scholarly journals Contracts, Firm Dynamics and Aggregate Productivity

2018 ◽  
Author(s):  
Bernabe Lopez-Martin ◽  
David Perez-Reyna
Keyword(s):  
Firm Dynamics ◽  
Aggregate Productivity

scholarly journals Barriers to Reallocation and Economic Growth: The Effects of Firing Costs

2019 ◽  
Vol 11 (4) ◽  
pp. 235-270 ◽  
Author(s):  
Toshihiko Mukoyama ◽  
Sophie Osotimehin
Keyword(s):  
Economic Growth ◽  
Productivity Growth ◽  
Firm Dynamics ◽  
Aggregate Productivity ◽  
Dynamics Model ◽  
Firing Costs ◽  
Endogenous Innovation

We study how factors that hinder the reallocation of inputs across firms influence aggregate productivity growth. We extend Hopenhayn and Rogerson’s (1993) firm-dynamics model to allow for endogenous innovation. We evaluate the effects of firing taxes on reallocation, innovation, and productivity growth. We find firing taxes can have opposite effects on entrants’ innovation and incumbents’ innovation, and the overall outcome depends on the relative strengths of these forces. In the entrant-driven growth calibration, firing taxes reduce aggregate productivity growth, whereas aggregate productivity growth increases in the incumbent-driven growth calibration. (JEL D24, E23, E24, J23, J24, J62, K31, O31, O47)

scholarly journals Financing Constraints, Radical versus Incremental Innovation, and Aggregate Productivity

2019 ◽  
Vol 11 (2) ◽  
pp. 275-309 ◽  
Author(s):  
Andrea Caggese
Keyword(s):  
Risk Taking ◽  
Productivity Growth ◽  
Negative Relationship ◽  
Firm Dynamics ◽  
Incremental Innovation ◽  
Financing Constraints ◽  
Aggregate Productivity ◽  
Financing Frictions ◽  
Barrier To Entry ◽  
Firm’S Life Cycle

I provide new empirical evidence on the negative relationship between financial frictions and productivity growth over a firm’s life cycle. I show that a model of firm dynamics with incremental innovation cannot explain this evidence. However, further including radical innovation, which is very risky but potentially very productive, allows for the joint replication of several stylized facts about the dynamics of young and old firms and the differences in productivity growth in industries with different degrees of financing frictions. These frictions matter because they act as a barrier to entry that reduces competition and the risk-taking of young firms. (JEL D22, D24, D25, G32, L25, L60, O31)

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