Adjustment Costs and Factor Demand: New Evidence from Firms’ Real Estate

The heterogeneous impact of market size on innovation: evidence from French firm-level exports

Antonin Bergeaud and Simon Ray

The Economic Journal, 2021, vol. 131, issue 633, 70-100

Abstract: We study corporate real estate frictions and their effect on firm dynamics and labour demand. We build and simulate a general equilibrium model with heterogeneous firms that predicts the response of firms to a productivity shock in the presence of fixed adjustment costs on real estate. Using a large firm-level database merged with local real estate prices, we then exploit variations in the tax on capital gains to document a causal effect of adjustment costs on firms’ labour demand and derive new results on the causes and implications of firms’ local relocation.

Date: 2021
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Adjustment costs and factor demand: new evidence from firms' real estate (2021)
Working Paper: Adjustment Costs and Factor Demand: New Evidence From Firms Real Estate (2017)
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