Resumen de Essays on firm behavior and productivity
My doctoral thesis is a collection of three self-contained essays that study firm behavior and productivity in relation to local economic conditions and institutions.
In the first chapter, co-authored with Antonio Accetturo and Andrea Linarello, we study the relationship between the quality of civil justice and the firms' participation to Global Value Chains. Poor contract enforcement may raise the inherent riskiness of a contract, thus reducing the probability of firms to establish commercial relationships. We show that firms located in courts with longer trial lengths are less likely to supply customized intermediate inputs to foreign firms. Our empirical analyses exploit variations in the efficiency across Italian tribunals, and use a new dataset that records whether firms supply customized inputs abroad. Consistently with the theory, we find that the negative effect of judicial inefficiencies on the firms' participation to GVCs is stronger in industries producing goods requiring more relationship-specific investments. To confirm that the results are not influenced by omitted variables at the court level, we use a spatial regression discontinuity design that compares the probability of supplying customized inputs abroad for firms located on different sides of a court border, and are therefore characterized by different trial lengths.
The second chapter, co-authored with Andrea Linarello and Enrico Sette, focuses on the effect of credit supply shocks on aggregate productivity growth in the manufacturing sector. Using a dataset that covers the universe of Italian manufacturing firms, we distinguish between different components of aggregate productivity growth: within-firm productivity growth, the reallocation of labor across incumbent firms, and the extensive margins (entry and exit). Our findings show that a credit restriction on one hand depresses productivity growth at the firm level; on the other hand, it fosters the reallocation of employment shares from less to more productive firms. The more selective environment induced by a credit restriction also affects the extensive margins: it increases the contribution of exit, since more and relatively less productive firms leave the market, and further lowers the one of entry, since firms enter with a lower productivity when the credit availability is limited. We provide an aggregate quantification of the effects of the 2008--14 credit shrinkage, showing that the positive contribution of reallocation and exit has more than compensated the negative effect that credit crunch has had on within-firm productivity and entry.
In the third chapter, co-authored with Andrea Lamorgese, we study the determinants of the productivity advantage displayed by firms located in urban areas. Using detailed data on the universe of Italian firms, we are able to disentangle the role played by two components: the sorting of intrinsically more productive firms to urban areas, and the extent of agglomeration economies specific to each city. While both channels significantly contribute to the urban productivity premium, we find that the former is more sizable than the latter. In order to shed some light on the mechanisms through which firms accrue a productivity advantage in a urban environment, we focus on firms relocating across cities. We set up a synthetic control exercise that builds appropriate counterfactuals to evaluate the productivity gains arising from relocation. The results show that firms reap the benefits of agglomeration in two ways: on one hand, the simple fact of being located in a city entails a static productivity premium; on the other hand, productivity gains accumulate more rapidly in urban areas, hinting at potentially faster learning processes for firms located in these environments.
