Urban Agglomeration and CEO Compensation
Bill Francis, Iftekhar Hasan, Kose John, Maya Waisman
Journal of Financial and Quantitative Analysis,
No. 6,
2016
Abstract
We examine the relation between the agglomeration of firms around big cities and chief executive officer (CEO) compensation. We find a positive relation among the metropolitan size of a firm’s headquarters, the total and equity portion of its CEO’s pay, and the quality of CEO educational attainment. We also find that CEOs gradually increase their human capital in major metropolitan areas and are rewarded for this upon relocation to smaller cities. Taken together, the results suggest that urban agglomeration reflects local network spillovers and faster learning of skilled individuals, for which firms are willing to pay a premium and which are therefore important factors in CEO compensation.
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29.09.2016 • 40/2016
Joint Economic Forecast: German Economy on Track – Economic Policy needs to be Realigned
Thanks to a stable job market and solid consumption, the German economy is experiencing a moderate upswing. The GDP is expected to increase by 1.9 percent this year, 1.4 percent in 2017, and 1.6 percent in 2018, according to the Gemeinschaftsdiagnose (GD, joint economic forecast) that was prepared by five of Europe’s leading economic research institutes on behalf of the Federal Government. The most recent GD, which was released in April, predicted a GDP growth rate of 1.6 percent for 2016 and 1.5 percent for 2017.
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27.07.2016 • 33/2016
The merger of London Stock Exchange and Deutsche Boerse was reasonable
Shareholders of Deutsche Boerse AG have agreed to merge with London Stock Exchange (LSE). “I appreciate this decision“, says Prof Reint E. Gropp, president of Halle Institute for Economic Research (IWH). “Europe is in need of a competitive financial center. Especially now, after the Brexit referendum, the arguments for a merger are more convincing than ever.”
Reint E. Gropp
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IWH President: Why London Will Remain Europe’s Most Relevant Financial Center. Three Arguments.
Reint E. Gropp
One-off Publications,
2016
Abstract
“Despite Great Britain’s referendum London will retain its dominant position as financial center within Europe. This is what we have learned when the Euro was introduced as the uniform currency of Europe but gets even more obvious when we consider London’s location factors: the size of the city, its regulatory environment and the human capital”, states professor Reint E. Gropp, president of Halle Institute for Economic Research (IWH).
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FDI, Human Capital and Income Convergence — Evidence for European Regions
Björn Jindra, Philipp Marek, Dominik Völlmecke
Economic Systems,
No. 2,
2016
Abstract
This study examines income convergence in regional GDP per capita for a sample of 269 regions within the European Union (EU) between 2003 and 2010. We use an endogenous broad capital model based on foreign direct investment (FDI) induced agglomeration economies and human capital. By applying a Markov chain approach to a new dataset that exploits micro-aggregated sub-national FDI statistics, the analysis provides insights into regional income growth dynamics within the EU. Our results indicate a weak process of overall income convergence across EU regions. This does not apply to the dynamics within Central and East European countries (CEECs), where we find indications of a poverty trap. In contrast to FDI, regional human capital seems to be associated with higher income levels. However, we identify a positive interaction of FDI and human capital in their relation with income growth dynamics.
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Young, Restless and Creative: Openness to Disruption and Creative Innovations
Daron Acemoglu, Ufuk Akcigit, Murat Alp Celik
NBER Working Paper,
No. 19894,
2015
Abstract
This paper argues that openness to new, unconventional and disruptive ideas has a first-order impact on creative innovations—innovations that break new ground in terms of knowledge creation. After presenting a motivating model focusing on the choice between incremental and radical innovation, and on how managers of different ages and human capital are sorted across different firms with different degrees of openness to disruption, we provide firm-level, patent level and cross-country evidence consistent with this pattern. Our measures of creative innovations proxy for innovation quality (average number of citations per patent) and creativity (fraction of superstar innovators, the likelihood of a very high number of citations, and generality of patents). Our main proxy for openness to disruption is the age of the manager - based on the idea that only companies or societies open to such disruption will allow the young to rise up within the hierarchy. Using this proxy at the firm, patent and country level, we present robust evidence that openness to disruption is associated with more creative innovations, but we also show that once the effect of the sorting of young managers to firms that are more open to disruption is factored in, the (causal) impact of manager age on creative innovations is small.
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Does Going Public Affect Innovation?
Shai B. Bernstein
Journal of Finance,
No. 4,
2015
Abstract
This paper investigates the effects of going public on innovation by comparing the innovation activity of firms that go public with firms that withdraw their initial public offering (IPO) filing and remain private. NASDAQ fluctuations during the book-building phase are used as an instrument for IPO completion. Using patent-based metrics, I find that the quality of internal innovation declines following the IPO, and firms experience both an exodus of skilled inventors and a decline in the productivity of the remaining inventors. However, public firms attract new human capital and acquire external innovation. The analysis reveals that going public changes firms' strategies in pursuing innovation.
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Ökonomisches Wachstum in Ostdeutschland seit der Wiedervereinigung: Eine empirische Perspektive
Maike Irrek
Hochschulschrift, Online-Publikation,
2015
Abstract
The sluggish convergence between East and West Germany and the persistent productivity deficit of the East Germany economy are the motivation of a large number of studies and analyses. Public physical capital and human capital play a major role therein. However, there are no appropriate time series to verify the hypotheses which are discussed in the literature in empirical studies. Therefore, in this thesis public and private physical capital as well as human capital will be estimated for East and West Germany. The newly constructed data are then used to derive more exact estimates of total factor productivity in both regions.
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Returns to Skills around the World: Evidence from PIAAC
Eric A. Hanushek, Guido Schwerdt, Simon Wiederhold, Ludger Woessmann
European Economic Review,
January
2015
Abstract
Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 23 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Instrumental-variable models that use skill variation stemming from school attainment, parental education, or compulsory-schooling laws provide even higher estimates. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares.
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Coordination between Municipalities and Local Non-Municipal Public Units (NMPUs) for Supporting Urban Economic Development: Theoretical Analysis and Empirical Evidence for the Example of Universities in Germany
Martin T. W. Rosenfeld, J. Hinz
Koordination raumwirksamer Politik: Mehr Effizienz und Wirksamkeit von Politik durch abgestimmte Arbeitsteilung,
2015
Abstract
In many European cities, policymakers are trying to change the local paths of economic development to head in new directions, e.g. by trying to become a location for Non-Municipal Public Units (NMPUs), like federal special agencies, state museums, military bases, universities or publicly funded research institutes. But as the competencies for such local NMPUs are allocated to higher levels of government, the municipal level has no direct formal institutional responsibilities for influencing their location. Once a NMPU has chosen a certain location, support from the municipality may, however, stabilize the NMPU. There are some categories of NMPUs that should have considerable interest in local conditions, as determined by the municipal level. This paper first theoretically categorizes NMPUs with regard to their importance for the urban economy, with regard to the importance of local conditions for the performance of NMPUs and with regard to their degree of fiscal autonomy. It is shown that universities are one example of NMPUs where the relevance of coordinating activities with the municipalities is fairly high. The benefits of universities for local economic development have often been discussed. From the point of view of universities, their capacity to attract human capital depends on factors which may be influenced by the municipalities. This means that there is a reciprocal relationship between municipalities and universities; coordination by cooperation between the partners could be useful for both – but in practice there is often a lack of cooperation. Information policy is one relevant field for coordination: the city should highlight publicly the advantages of local universities; the universities should highlight the advantages of their city. As information policy is a field for which empirical data is available, the empirical part of the paper presents results from an analysis based on the internet presentations of selected cities and universities. It is shown that in most cities the level of coordination in this field is so far quite low. One possible way to achieve a higher degree of coordination could be to introduce fiscal incentives for cities.
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