Entrepreneurship, Innovation, and Productivity Growth
The research group “Entrepreneurship, Innovation, and Productivity Growth” tackles a broad set of research topics that are of relevance for our understanding of patterns of innovation and productivity growth and explores implications for workers and firms. Areas of particular focus include the decline in business dynamism, the growth in automation, entrepreneurship and innovation, and supply chains. The work is empirical in focus, it is grounded in microeconomic data research, but seeks to understand relevant macroeconomic trends.
Business Dynamism: The last decade has seen the explosion of research on business dynamism largely as a result of the development of new comprehensive firm and establishment level micro datasets. We exploit existing CompNet data to understand patterns of business dynamism in Europe. In particular this subgroup seeks to explain the role of technological change and market power. The team documents the decline in young firm activity and reallocation, and estimates models that assess the causes and impacts on productivity growth (with Matthias Mertens, Sergio Inferrara, and Filippo Biondi).
Entrepreneurship: Going back to the days of Schumpeter, economists understand the important role entrepreneurs play in modern capitalist economies. This workpackage sets up a collaboration with the ZEW to develop a new data infrastructure and explore entrepreneurship in Germany broadly. Areas of research include:
a. Entrepreneurship and Firm Performance: Understanding High Growth Firms.
b. Innovative Firms and the Diffusion of Technology
c. (Im)Migration, Entrepreneurship and Regional Development
Automation: The introduction of robots and automation technologies in the workplace are fundamentally altering the balance of tasks and skills that are in demand. At the same time automation technologies increase the productivity of the workers and firms that make use of them relative to those that do not and can potentially lead to winners and losers. In this workpackage we conduct research on robot automation and its impacts on workers and firms. We focus our research both in Germany and the U.S..
The research group makes use of various administrative and survey datasets from a variety of sources and countries.
IWH Data Project: The Competitiveness Research Network (CompNet) is a research network founded in 2012 to foster the debate on competitiveness issues among partner institutions and researchers. It aims at providing a robust theoretical and empirical link between micro-level drivers of competitiveness and macroeconomic performance for research and policy analysis purposes.
CompNet is funded by various European institutions, including among others: European Bank of Reconstruction and Development (EBRD); European Central Bank (ECB); European Commission (EC); European Investment Bank (EIB); European Stability Mechanism (ESM); France Stratégie; German Council of Economic Experts, Halle Institute for Economic Research (IWH); German Federal Ministry of Economic Affairs and Climate Action (BMWK); Tinbergen Institute (TI). CompNet is advised by leading researchers in the field of firm performance and has created a European micro-aggregated industry- and country-level database on indicators of firm- and country-level competitiveness and performance.
The database is unique in terms of its coverage and contents, particularly as, although being aggregated, it contains rich information on firm heterogeneity (i.e., distributional characteristics, like standard deviations and various percentiles of the firm distributions) across a large set of countries and industries in Europe. Among others, key variables included in the database are indicators of firm productivity, market power, firms’ financial situation, trade, and firm dynamics.
Research Cluster
Productivity and InstitutionsYour contact
- Department Centre for Business and Productivity Dynamics
EXTERNAL FUNDING
06.2024 ‐ 05.2027
High-growth Entrepreneurship, Innovation, and the Transformation of our Economy (Collaborative Excellence)
Leibniz Association
Refereed Publications
Business Volatility, Job Destruction, and Unemployment
in: American Economic Journal: Macroeconomics, Vol. 2 (2), 2010
Abstract
Unemployment inflows fell from 4 percent of employment per month in the early 1980s to 2 percent by the mid 1990s. Using low frequency movements in industry-level data, we estimate that a 1 percentage point drop in the quarterly job destruction rate lowers the monthly unemployment inflow rate by 0.28 points. By our estimates, declines in job destruction intensity account for 28 (55) percent of the fall in unemployment inflows from 1982 (1990) to 2005. Slower job destruction accounts for similar fractions of long-term declines in the rate of unemployment.
Labor Market Analysis and Public Policy: The Case of Morocco
in: World Bank Economic Review, Vol. 13 (3), 1999
Abstract
This article uses detailed industry and household data to understand why Morocco's labor market performed poorly in 1985–95. The data indicate that marked structural changes and weak demand in the product market were responsible. This article makes two contributions to the literature. The first is specific: it underscores that the demand for labor is a derived demand and that the performance of the product market is an important determinant of the performance of the labor market. The second is more general: it demonstrates that this kind of microeconomic analysis, using data sets that are often available in developing countries, can inform policy design.
Working Papers
Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK
in: IWH Discussion Papers, No. 9, 2023
Abstract
Small and young businesses are essential for job creation, innovation, and economic growth. Even most of the superstar firms start their business life small and then grow over time. Small firms have less internal resources, which makes them more fragile and sensitive to macroeconomic conditions. This suggests the need for frequent and real-time monitoring of the small business sector’s health. Previously this was difficult due to a lack of appropriate data. This paper fills this important gap by developing a new Intuit QuickBooks Small Business Index that focuses on the smallest of small businesses with at most 9 workers in the US and the UK and at most 19 workers in Canada. The Index aggregates a sample of anonymous Quick- Books Online Payroll subscriber data (QBO Payroll sample) from 333,000 businesses in the US, 66,000 in Canada, and 25,000 in the UK. After comparing the QBO Payroll sample data to the official statistics, we remove the seasonal components and use a Flexible Least Squares method to calibrate the QBO Payroll sample data against official statistics. Finally, we use the estimated model and the QBO Payroll sample data to generate a near real-time index of economic activity. We show that the estimated model performs well both in-sample and out-of-sample. Additionally, we use this analysis for different regions and industries. Keywords:
Measuring the Impact of Household Innovation using Administrative Data
in: NBER Working Paper, No. 25259, 2018
Abstract
We link USPTO patent data to U.S. Census Bureau administrative records on individuals and firms. The combined dataset provides us with a directory of patenting household inventors as well as a time-series directory of self-employed businesses tied to household innovations. We describe the characteristics of household inventors by race, age, gender and U.S. origin, as well as the types of patented innovations pursued by these inventors. Business data allows us to highlight how patents shape the early life-cycle dynamics of nonemployer businesses. We find household innovators are disproportionately U.S. born, white and their age distribution has thicker tails relative to business innovators. Data shows there is a deficit of female and black inventors. Household inventors tend to work in consumer product areas compared to traditional business patents. While patented household innovations do not have the same impact of business innovations their uniqueness and impact remains surprisingly high. Back of the envelope calculations suggest patented household innovations granted between 2000 and 2011 might generate $5.0B in revenue (2000 dollars).
