Preliminary and Incomplete. A major empirical challenge in economics is to identify how regulations (such as firing costs) affect economic efficiency. Almost all countries have regulations that increase costs when firms cross a discrete size threshold. We show how these size-contingent regulations can be used to identify the equilibrium and welfare effects of regulation through combining a new model with the firm-level distributions of size and productivity. Our framework adapts the Lucas (1978) model to a world with size-contingent regulations and applies this to France where there are sharp increases in firing costs (which we model as a labor tax) when firms employ 50 or more workers. Using administrative data on the population of firms 2002 through 2007, we show how this regulation has major effects on the distribution of firm size (a “broken power law”) and productivity. We then econometrically recover the key parameters of the model in order to estimate the costs of regulation which appear to be non-trivial.

Documents de travail reflètent les idées personnelles de leurs auteurs et n'expriment pas

Firm dynamics in poor countries show striking differences to those of rich countries. While some firms indeed experience growth as they age, many firms are simply stagnant in that they neither exit nor expand. We interpret this fact as a lack of selection, whereby producers with little growth potential survive because innovating firms do not expand enough to force them out of the market. To explain these differences we develop a theory, whereby contractual frictions limit firms ’ acquisition of managerial time. If managerial effort provision is non-contractible, entrepreneurs will benefit little from delegating decision power to outside managers, as they spend most of their time monitoring their managerial personnel. As the return to managerial time is higher in big firms, improvements in the degree of contract enforcement will raise the returns of growing large and thereby increase the degree of creative destruction. To discipline the quantitative importance of this mechanism, we incorporate such incomplete managerial contracts into an endogenous growth model and calibrate it to firm level data from India. Improvements in the efficacy of managerial delegation can explain a sizable fraction of the difference between

fragility in small open economies:

economic growth

Abstract not found

Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be

We develop a framework where mismatch between vacancies and job seekers across sectors translates into higher unemployment by lowering the aggregate job-finding rate. We use this framework to measure the contribution of mismatch to the recent rise in U.S. unemployment by exploiting two sources of cross-sectional data on vacancies, JOLTS and HWOL, a new database covering the universe of online U.S. job advertisements. Mismatch across industries and occupations explains at most 1/3 of the total observed increase in the unemployment rate, whereas geographical mismatch plays no apparent role. The share of the rise in unemployment explained by occupational mismatch is increasing in the education level.

I would like to express my gratitude to my supervisor, Dr. Tobias Berger, whose knowledge, expertise and support have proved invaluable throughout the course of my doctorate, and without whose careful guidance I would not be even half the mathematician I am today. I thank the EPSRC and the University of Sheffield, for providing the financial and administrative support to allow me to perform my research, and to the staff in the School of Mathematics and Statistics for creating a most wonderful atmosphere in which to study mathematics. I am particularly in debt to Dr. Jayanta Manoharmayum, for introducing me to modular forms, and to Mr. David Robson, whose excellent I.T. support was key to my computations. While countless people have had a hand in this thesis, whether directly or indirectly, I would like to extend special thanks to Drs. Paul Gunnells and Dan Yasaki, for some enlightening conversations in Greensboro, North Carolina; to Professor John Cremona and Dr. Neil Dummigan, whose insightful comments helped to improve this piece of work; to Alexander Rahm, for his generous

We present a framework that integrates several regularities associated with financial liberalization and that allows for decomposing the gains and costs of liberalization in the presence of systemic bailout guarantees. Empirically, financial liberalization tends to spur long-run growth, but it does so via lending booms that are punctuated by costly crises. In some extreme cases, however, unfettered liberalization has led to a breakdown of financial discipline and to the large-scale funding of unproductive activities. We consider a two-sector model with credit market imperfections that replicates these facts and shows why, in the presence bailout guarantees, the gains from financial liberalization depend crucially on the regulatory limits on the type of issuable liabilities. Under financial repression, borrowing constraints in the input sector lead to underinvestment, which causes bottlenecks throughout the economy and low growth. Liberalization allows for new financing instruments that relax the constraints, improve allocative effi ciency, and foster growth. However, the use of new instruments generates new states of the world in which insolvencies occur, and thus a riskless economy is endogenously transformed into an economy prone to rare crises. A key result is that if only standard debt is allowed, then