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Hilton Atlanta, Grand Ballroom D
American Finance Association
Labor and Investment
Sunday, Jan. 6, 2019 8:00 AM - 10:00 AM
- Chair: Paige Ouimet, University of North Carolina
Economic Stimulus at the Expense of Routine-Task Jobs
AbstractDo investment tax incentives improve job prospects for workers? Using two massive establishment-level datasets on occupational employment and computer investment, we study the causal effect of a major tax incentive for investment on labor outcomes. The incentive, Section 179, indirectly reduces the after-tax price of equipment investment for eligible firms (i.e., small businesses) but not for ineligible ones. Combining this heterogeneous treatment with the variation in states' adoption of the incentive for state taxes, we find that when states increase investment incentive, eligible firms increase their equipment investments but experience little change in total employment. A further investigation uncovers that these firms increase skilled employees immediately following the incentive, however, they reduce their routine-task employees over the following three years. Hence, investment policy affects workers of different skills not only in different directions, but also at different times.
Access to Finance and Technological Innovation: Evidence from Antebellum America
AbstractThis paper provides new evidence on how access to finance impacts technological innovation and establishes labor scarcity as a novel economic mechanism. We exploit antebellum America, a unique setting with (1) staggered passage of free banking laws across states and (2) well-documented differences in labor scarcity between free and slave states. We find that access to finance spurred technological innovation as measured by patenting activities, especially in free states where labor was relatively scarcer. Notably, in slave states, access to finance encouraged technological innovation that substituted for free labor but discouraged technological innovation that substituted for slave labor.
Manpower Constraints and Corporate Policies
AbstractManpower constraints are the pervasive lack of specialized high- and low-skill workers, irrespective of the wage firms might offer. For a panel of German firms, we show manpower-constrained firms have 5% higher capacity utilization and 21% longer backlog of orders (measured in months). They are 15% more willing to increase their capital expenditures, and 4% more willing to grow their employment in the following year. Manpower constraints vary substantially over time and across industries, being higher on average in traditional manufacturing industries and lower in high-tech industries. For identification, we exploit the fall of the Berlin Wall in 1989, and the subsequent differential fluxes of Eastern immigrants across Western states, which followed the pre-existing patterns of Eastern German immigration immediately after WWII. We construct a Manpower Constraint (MPC) Index calibrating the loadings on firm-level financials that are also available in commonly used data set for US, European, and Asian firms. Our results help inform relevant debates such as the reform of immigration policies and the investment in public and private education for low-skilled workers.
Federal Reserve Bank of Chicago
Robert S. Chirinko,
University of Illinois
University of Toronto
- G3 - Corporate Finance and Governance