Profitable firms generate employment and pay higher wages
Vanhala, Juuso; Virén, Matti (29.06.2017)
JulkaisusarjaBank of Finland. Bulletin
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201706301395
An economy does not export products or create jobs – firms do. These are, however, very heterogeneous and often far from the average. Only the few 'superstars' of high productivity and profitability stand out distinctively in the large mass. A situation in which a few successful firms deviate strongly from the mass may distort the picture of an average firm and lead to erroneous conclusions about the condition of the corporate sector. However, a characteristic common to all firms is that success is reflected in wages and employment, even if in the export sector, the effect is typically smaller. Economic policy should pay more attention to the considerable heterogeneity of firms.