Civic Capital and the Size Distribution of Plants: Short-Run Dynamics and Long-Run Equilibrium

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We characterize how the size distribution of plants, within narrowly defined industries, changed in Italy over a ten-year time span, and relate this to the stock of civic capital at the provincial level. Data on plant size come from the 1991 and 2001 Italian censuses. Civic capital turns out to have a positive effect on both the average and standard deviation of size. Looking at several precise points of the plant size distribution, we find that it shifts toward the right and becomes more dispersed where civic capital is high. The potential endogeneity of current civic capital is addressed by instrumenting it with historical variables. Our main conclusion is that the geographic variation in the stock of civic capital poses substantial constraints on plants' ability to expand. Understanding this is the key for the implementation of effective industrial policies. Looking at several precise points of the plant size distribution, we find that it shifts toward the right and becomes more dispersed where civic capital is high. The potential endogeneity of current civic capital is addressed by instrumenting it with historical variables. Our main conclusion is that the geographic variation in the stock of civic capital poses substantial constraints on plants' ability to expand. Understanding this is the key for the implementation of effective industrial policies. Terms of use: Documents inJEL Classification: A13, D23, L20, R12.

Legal Reform, Contract Enforcement and Firm Size in Mexico

“…The model of Guner et al (2008) suggests that the firm size distribution should be more dispersed when there are fewer restrictions on capital use. However, Bürker and Minerva (2012) find that in Italian provinces with shorter civil trials-one narrow measure of judicial quality-the firm size distribution is more compact. We, however, find evidence that the shape of the distribution tends to be more dispersed when firms are located in Mexican states with better judicial quality, using our fairly broad measure.…”

CO2-reducing innovations and outsourcing: Evidence from photovoltaics and green construction in North-East Italy

“…Unionisation is defined as the provincial ratio between the number of workers registered with the two most important unions in Italy (CGIL and CISL) and the total number of employed workforce in the pre-sample year 2005. Finally, greater recourse to the outsourcing of intangibles is expected in the presence of a higher level of social capitalproxied with the number of employees in social enterprises over the total in the pre-sample year 2005 (Social Capital) -given its role in reducing opportunistic, rent-seeking behaviours in market transactions (Burker and Minerva, 2013).…”

Policy Implementation in Italy

“…In a study which focuses on what might be thought of as a counterpart of (the absence of) corruption, Buerker and Minerva (2012) show that measures of 'civic capital' (based on the prevalence of altruistic acts such as donating blood) appear to be one determinant of variation in firms' plant size across Italy's regions. Bank of Italy researchers assess the following factors as being particularly likely to enhance corruption: low social capital; excessive bureaucratic burdens and low quality of bureaucracy (these are both cause and effect); ineffective enforcement; limited independence of the media and a high crime rate (Bianco and Tonello, 2012).…”

“…assessment of their vulnerability to corruption or mafia -the measures in the anticorruption law should help, no doubt slowly, to make citizens and firms both more able and more willing to respect laws and regulations. The results of Buerker and Minerva (2012), where civic capital appears to influence firm size, may result partly from civic capital acting to reduce the prevalence of corruption and therefore the reliability of the public administration. Government policy has few ways to influence civic values, except by example, but an effective education system, notwithstanding the apparent link between level of education and prevalence of corruption (Fiorino and Galli, 2010), is surely a necessary condition.…”