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Posts
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portfolio
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publications
Import competition and firm productivity: Evidence from German manufacturing
The World Economy, 2023
We study how different types of import competition affect firm productivity using firm-product data from German manufacturing (2000–2014). Competition from high-income countries causes affected domestic firms to increase their productivity and lower their prices. Oppositely, import competition from low-wage countries does not lead to firm productivity gains. Instead, domestic firms` sales and input usage decline. Our findings confirm the intuition of ladder models that the effect of competition depends on the “closeness” of competitors. They are in line with widespread X-inefficiencies throughout the economy, which firms reduce in response to competition from high-income countries.
Recommended citation: Braeuer, R., Mertens, M., Slavtchev, V. (2023). Import competition and firm productivity: Evidence from German manufacturing. The World Economy, 00, 00–21.
Trade shocks, labour markets and migration in the First Globalisation
The Economic Journal, 2024
This paper studies the economic and political effects of a large trade shock in agriculture—the grain invasion from the Americas—in Prussia during the first globalisation (1870-1913). We show that this shock led to a decline in the employment rate and overall income. However, we do not observe declining per capita income and political polarization, which we explain by a strong migration response. Our results suggest that the negative and persistent effects of trade shocks we see today are not a universal feature of globalisation, but depend on labour mobility. For our analysis, we digitize data from Prussian industrial and agricultural censuses on the county level and combine it with national trade data at the product level. We exploit the cross-regional variation in cultivated crops within Prussia and instrument with Italian and US trade data to isolate exogenous variation.
Recommended citation: Richard Bräuer, Felix Kersting, Trade shocks, labour markets and migration in the First Globalisation, The Economic Journal, 2024
Matching on the Global Inventor Firm Labor Market
Working Paper, 2024
I analyze the matching of firms and inventors and the patent (citation) arrival rate of the resulting matches as a potential driver of slowing technology growth. I document a global trend towards increased assortative matching and declining inventor mobility to low productivity firms despite a largely constant patent invention function. To arrive at these results, I further develop empirical strategies used in the search and matching labor market literature to account for inventor teams and adapt these estimators to the pecularities of the PATSTAT patent data from 1974-2012, which I use as an employer-employee data set.
Labor market power and innovation
Working Paper, 2024
This paper studies the effect of labor market power (LMP) on firms` innovation decisions and consequently its effect on aggregate growth. We find that LMP is particularly prevalent in structurally weak regions across Europe and is negatively correlated to aggregate productivity and innovation activity. We estimate labor market power, the effect on innovation on productivity and profits for each firm with a firm level data set on the German manufacturing sector 1999-2016. Then we estimate the value of additional innovation for firms in the poorer, labor-market-power-prone East German states and in West Germany. The average firm in the East German states gains between 0.3 and 0.7 Million € more from innovation than its equivalent in West Germany. This relationship is reversed for low productivity firms: Low productivity East German firms gain about 1.5 Million \euro more, since innovation allows them to grow to a moderate size and profit from the high labor market power environment. Statically, a one standard deviation change in LMP explains a differential of 10\% of firm-level R\&D spending. As a result, Eastern firms are less productive, smaller, but not necessarily less profitable. Our theoretical framework provides an explanation for these patterns: Firms with high labor market power have less incentives to innovate as their profit function depends to a relatively lesser extent on total factor productivity (TFP). With this new channel and its implication on firm dynamics we provide a new explanation for the persistence of low productivity in structurally weak regions and in particular for the persistence of the productivity gap within Germany.
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GMM over Split Data Sets
Working Paper, 2024
We present an algorithm for linear GMM estimation which works even if the researcher cannot combine the underlying data into one data set. We discuss three different applications: First, a Regression where X- and Y- variables are in different data sets. Second a Regression where observations are in different data sets. Third, a Regression where the complete data is so large as to be unwieldy. We demonstrate these use cases by studying the effects of German R&D subsidies without merging patent and firm data, estimating a Europe-wide production function without merging the firm level data sets of different EU countries and by documenting the speed performance of our code in simulated data. The main requirement of this method is that instruments and exogenous regressors have to be present in all data sets.
The Aggregate Effects of Incumbent Firms Preventing Disruptive Innovation (JMP)
IWH Working Paper, 2024
This paper proposes to explain the productivity growth slowdown with firms consciously preventing disruptive innovation. I build an endogenous growth model with incremental and disruptive inventions and an inventor labor market where firms poach disruptive inventors to protect established technologies. I calibrate this model to the global patent landscape in 1990 and show that it predicts 52% of the decline of disruptive innovation until 2010. I confirm critical assumptions with an event study: Disruptions increase future research productivity, hurt incumbent inventors and raise the probability of future disruption. Without disruption, technology classes trend further towards incrementalism.
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talks
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teaching
CompNet Seminar
Seminar, several, incl. European Commission, 2017
Together with Dr. Matthias Mertens, I conceptualized and gave a seminar on recent developments and questions in productivity estimation, use of micro-data for macro questions and the various firm level data sets available.
Tinbergen Summer School
Seminar, Tinbergen Institute, 2019
I was TA for the Tinbergen Summerschool on “Productivity, Trade and Growth” from 2017 to 2019.