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Presentation1

  1. 1.
  2. 2. Research Question?<br />Can We Relate Post Entry Performance of Individual establishments to establishment specific characterstics?<br />
  3. 3. Prior Work<br />Audretsch(1991) showed that survival rates of industries happen at industry level and not at business level. <br />hij – baseline rate of hazard<br />Xij – Vector of Covariates containing 3 factors<br />Long run average cost function - degree to which new business is burdened by inherent size disadvantage<br />Technological regime change(<br />Industry growth (Price/Cost Margin)<br />
  4. 4. Model Estimation<br />To estimate the β’s the Partial Likelihood function<br />Coefficients are estimated by maximizing the PL.(Log Likelihood function)<br />In case of Ties a modified PL is used.<br />
  5. 5. Model Estimation<br />S(t) – vector of the sum of covariates for episodes at time t, m – number of exits at time t<br />
  6. 6. Data Specification<br />Longitudanal data does not have start and end date [5 year interval used]<br />SIC predicted estimation. – data from D&B file provides virtual census<br />12251 new establishments in 1976 studied for 10 years.<br />Firm specific characterstics – innovation rate=number of innovations/employment<br />Establishmnet size = MES<br />Industry employment growth , price – cost margin<br />Macroeconomic employment rate , real interest rate (Economic report of president)<br />
  7. 7. Regression Results (Cox Model)<br />
  8. 8. Critique<br />While Survival Analysis is right, handling of censoring (right/left and interval) is not handled in his model<br />Not clear whether the coefficients are significant (Wald test of coefficients)<br />Is the model adequate to explain the phenomenon?<br />

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