction of firms to external environmental and policy changes two significant implications are 1 that firms behave as if they are risk averse individuals maximizing a utility function of terminal wealth profitability even when the risks involved are unsystematic and 2 in many circumstances because this utility function is likely to be characterized by decreasing absolute risk aversion firms are likely to respond significantly and positively to changes in cash flow and profitability together these two phenomena are able to account for a wide range of firm behaviors that have been empirically observed both formally and informally and that are difficult to explain in terms of the traditional theory of the firm furthermore the responses of such firms to policy interventions are likely to differ significantly from those of neoclassical firms this abstract was borrowed from another version of this item

labour markets bargaining and innovation much of the recent empirical work on the impact of unions on rd ii under some circumstances an increase in union strength can make both firms and unions worse off we survey a more recent theoretical literature which takes account of the fact that r d is often undertaken for strategic reasons by firms that are in competition with one another we show that in this framework the prevailing theoretical paradigm may be overturned thus when firms and unions can enter into long term bargains then an increase in union strength will increase decrease r d spending if successful innovation causes employment to rise respectively fall however when r d falls then this increase in union strength can cause both firms and unions to be better off when firms and unions engage in short term bargaining then an increase in union bargaining strength will cause r d to fall when bargaining is over wages alone however when bargaining takes place over wages and employment then if unions care a lot about employment the relationship between union strength and r d is inverse u shaped

economic liberalization and indian economic growth what s the evidence india s growth and poverty performance over the last three decades has been a subject of great curiosity unlike the east asian countries india s growth spurt is not associated with exceptionally high domestic savings or foreign capital inflows or manufacturing exports so what triggered the change in the growth trajectory did the market liberalization policies of the 1990s help how have the initial conditions shaped the process and how has the indian model impinged on india s central problem of mass poverty this paper surveys the literature and offers its own assessment of the drivers of change jel i32 o13 o14 o15 o21 o47

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

borrowing relationships intermediation and the cost of issuing public securities abstract this paper investigates how an established borrowing relationship affects the costs associated with initial public offerings of equity our model illustrates how the existence of a borrowing relationship reduces the ex ante uncertainty about the value of the issuing firm s equity in the secondary market if underpricing is related to uncertainty a borrowing relationship can reduce underpricing empirically we find that other things equal ipos of firms with previously established borrowing relationships are underpriced substantially less than other ipos

success of start up firms the role of financial constraints although there are some studies that empirically test the impact of financial constraints on the success of start ups the persistence of this impact is not well understood using survey data for a cohort of swiss start ups that were observed during a period of 10 years we find that financial constraints are not only a problem of the first years although the negative impact of financial constraints on firm survival disappears with increasing age of the firms profit is persistently negatively affected by financial constraints copyright 2014 the author 2013 published by oxford university press on behalf of associazione icc all rights reserved oxford university press