Short and medium-term effects of intangible capital on firm growth: firm-level evidence from austrian microdata

Macroeconomic calibrations imply much larger labor supply elasticities than microeconometric studies. One prominent explanation for this divergence is that indivisible labor generates extensive margin responses that are not captured in micro studies of hours choices. We evaluate whether existing calibrations of macro models are consistent with micro evidence on extensive margin responses using two approaches. First, we use a standard calibrated macro model to simulate the impacts of tax policy changes on labor supply. Second, we present a metaanalysis of quasi-experimental estimates of extensive margin elasticities. We find that micro estimates are consistent with macro evidence on the steady-state (Hicksian) elasticities relevant for cross-country comparisons. However, micro estimates of extensive-margin elasticities are an order of magnitude smaller than the values needed to explain business cycle fluctuations in aggregate hours. Hence, indivisible labor supply does not explain the large gap between micro and macro estimates of intertemporal substitution (Frisch) elasticities. Our synthesis of the micro evidence points to Hicksian elasticities of 0.3 on the intensive and 0.25 on the extensive margin and Frisch elasticities of 0.5 on the intensive and 0.25 on the extensive margin.

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This paper analyzes the distribution and growth of firm-level employment along two margins: the extensive margin (the number of establishments in a firm) and the intensive margin (the number of workers per establishment in a firm). We utilize administrative datasets to document the behavior of these two margins in relation to changes in the U.S. firm-size distribution. In the cross section, we find the firm-size distribution, as well as both extensive and intensive margins, exhibits a fat tail. The increase in average firm size between 1990 and 2014 is primarily driven by an expansion along the extensive margin, particularly in very large firms. We develop a tractable general-equilibrium growth model with two types of innovations: external and internal. External innovation leads to the extensive margin of firm growth, and internal innovation leads to intensive-margin growth. The model generates fat-tailed distributions in firm size, establishment size, and the number of establishments per firm. We estimate the model to uncover the fundamental forces that caused the distributional changes from 1995 to 2014. The largest contributors to the increase in the number of establishments per firm are the external innovation cost and the decline in establishment exit rate.

We estimate the impacts of Korean firms’ participation in regional trade agreements (RTAs) on the extensive and intensive export margins by identifying exporting firms based on their firm size—small and medium‐sized enterprises (SMEs) and large enterprises (LEs) at the 5 399 HS six‐digit commodity level—and specifying characteristics of RTAs from 2004 to 2015. We apply the EK Tobit estimation technique to control zero trade and the OLS estimation with importer‐product and time fixed effects to alleviate the endogeneity problem. We find that firm size, product type, and depth of RTA significantly matter. Specifically, we find that deeper RTAs with larger, developing, and closer members significantly enhance the export creation effects of SMEs and LEs. Regarding the firm size‐specific effects, we find that SMEs are less sensitive to exploiting RTA participation but more sensitive to the import market size, bilateral and relative trade costs, and the RTA characteristics. LEs’ export creation is mainly driven by the intensive margin, while SMEs’ export creation is driven by extensive and intensive margins (slightly more by the extensive margin). For the product‐specific effects, we find that Korea's major exportable products such as chemicals, basic metals, motor vehicles, and transport equipment generate significantly strong export creation effects for both LEs and SMEs through their participation in RTAs.

Background: The significance of the paper is twofold. Firstly, it adds to the small but growing body of literature focusing on the decomposition of South Africa’s export growth. Secondly, it identifies the determinants of the intensive and extensive margins of South Africa’s exports – a topic that (as far as the authors are concerned) has not been explored before.Aim: This paper aims to investigate a wide range of market access determinants that affect South Africa’s export growth along the intensive and extensive margins.Setting: Export diversification has been identified as one of the critical pillars of South Africa’s much-hoped-for economic revival. Although recent years have seen the country’s export product mix evolving, there is still insufficient diversification into new markets with high value-added products. This is putting a damper on export performance as a whole and, in turn, hindering South Africa’s economic growth.Methods: A Heckman selection gravity model is applied using highly disaggregated data. The first stage of the process revealed the factors affecting the probability of South Africa exporting to a particular destination (extensive margin). The second stage, which modelled trade flows, revealed the variables that affect export volumes (intensive margin).Results: The results showed that South Africa’s export product mix is relatively varied, but the number of export markets is limited. In terms of the extensive margin (or the probability of exporting), economic variables such as the importing country’s GDP and population have a positive impact on firms’ decision to export. Other factors affecting the extensive margin are distance to the market (negative impact), cultural or language fit (positive impact), presence of a South African embassy abroad (positive impact), existing free trade agreement with Southern African Development Community (positive impact) and trade regulations and costs (negative impact). In terms of the intensive margin (or the factors influencing the volume of exports), there are strong parallels with the extensive margin, with the exception being that the time involved in exporting has more of an impact than documentary requirements.Conclusion: Among the factors contributing to South Africa’s exports having largely developed in the intensive margin are a general lack of market-related information, infrastructural weaknesses (both of a physical and technological nature) and a difficult regulatory environment – all of which add to the cost and time involved in exporting. Policymakers have long spoken about the need for the country to diversify its export basket, but now talk about needs to give way to action. The government and its economic partners need to arrive at a common vision of an export sector that will be able to expand into new products and markets, be an active participant in global value chains and deliver sustainable jobs.

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INTRODUCTION TO SPECIAL SECTION ON INTANGIBLE CAPITAL

The objective of this study is to analyze the effects of the Customs Union (CU) and Free Trade Agreements (FTA) on the extensive and intensive margins. For this purpose, initially, Turkey’s export data set composing HS-6 digit product level statistics for period 1996 to 2011 with 172 countries has been decomposed into extensive and intensive margins by using the decomposition method of export shares developed by Hummels and Klenow (2005). Then, the effects of the CU and FTA on both extensive and intensive margins have been identified with the Gravity model. All analyzes have been performed for the exports of the total goods as well as the exports of the final and intermediate goods. Empirical results for the Gravity model show that the effects of the CU and FTA on the extensive margin are negative while the effects of the CU and FTA on the intensive margin are positive. Furthermore, the effect of the CU on the extensive and intensive margins is greater than that of the FTA.

The present paper examines the factors that result in firms' good performance with a focus on the pharmaceutical industry, which constitutes an important part of the economy. An econometric analysis revealed that the investment in intangible assets (mainly in innovative activity) contributes more to the gross sales and employment growth than the investment in tangible assets. Furthermore, through the segregation of the innovative process to in-house Research and Development (R&D), production in third-party facilities and the acquisition of intellectual property rights, we found that only the former seems to have a positive effect on firm growth. Real innovative activity appears to be a critical issue in the survival and success of the pharmaceutical firms as opposed to the other kinds of investment or ownership status (subsidiary versus domestic). The results strongly indicate that firms in the sector (especially those that are independent) should focus on in-house innovative activity as a central issue of future strategies.

This study examines the impacts of Japan-Mexico FTA (JMXFTA) on Japanese exports to Mexico. The authors construct a theoretical trade model of heterogeneous firms based on the Melitz-Chaney model, and derive the theoretical relationship of the impacts of tariff changes on extensive and intensive trade margins. Applying this model, the authors estimate the impacts of JMXFTA on product-level extensive and intensive margins of Japan’s exports to Mexico by using the most detailed commodity trade data. The results show that the tariff reduction due to JMXFTA increases the intensive margin while no clear evidence is found regarding the effect on extensive margin. This indicates that in the short-run, the JMXFTA exerted more favorable effect on the existing exporters than on new export market entrants.

The empirical trade literature has long been puzzled by the finding of large and non-decreasing distance coefficients in the gravity equation amid falling transportation costs over time. To shed new light on this puzzle, the recent theoretical literature shifts its focus to the differential effects of distance on the extensive and intensive margins of trade. However, so far there is a lack of corresponding contributions from empirical studies of the gravity equation. This paper provides the first piece of evidence using data for about 150–200 countries between the years 1980 and 2009. The extensive and intensive margins are measured based on bilateral trade data of more than 3,100 product items. It is found that the distance effect on the extensive margin declines, while that on the intensive margin rises over time for most specifications. Therefore, there is little empirical evidence that distinguishing between the extensive and intensive margins of trade solves the distance puzzle.

In an unique lab-in-the-field experiment we design a novel labor market environment, the Game of Prejudice, to elicit preferences for discrimination towards the largest minority group in Europe (the Roma) at the intensive margins as well as at the extensive margins. Our unique experiment design allows us to separate taste-based discrimination from statistical discrimination and examine the impacts of raising the costs of discrimination in such situations. We find discrimination to be commonplace at both margins, with stronger incidence at the extensive margin. We also find higher incidence of taste-based discrimination compared to statistical discrimination. Importantly, we find that when the cost of taste-based discrimination is made sufficiently high, such behavior disappears at the intensive and extensive margins, providing support for labor market policies that make discrimination very costly for the employer.

Intangible capital in Chinese regional economies: Measurement and analysis

How effective are export promotion activities in developing countries? What are the channels through which export promotion affects firms' exports, the intensive margin or the extensive margin? Empirical evidence in this respect is scarce. We aim at filling this gap in the literature by providing evidence on the impact of export promotion on export performance using a unique firm-level dataset for Peru over the period 2001-2005. We find that export promotion actions are associated with increased exports, primarily along the extensive margin, both in terms of markets and products. This result is robust across alternative specifications and estimation methods.

Are intangibles more productive in ICT-intensive industries? Evidence from EU countries