Priscila Ferreira

The Dynamics of Job Creation and Destruction for University Graduates: Why a Rising Unemployment Rate Can Be Misleading

A large matched employer–employee data set on the Portuguese economy is used to analyse gross job creation and job destruction for university graduates, compared to other groups of workers. Standard measures of gross job flows are computed, and variance decomposition is used to check whether idiosyncratic shocks or aggregate and sectoral shocks can account for the time variation in gross job flows, for schooling groups separately. Results indicate that the market for university graduates has expanded much more than that for undergraduates, and that idiosyncratic shocks are more relevant driving job flows for university graduates than for nongraduates. No support is therefore found for the pessimistic view that states that the expansion of higher education may have gone too far.

The effect of competition on executive compensation and incentives: Evidence from a quasi-natural experiment

This paper studies the effect of increased product market competition on executive compensation and incentives. We use a reform that simplified firm entry regulation in Portugal as a quasi-natural experiment and exploit its staggered implementation across municipalities for identification. Using employer–employee data, we find that increased competition following the reform raised total pay but reduced the sensitivity of pay to firm performance. This is consistent with theoretical results showing that a fall in entry costs weakens managerial incentive provision. Entry deregulation also increased performance-induced CEO turnover and firms’ probability of exit, suggesting that competition provides direct incentives for managerial effort.

Market competition and executive pay

El salario ejecutivo está relacionado con el nivel competitivo del mercado de productos. Pero, aunque la mayoría de las reformas políticas que fomentan la competencia refuerzan el vínculo entre competencia y salario según el rendimiento, también puede ocurrir que aumentar la competencia reduzca los incentivos. Asimismo, como las empresas pueden cambiar sus estructuras salariales, los cambios en la competencia no siempre afectan al salario de los CEO. Por tanto, las políticas para reducir la desigualdad salarial deben tener en cuenta las idiosincrasias del mercado y estos efectos diferentes. La mayor competencia a través de, por ejemplo, la desregulación tiene el potencial de ofrecer incentivos directos a los directivos para que obtengan un buen rendimiento. Esto puede reducir las ineficiencias asociadas a una mala dirección. Contras

Firm Shutdown During the Financial and the Sovereign Debt Crises: Empirical Evidence from Portugal

Abstract This paper examines Portuguese firms’ survival over the business cycle and investigates whether the effect of firm size varies across the phases of the cycle and with the type of shock associated with periods of economic contraction. Our results show that smaller firms are more likely to shut down than larger firms. Within each size band, however, we found that during the two crises examined, micro firms experienced hazards of closing (relative to large firms) at least similar to those observed in the pre-crisis period, while medium-sized firms were found to have been more vulnerable during the financial crisis period but showed more resilience during the sovereign debt crisis. The results suggest that during the sovereign debt crisis, firms faced a higher probability of closing than they did during the financial crisis.

Employment, turnover and career progress

Funding by FEDER (Programa Operacional Factores de Competitividade – COMPETE) and by National Funds (Fundacao para a Ciencia e a Tecnologia) within project EXPL/IIM-ECO/1207/2013