Institute for the Study of Labor

About: Institute for the Study of Labor is a nonprofit organization based out in Bonn, Germany. It is known for research contribution in the topics: Wage & Unemployment. The organization has 2039 authors who have published 13475 publications receiving 439376 citations.

Innovative Firms or Innovative Owners? Determinants of Innovation in Micro, Small, and Medium Enterprises

Abstract: Innovation is key to technology adoption and creation, and to explaining the vast differences in productivity across and within countries. Despite the central role of the entrepreneur in the innovation process, data limitations have restricted standard analysis of the determinants of innovation to consideration of the role of firm characteristics. We develop a model of innovation which incorporates the role of both owner and firm characteristics, and use this to determine how product, process, marketing and organizational innovations should vary with firm size and competition. We then use a new large representative survey from Sri Lanka to test this model and to examine whether and how owner characteristics matter for innovation. The survey also allows analysis of the incidence of innovation in micro and small firms, which have traditionally been overlooked in the study of innovation, despite these firms comprising the majority of firms in developing countries. More than one quarter of microenterprises are found to be engaging in innovation, with marketing innovations the most common. As predicted by our model, firm size is found to have a stronger positive effect, and competition a stronger negative effect, on process and organizational innovations than on product innovations. Owner ability, personality traits, and ethnicity are found to have a significant and substantial impact on the likelihood of a firm innovating, confirming the importance of the entrepreneur in the innovation process.

The Propensity Score: A Means to An End

Abstract: Propensity score matching is a prominent strategy to reduce imbalance in observational studies. However, if imbalance is considerable and the control reservoir is small, either one has to match one control to several treated units or, alternatively, discard many treated persons. The first strategy tends to increase standard errors of the estimated treatment effects while the second might produce a matched sample that is not anymore representative of the original one. As an alternative approach, this paper argues to carefully reconsider the selection equation upon which the propensity score estimates are based. Often, all available variables that rule the selection process are included into the selection equation. Yet, it would suffice to concentrate on only those exhibiting a large impact on the outcome under scrutiny, as well. This would introduce more stochastic noise making treatment and comparison group more similar. We assess the advantages and disadvantages of the latter approach in a simulation study.

Does culture affect unemployment? : evidence from the Röstigraben

Abstract: This paper studies the role of culture in shaping unemployment outcomes. The empirical analysis is based on local comparisons across a language barrier in Switzerland. This Rostigraben separates cultural groups, but neither labor markets nor political jurisdictions. Local contrasts across the language border identify the role of culture for unemployment. Our findings indicate that differences in culture explain differences in unemployment duration on the order of 20 %. Moreover, we find that horizontal transmission of culture is more important than vertical transmission of culture and that culture is about as important as strong changes to the benefit duration.

Job Creation, Job Destruction and Employment Growth in Transition Countries in the 90's

Abstract: In this paper we document and analyze gross job flows in five transition countries, Poland, Estonia, Slovenia, Bulgaria and Romania. Using comparable firm level data over the years 1993- 1997, we find that in early transition job destruction dominates job creation, while the latter is picking up as the country enters into a mature stage of transition. Gross job reallocation rates in the more advanced transition countries are comparable to those of Western economies. We show that the restructuring process is a very heterogeneous one in terms of job creation and destruction: Even in transition countries, hit by very large negative aggregate shocks, we find simultaneous creation and destruction of jobs within narrowly defined sectors, regions and firm types. In addition, we find that most of the job reallocation occurs within sectors and regions, rather than across sectors and regions. We suggest that a measure for restructuring is the excess job reallocation rate and show that the excess job reallocation rate is positively correlated with the net employment growth rate at the sector and regional level. Finally, we find that ownership and firm size are the most relevant characteristics for understanding different cross-sectional patterns of job reallocation. Foreign firms have higher job creation and higher excess job reallocation rates, while small businesses are the most dynamic in terms of job reallocation. We investigate the job reallocation process at the firm level and test for trade orientation, ownership and size effects. The results show that firm growth depends on ownership and initial size. Trade orientation effects are important for countries in early transition but not for countries in a more mature stage of the transition process.

Does Retirement Kill You? Evidence from Early Retirement Windows *

Abstract: The effect that health has on the retirement decision has long been studied. We examine the reverse relationship, whether retirement has a direct impact on later-life health. To identify the causal relationship, we use early retirement window offers to instrument for retirement. We find no negative effects of early retirement on men’s health, and if anything, a temporary increase in self-reported health and improvements in health of highly educated workers. While this is consistent with previous literature using Social Security ages as instruments, we also find that anticipation of retirement might be important, and bias the previous estimates downwards.