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What is the optimal form of firm organization during “bad times”? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases (the “localist” view). On the other hand, the need to make tough decisions may favor centralized firms (the “centralist” view). Using two large micro datasets on decentralization in firms in ten OECD countries (WMS) and US establishments (MOPS administrative data), we find that firms that delegated more power from the central headquarters to local plant managers prior to the Great Recession outperformed their centralized counterparts in sectors that were hardest hit by the subsequent crisis (as measured by export growth and product durability). Results based on measures of turbulence based on product churn and stock market volatility provide further support to the localist view. This conclusion is robust to alternative explanations such as managerial fears of bankruptcy and changing coordination costs. Although decentralization will be suboptimal in many environments, it does appear to be beneficial for the average firm during bad times.

Slow growth over the last decade has prompted policy attention towards increasing R&D spending, often via the tax system. We examine the impact of R&D on firm performance, both by the firm’s own investments and through positive (and negative) spillovers from other firms. We analyse panel data on US firms over the last three decades, and allow for time-varying spillovers in both technology space (knowledge spillover) and product market space (product market rivalry). We show that the magnitude of R&D spillovers remains as large in the second decade of the 21st century as it was in the mid 1980s. Since the ratio of the social return to the private return to R&D is about four to one, this implies that there remains a strong case for public support of R&D. Positive spillovers appeared to temporarily increase in the 1995–2004 digital technology boom. We also show how these micro estimates relate to estimates from the endogenous growth literature and give some suggestions for future work.

Slow growth over the last decade has prompted policy attention towards increasing R&D spending, often via the tax system. We examine the impact of R&D on firm performance, both by the firm's own investments and through positive (and negative) spillovers from other firms. We analyse panel data on US firms over the last three decades, and allow for time‐varying spillovers in both technology space (knowledge spillover) and product market space (product market rivalry). We show that the magnitude of R&D spillovers remains as large in the second decade of the 21 st century as it was in the mid 1980s. Since the ratio of the social return to the private return to R&D is about four to one, this implies that there remains a strong case for public support of R&D. Positive spillovers appeared to temporarily increase in the 1995–2004 digital technology boom. We also show how these micro estimates relate to estimates from the endogenous growth literature and give some suggestions for future work.

This dissertation, \"Essays in Labor Economics, \" includes three chapters investigating the role of innovation and technological change in shaping labor markets.The first chapter, \"Do R&D Tax Credits Create Jobs?\", studies the employment effects of state tax credits for research and development (R&D), a large and widely-used policy tool. Using confidential micro data from the U.S. Census Bureau, I show that state R&D tax credits increase state employment growth. The increased in-state employment growth is not due to R&D-performing firms shifting employment across states in response to differential tax incentives. Rather, total employment growth at these firms increases. Additionally, greater in-state employment growth does not come at the expense of neighboring states. This is surprising in light of previous research which found that the credits increase in-state R&D spending but that all of the increase is offset by decreased R&D spending in neighboring states. I find no similar effect with respect to employment growth. A plausible explanation for my results is that state R&D tax credits cause increased innovation in the states which offer them, as the tax credits are associated with higher R&D investment and patenting, and lead to increased productivity growth.The second chapter, \"Do Innovative Firms Offshore Less?\", provides causal evidence of a link between innovation and offshoring. Linking confidential U.S. Census micro data on foreign trade transactions, production, and R&D expenditures, and using R&D state tax credits to instrument for firm R&D investment, I find that over the past 20 years more R&D-intensive firms engage in less offshoring. I provide evidence that the operative mechanism is quality-upgrading -- innovative firms produce higher quality products using more expensive and higher quality intermediate inputs which are complementary to domestic production.The third chapter, co-authored with Nicholas Bloom of Stanford University and John Van Reenen of the Massachusetts Institute of Technology, is titled \"Have R&D Spillovers Changed?\". Slow growth over the last decade has prompted policy attention towards increasing R&D spending, often via the tax system. In this essay, we examine the impact of R&D on firm performance, both by the firm's own investments and through spillovers from other firms. Analysing panel data on US firms over the last three decades, and allowing for interactions in both technology space and product market space. We show that the magnitude of R&D spillovers remains as large in the second decade of the 21st Century as it was in the mid-1980s. The marginal social return and marginal private return to R&D have been largely stable during this time period. Consequently, the ratio between marginal social returns to R&D and marginal private returns has changed little since the 1980's, with the marginal social return exceeding the marginal private return by a factor of 4. This implies that there remains a strong case for public support of R&D. Positive spillovers appeared to increase in the 1995-2004 digital technology boom.

This paper revisits the results of Bloom, Schankerman, and Van Reenen (2013) examining the impact of R&D on the performance of US firms, especially through spillovers. We extend their analysis to include an additional 15 years of data through 2015, and update the measures of firms' interactions in technology space and product market space. We show that the magnitude of R&D spillovers appears to have been broadly similar in the second decade of the 21st Century as it was in the mid-1980s. However, there does seem to have been some increase in the wedge between marginal social returns to R&D and marginal private returns with the ratio of marginal social to private returns increasing to a factor of 4 from 3. There is certainly no evidence that the need to subsidize R&D has diminished. Positive spillovers appeared to increase in the 1995-2004 boom.

This paper revisits the results of Bloom, Schankerman, and Van Reenen (2013) examining the impact of R&D on the performance of US firms, especially through spillovers. We extend their analysis to include an additional 15 years of data through 2015, and update the measures of firms' interactions in technology space and product market space. We show that the magnitude of R&D spillovers appears to have been broadly similar in the second decade of the 21st Century as it was in the mid-1980s. However, there does seem to have been some increase in the wedge between marginal social returns to R&D and marginal private returns with the ratio of marginal social to private returns increasing to a factor of 4 from 3. There is certainly no evidence that the need to subsidize R&D has diminished. Positive spillovers appeared to increase in the 1995-2004 boom.

Working Paper No. 24622 This paper revisits the results of Bloom, Schankerman, and Van Reenen (2013) examining the impact of R&D on the performance of US firms, especially through spillovers. We extend their analysis to include an additional 15 years of data through 2015, and update the measures of firms' interactions in technology space and product market space. We show that the magnitude of R&D spillovers appears to have been broadly similar in the second decade of the 21st Century as it was in the mid-1980s. However, there does seem to have been some increase in the wedge between marginal social returns to R&D and marginal private returns with the ratio of marginal social to private returns increasing to a factor of 4 from 3. There is certainly no evidence that the divergence between public and private return has narrowed. Positive spillovers appeared to increase in the 1995-2004 boom.

The Census Bureau’s 2015 Management and Organizational Practices Survey (MOPS) utilized innovative methodology to collect five-point forecast distributions over own future shipments, employment, and capital and materials expenditures for 35,000 U.S. manufacturing plants. First and second moments of these plant-level forecast distributions covary strongly with first and second moments, respectively, of historical outcomes. The first moment of the distribution provides a measure of business’ expectations for future outcomes, while the second moment provides a measure of business’ subjective uncertainty over those outcomes. This subjective uncertainty measure correlates positively with financial risk measures. Drawing on the Annual Survey of Manufactures and the Census of Manufactures for the corresponding realizations, we find that subjective expectations are highly predictive of actual outcomes and, in fact, more predictive than statistical models fit to historical data. When respondents express greater subjective uncertainty about future outcomes at their plants, their forecasts are less accurate. However, managers supply overly precise forecast distributions in that implied confidence intervals for sales growth rates are much narrower than the distribution of actual outcomes. Finally, we develop evidence that greater use of predictive computing and structured management practices at the plant and a more decentralized decision-making process (across plants in the same firm) are associated with better forecast accuracy.

Working Paper No. 23354 What is the optimal form of firm organization during “bad times”? Using two large micro datasets on firm decentralization from US administrative data and 10 OECD countries, we find that firms that delegated more power from the Central Headquarters to local plant managers prior to the Great Recession out-performed their centralized counterparts in sectors that were hardest hit by the subsequent crisis. We present a model where higher turbulence benefits decentralized firms because the value of local information and urgent action increases. Since turbulence rises in severe downturns, decentralized firms do relatively better. We show that the data support our model over alternative explanations such as recession-induced reduction in agency costs (due to managerial fears of bankruptcy) and changing coordination costs. Countries with more decentralized firms (like the US) weathered the 2008-09 Great Recession better: these organizational differences could account for about 16% of international differences in post-crisis GDP growth.

What is the optimal form of firm organization during \"bad times\"? Using two large micro datasets on firm decentralization from US administrative data and 10 OECD countries, we find that firms that delegated more power from the Central Headquarters to local plant managers prior to the Great Recession out-performed their centralized counterparts in sectors that were hardest hit by the subsequent crisis. We present a model where higher turbulence benefits decentralized firms because the value of local information and urgent action increases. Since turbulence rises in severe downturns, decentralized firms do relatively better. We show that the data support our model over alternative explanations such as recession-induced reduction in agency costs (due to managerial fears of bankruptcy) and changing coordination costs. Countries with more decentralized firms (like the US) weathered the 2008-09 Great Recession better: these organizational differences could account for about 16% of international differences in post-crisis GDP growth.