Recently, a group of Growthology writers at the Kauffman Foundation trekked from the wintery cold of Kansas City to a warmer but rainier San Francisco for the annual American Economic Association (AEA) meeting.
We find the meeting useful each year to learn about new and interesting research, to meet old friends and make new ones, and host events around some of our Kauffman projects. Since our team had many different experiences, we thought we would all share our favorite session to discuss some of the key takeaways.
This session discussed a lot of the conversation about the potential merit and pitfalls of the H1-B visa program.
Ron Hira’s presentation on The Top H1-B Employers: Characteristics of H1-B Workers discussed the characteristics of companies that most heavily use the H1-B program, as the top ten employers who use the H1-B program specialize in IT offshoring services. The presentation highlighted findings which show H1-B workers tend to be paid lower wages than the workers they replace. The presentation also discussed its similarity to a guest worker program, as an overwhelming majority of H1-B workers are not sponsored by their employer for a pathway to citizenship.
H1-B visas are a popular topic of interest when studying immigrant entrepreneurship. A previous Growthology post examined their effect on startup growth.
Other excellent presentations explored the connection with H1-B visas and innovation; whether H1-B workers affect firms’ productivity, sales, employment or profit; and the F1 visa program and potential economic loss of not employing foreign-born college students.
At the Kauffman Emerging Scholars Awards Reception, we presented awards to 21 fantastic entrepreneurship scholars. Yael Hochberg received the 2016 Kauffman Prize Medal, and 20 PhD students from across the U.S. received 2016 Kauffman Dissertation Fellowships. We also acknowledged the 2015 Kauffman Junior Faculty Fellows who were present at the AEA meetings, whose awards were initially presented at the 2015 Academy of Management meeting in Vancouver, Canada.
After the official AEA meetings, the new Dissertation Fellows participated in the 5th annual Kauffman Entrepreneurship Mentoring Workshop. This opportunity was designed specifically for these scholars, and matches each student with a handful of senior scholars to provide specific feedback on their dissertations. Students also received general advice on completing their dissertations and entering the academic field from new Kauffman Prize Medal recipient, Yael Hochberg, and publishing advice from a panel of entrepreneurship-focused journal editors.
This session contained three different discussions on the decline of individual labor mobility. One of the labor market mechanisms that was discussed was non-compete agreements. Evan Starr (University of Maryland) presented work that sought to better understand how impactful employees believe and act as though non-compete agreements are.
Non-compete agreement enforcement varies significantly at the state level and the rationale for deciding how strictly to enforce non-compete agreements has been a topic of previous Growthology posts and a Kauffman policy digest. Starr found that employees who sign non-compete agreements are both more likely to stay at their current company longer and receive more offers from both competitors and non-competitors. This is a curious result, as it would make intuitive sense for individuals who receive more offers to leave sooner than individuals who receive fewer.
A second important result from the work is that an employee’s belief about the likelihood that the agreement with stand in court or that the firm will pursue legal action greatly affects how restrictive the non-compete actually is.
This session contained four different discussions on urban productivity and how cities have adjusted to a changing workforce from manufacturing to high-skilled labor. One of the discussions by Jordan Rappaport from the Federal Reserve Bank of Kansas City, which deserves a full read, was on Total Factor Productivity (TFP) and its relationship to commuting time and metro size.
To get the population a metro areas wants, the area needs to have a certain level of TFP. However, a densely populated metro can already expect to have a certain level of TFP. One of the ways metro size is measured is by commute congestion and perimeter land prices. In small cities such as Omaha, an easy commute and reasonable land prices can be an indicator of both the city’s population density and TFP. In larger cities such as Denver, a relatively more congested commute and higher land prices can indicate higher TFP. There is, however, a cap to the degree to which TFP growth matters, as once a metro area reaches a certain size, the area is less impacted by change in TFP.
CrunchBase is a leading platform to discover innovative companies and the people behind them. The CrunchBase Dataset is constantly expanding through contributions from their community of users, investment firms, and network of global partners. It now covers millions of users and businesses around the world. CrunchBase also has an open-access data license available to academic users.
We held a workshop at AEA which provided insights by the CrunchBase team on how the data is assembled and how it can be used, Kauffman’s perspective on emerging datasets like CrunchBase and thoughts on further exploration and funding, discussion on the advantages and constraints of the data, and presentations by academic and industry users of the data.
The declining rate of business dynamism has been well documented, but understanding the causes and consequences is still a work in progress. The four papers presented on aspects of business dynamism at the AEA conference were quite interesting and helped identify parts of the story. Like all great research, the papers also raised many questions and directions for future research. Not all of the papers are available to read yet, but they all deserve a thorough reading.
One paper, Changing Business Dynamism: Volatility of or Responsiveness to Shocks, by Ryan Decker, John Haltiwanger, Ron Jarmin and Javier Miranda discussed how businesses (at least in some sectors) are becoming less responsive to productivity, which may tell part of the decline in dynamism. The change in responsiveness of high tech firms increases in the 1980s to 1990s, but decreases after 2000, which mirrors the dynamism patterns. The authors speculate that this could be the result of changing frictions, globalization, capital growth instead of labor growth, movement towards acquisition rather than going public, or other factors.
We learned a lot at AEA, and met many interesting researchers with great ideas. We’re back this year blogging more about entrepreneurship research on Growthology. Stick with us to stay up to date on the latest as we learn together throughout this year.
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