Banque Nationale De Belgique Sa · EURONEXT:BNB

Banque Nationale De Belgique Sa — National Bank of Belgium — Technical Presentation (October 2010)

26 slides from Banque Nationale De Belgique Sa's technical presentation, Oct 14, 2010

  1. Slide 1: Labour demand adjustment: Does foreign ownership matter?

    Labour demand adjustment: Does foreign ownership matter? NBB Conference on "International Trade: Threats and Opportunities in a Globalised World" October 14-15, 2010 Catherine Fuss (National Bank of Belgium) Emmanuel Dhyne (National Bank of Belgium, Université de Mons) Claude Mathieu (ERUDITE, Unive

  2. Slide 2: Introduction

    Introduction Importance of multinational firms (MNFs) 2002 2003 2004 2005 2006 2007 Inwards FDI flows/gross capital formation Belgium 33.6 57.4 61.8 45.1 71.5 114.8 EU 16.8 11.7 8.6 18.1 19.5 23.7 US 4.0 2.7 6.3 4.4 9.3 10.9 Inwards FDI stock/GDP Belgium 91.1 113.4 129.7 100.7 121.2 130.4 EU 30.8 32

  3. Slide 3: Introduction: Plan of the analysis

    Introduction: Plan of the analysis 1. Net job creation analysis (Davis, Haltiwanger and Schuh, 1996) domestic firms / Belgian MNFs / foreign MNFs new firms / incumbent firms / exiting firms incumbent firms account for a large fraction of net employment creation 2. Estimates of labour adjustment cost

  4. Slide 4: Data

    Data Merging Survey on FDI + Social Security (LB, LW, WB, WW) + annual accounts Selection "profit-maximising" firms, with 10 employees, full annual accounts, excluding agriculture, extraction, non market services, and other business activities; consistency between the wage bill in annual accounts an

  5. Slide 5: Net employment creation: domestic firms vs. MNFs

    Net employment creation: domestic firms vs. MNFs 1998 1999 2000 2001 2002 2003 2004 2005 Domestic firms Net creation (thousands) 16.7 15.4 19.7 3.1 0.4 -1.0 6.1 -2.8 Incumbent firms 20.0 22.3 25.0 8.5 4.2 5.6 8.6 5.5 Firm exit -6.8 -10.2 -8.5 -8.6 -8.0 -7.3 -4.0 -8.6 Average net creation (units) 1.7

  6. Slide 6: Net employment creation: domestic firms vs. MNFs

    Net employment creation: domestic firms vs. MNFs 1998 1999 2000 2001 2002 2003 2004 2005 Domestic firms Net creation (thousands) 16.7 15.4 19.7 3.1 0.4 -1.0 6.1 -2.8 Incumbent firms 20.0 22.3 25.0 8.5 4.2 5.6 8.6 5.5 Firm exit -6.8 -10.2 -8.5 -8.6 -8.0 -7.3 -4.0 -8.6 Average net creation (units) 1.7

  7. Slide 7: Net employment creation: incumbents vs firm exit

    Net employment creation: incumbents vs firm exit 1998 1999 2000 2001 2002 2003 2004 2005 Domestic firms Net creation (thousands) 16.7 15.4 19.7 3.1 0.4 -1.0 6.1 -2.8 Incumbent firms 20.0 22.3 25.0 8.5 4.2 5.6 8.6 5.5 Firm exit -6.8 -10.2 -8.5 -8.6 -8.0 -7.3 -4.0 -8.6 Average net creation (units) 1.7

  8. Slide 8: Euler equations for labour demand

    Euler equations for labour demand Assumptions Cobb-Douglas production function and Cournot competition Adjustment costs function differences between blue-collar workers and white-collar workers convexity: aB and aW asymmetry: when dB, dW<0 downsizing cost are larger than upsizing costs cross adjustm

  9. Slide 9: Estimates of production function coefficients

    Estimates of production function coefficients Allowing for market power estimates of K/ B/ W/ (Griliches and Mairesse, 1995) correction for the use of sector-level deflator instead of firm-level prices Ackerberg, Caves and Frazer (2006) assuming that capital, blue-collar workers and white-collar wor

  10. Slide 10: Estimates of adjustment costs

    Estimates of adjustment costs Differences between domestic firms and MNFs Estimation System GMM, i.e. firms form rational expectations INTRODUCTION DATA JOB CREATION EULER PRODUCTION FUNCTION ADJUSTMENT COSTS CONCLUSION

  11. Slide 11: Estimates of adjustment costs

    Estimates of adjustment costs (1) (2) aB 228.75*** 291.84*** aBMNF -93.67 dB -2.22** -7.99** dBMNF 7.98** aW 835.20*** 1191.58*** aWMNF -692.26*** dW -8.36*** -20.98** dWMNF 14.40 g -216.40*** -283.13*** gMNF 185.13 Sargan 19.15* 30.41 Notes: 37553 observations and 5544 firms over the period 1998-20

  12. Slide 12: Estimates of adjustment costs

    Estimates of adjustment costs (1) (2) aB 228.75*** 291.84*** aBMNF -93.67 dB -2.22** -7.99** dBMNF 7.98** aW 835.20*** 1191.58*** aWMNF -692.26*** dW -8.36*** -20.98** dWMNF 14.40 g -216.40*** -283.13*** gMNF 185.13 Sargan 19.15* 30.41 Notes: 37553 observations and 5544 firms over the period 1998-20

  13. Slide 13: Examples of adjustment costs

    Examples of adjustment costs Total adjustment costs for a net employment change of 2 (in absolute value) 3000 2500 2000 1500 1000 500 0 LB = 2 LB = -2 LB = 0 LB = 0 LB = 1 LB = 3 LW = 0 LW = 0 LW = 2 LW = -2 LW = 1 LW = -1 domestic firms multinational firms INTRODUCTION DATA JOB CREATION EULER PRODU

  14. Slide 14: Examples of adjustment costs

    Examples of adjustment costs Total adjustment costs for a net employment change of 2 (in absolute value) 3000 2500 2000 1500 1000 500 0 LB = 2 LB = -2 LB = 0 LB = 0 LB = 1 LB = 3 LW = 0 LW = 0 LW = 2 LW = -2 LW = 1 LW = -1 domestic firms multinational firms INTRODUCTION DATA JOB CREATION EULER PRODU

  15. Slide 15: Examples of adjustment costs

    Examples of adjustment costs Total adjustment costs for a net employment change of 2 (in absolute value) 3000 2500 2000 1500 1000 500 0 LB = 2 LB = -2 LB = 0 LB = 0 LB = 1 LB = 3 LW = 0 LW = 0 LW = 2 LW = -2 LW = 1 LW = -1 domestic firms multinational firms INTRODUCTION DATA JOB CREATION EULER PRODU

  16. Slide 16: Examples of adjustment costs

    Examples of adjustment costs Total adjustment costs for a net employment change of 2 (in absolute value) 3000 2500 2000 1500 1000 500 0 LB = 2 LB = -2 LB = 0 LB = 0 LB = 1 LB = 3 LW = 0 LW = 0 LW = 2 LW = -2 LW = 1 LW = -1 domestic firms multinational firms INTRODUCTION DATA JOB CREATION EULER PRODU

  17. Slide 17: Examples of adjustment costs

    Examples of adjustment costs Total adjustment costs for a net employment change of 2 (in absolute value) 3000 2500 2000 1500 1000 500 0 LB = 2 LB = -2 LB = 0 LB = 0 LB = 1 LB = 3 LW = 0 LW = 0 LW = 2 LW = -2 LW = 1 LW = -1 domestic firms multinational firms INTRODUCTION DATA JOB CREATION EULER PRODU

  18. Slide 18: Differences in adjustment costs

    Differences in adjustment costs Differences between domestic firms and MNFs Role of additional variables INTRODUCTION DATA JOB CREATION EULER PRODUCTION FUNCTION ADJUSTMENT COSTS CONCLUSION

  19. Slide 19: Differences in adjustment costs

    Differences in adjustment costs Bel. MNF L 50 turn ftc early ret. aBMNF -93.67 -96.21 -30.81 -12.17 48.54 aBproxy -24.72 -337.67*** -166.36* -456.12*** dBMNF 7.98** 7.85** 8.76*** 4.91 4.53* dBproxy 0.36 1.60 2.37 17.13*** aWMNF -692.26*** -704.23*** -388.59 -691.96*** -564.39** aWproxy 285.21 -994.

  20. Slide 20: Differences in adjustment costs

    Differences in adjustment costs Bel. MNF L 50 turn ftc early ret. aBMNF -93.67 -96.21 -30.81 -12.17 48.54 aBproxy -24.72 -337.67*** -166.36* -456.12*** dBMNF 7.98** 7.85** 8.76*** 4.91 4.53* dBproxy 0.36 1.60 2.37 17.13*** aWMNF -692.26*** -704.23*** -388.59 -691.96*** -564.39** aWproxy 285.21 -994.

  21. Slide 21: Differences in adjustment costs

    Differences in adjustment costs Bel. MNF L 50 turn ftc early ret. aBMNF -93.67 -96.21 -30.81 -12.17 48.54 aBproxy -24.72 -337.67*** -166.36* -456.12*** dBMNF 7.98** 7.85** 8.76*** 4.91 4.53* dBproxy 0.36 1.60 2.37 17.13*** aWMNF -692.26*** -704.23*** -388.59 -691.96*** -564.39** aWproxy 285.21 -994.

  22. Slide 22: Differences in adjustment costs

    Differences in adjustment costs Bel. MNF L 50 turn ftc early ret. aBMNF -93.67 -96.21 -30.81 -12.17 48.54 aBproxy -24.72 -337.67*** -166.36* -456.12*** dBMNF 7.98** 7.85** 8.76*** 4.91 4.53* dBproxy 0.36 1.60 2.37 17.13*** aWMNF -692.26*** -704.23*** -388.59 -691.96*** -564.39** aWproxy 285.21 -994.

  23. Slide 23: Differences in adjustment costs

    Differences in adjustment costs Bel. MNF L 50 turn ftc early ret. aBMNF -93.67 -96.21 -30.81 -12.17 48.54 aBproxy -24.72 -337.67*** -166.36* -456.12*** dBMNF 7.98** 7.85** 8.76*** 4.91 4.53* dBproxy 0.36 1.60 2.37 17.13*** aWMNF -692.26*** -704.23*** -388.59 -691.96*** -564.39** aWproxy 285.21 -994.

  24. Slide 24: The role of firm size

    The role of firm size Generalised adjustment cost specification = 0: adjustment costs are independent of firm size (Alonso-Borrego, 1998) = -1: adjustment costs depend on firm size (Meghir, Ryan, Van Reenen, 1996) =0 =-0.5 =-0.6 =-0.8 =-1 =-1.2 aBMNF -93.67 457.60 3,494 18,598** 62,345*** 201,126***

  25. Slide 25: Summary

    Summary 1. Net employment creation of MNEs is driven by incumbent firms foreign MNFs generate substantial employment creation incumbent firms are responsible for a large fraction of net employment creation 2. Differences in adjustment costs across firms and workers adjustment costs are convex; downs

  26. Slide 26: Thank you for your attention

    THANK YOU FOR YOUR ATTENTION

National Bank of Belgium — Technical Presentation (October 2010) on 6ix