Joana Duran-franch (p), Alexandra Rusu, Alexander Lembcke, Jaroslav Groero

Emmanouil Tranos

This paper constructs new measures of local access to finance across OECD regions. We document important differences in access to finance across and within countries. We find preliminary evidence better access to finance is positively associated with firm performance.

Oana Mihaescu (p), Kristina Nyström (p)

Joana Duran-franch

In this study we offer a comprehensive perspective on the impact of large firm closures on the exit regions by investigating the effects of such large closures on both the economic performance of incumbent firms, measured using the CPI-adjusted real revenues, employment, and productivity, as well as on the attractiveness of the exit regions, proxied by real-estate property prices. We use a difference-in-difference setup and compare firm performance and real-estate property prices in the exit regions with firms and real-estate properties selected in a control group so that the two groups have similar pre-treatment trends in the dependent variables. The results show that the closure of a large firm leads to an increase of +0.91% in the revenues the incumbents in the exit regions, as well as to a smaller increase of +0.30% in their employment and of +0.61% in their productivity. This indicates that the sales, and, to a lesser degree, employment of the large exiting firm is absorbed by other firms in the region. There is a threshold to this effect though, as further analysis shows that it decreases quickly with the number of closures that take place within the same region. The results also show a positive effect of +6.89% the prices of the residential real-estate properties that are located in the direct vicinity of the large closures, an effect that decreases quickly with distance. The effect on commercial properties follows a similar. Although contrary to the expectations, this result validates the fact that redevelopment of the closure sites takes place quickly after the time point of the closure, with new firms generally making entrance at the exit site during the first year after the large closure. The quick redevelopment makes that the site of the large closure is seen as an amenity rather than a disamenity by both residents and other firms and thus that the demand for space in these areas is high.

Martina Pardy (p), David Ampudia

Oana Mihaescu

Brexit delivered a major political and economic shock to the UK economy. However, little is known about the effect of this shock through impacts on openness, ambition, and innovation among Small and Medium Enterprises (SMEs) in the UK, which are the backbone of the economy providing 60% of all jobs. This is even more the case for local economies in Northern Ireland, South West England and Wales, as their employment makes up 70% of employment in the private sector. We seek to exploit regional variation in the magnitude of this shock, measured by the differences between survey-based expectations and actual Brexit vote, and estimate the local effect on firm level performance. We use novel data sources to provide additional measures to investigate differences of how SMEs use technology and more granular definitions of business activity. Understanding how firms’ innovation and export behavior are affected by economic expectation changes due to Brexit is essential to mitigate the effects on the long-run productivity decline affecting growth and standards of living.

Emmanouil Tranos (p), Tasos Kitsos, Levi Wolf

Martina Pardy

The discussion about the productivity gains from digital technologies is almost as old as digital technologies themselves. From early futuristic approaches to the various forms of the productivity paradox, there are still open questions regarding if and how the internet can lead to positive economic effects. The usual caveat to unpack this relationship is data about internet usage that is detailed enough to be linked both to economic outputs and places. We develop a multilevel framework and combine firm-level microdata with novel internet speed microdata illustrating how connectivity has been experienced by end-users. We observe firms, their productivity, and other firm characteristics and estimate the effects of broadband speeds after accounting for spatial effects and platial characteristics. Our results indicate that it is differences in the top 90th percentile) internet speeds that are associated with higher firm productivity rather than variation in the median. These results vary by sector and depict a clear urban benefit. They have significant policy implications, highlighting the material impact of rollout decisions and presenting policymakers with dilemmas regarding efficiency vs. equity.