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This paper estimates worker and firm impacts of foreign shocks, and the income support provided by assistance programs. It exploits quasi-experimental variation in firms' foreign demand resulting from the global financial crisis, using employer-employee data for Brazil in 2004-2017, linked with firm customs and financial data, and administrative data covering the universe of cash transfer, unemployment insurance, and training beneficiaries. Negative employment effects take over a decade to dissipate fully, wage effects persist, and firm restructuring involves occupational adjustment, increasing permanently skilled workers while reducing unskilled workers. Brazilian workers suffer smaller employment losses in highly informal locations and concentrated sectors. Underlying labor scarring is firm scarring caused by selection (exit) and (revenue, employment and productivity) downsizing. Unemployment insurance and cash transfers yield limited wage loss replacement (6 percent). Training does not increase. The evidence shows that a temporary shock induces persistent effects: firm restructuring scars incumbent workers and increases long-run inequality. Firm scarring may be even more severe in less flexible labor markets. Using data from Ecuador, analysis finds that firms do not adjust workforce composition, but they permanently reduce capital which increases scarring.

Global Financial Crisis, 2008-2009.

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This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading. The econometric analysis relies on a rich dataset of Chilean manufacturing firms and their products. Product quality is measured with unit values (prices) and imports’ transport costs are used as an exogenous proxy for import competition. The estimates show a negative effect of transport costs on product quality. The paper provides explicit evidence that estimated increases in unit values capture product quality upgrading, and that competition effects of imports explain our results. Easier access to intermediate inputs also fosters quality upgrading.

Development

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"The author studies the determinants of total factor productivity (TFP) for manufacturing firms in Bangladesh using data from a recent survey. She obtains TFP measures by making use of firm-specific deflators for output and inputs. Controlling for industry, location, and year fixed effects, she finds that: (1) firm size and TFP are negatively correlated; (2) firm age and TFP exhibit an inverse-U shaped relationship; (3) TFP improves with the quality of the firm's human capital; (4) global integration improves TFP; (5) firms with research and development activities and quality certifications have higher TFP, while more advanced technologies improve TFP only in the presence of significant absorptive capacity; (6) power supply problems cost firms heavily in terms of TFP losses; and (7) the presence of crime dampens TFP. "--World Bank web site.

Industrial productivity

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This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading. The econometric analysis relies on a rich dataset of Chilean manufacturing firms and their products. Product quality is measured with unit values (prices) and imports’ transport costs are used as an exogenous proxy for import competition. The estimates show a negative effect of transport costs on product quality. The paper provides explicit evidence that estimated increases in unit values capture product quality upgrading, and that competition effects of imports explain our results. Easier access to intermediate inputs also fosters quality upgrading.

Development

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"During the 1990s, foreign direct investment in producer service sectors in Latin America was massive. Such investment may increase the quality of services, reduce their cost, and offer opportunities for knowledge spillovers to downstream users of the services. This paper examines the effects of foreign direct investment in services on manufacturing productivity growth in Chile between 1992 and 2004. The authors estimate an extended production function where plant output growth depends on input growth and a weighted measure of foreign direct investment in services. The novelty of the approach is that the authors are able to assess the intensity of usage of various types of services at the plant level and use that information in the estimation of the importance of foreign direct investment in those services. The econometric results show a positive and significant effect of foreign direct investment in services on productivity growth of Chilean manufacturing plants which is robust to a multitude of tests. The economic impact of the estimates is that forward linkages from foreign direct investment in services account for almost 5 percent of the observed increase in Chilean manufacturing productivity growth during the sample period. This evidence therefore suggests that reducing the barriers restricting foreign direct investment in services in many developing economies may help accelerate productivity growth in their manufacturing sectors. "--World Bank web site.

Industrial productivity --- Investments, Foreign