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Professor Ufuk Akcigit, PhD

Professor Ufuk Akcigit, PhD
Current Position

since 1/20

Research Professor
 

Head of the Research Group The Economic Gap between East and West Germany

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 8/19

Professor of Economics

University of Chicago

since 9/21

Fellow

Econometric Society

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Research Interests
  • macroeconomics
  • economic growth
  • firm dynamics
  • innovation
  • entrepreneurship

Ufuk Akcigit, winner of the Max-Planck-Humboldt Research Award, joined the institute as a Research Professor in January 2020. His research focuses on macroeconomics, economic growth, firm dynamics, innovation, and entrepreneurship.

Ufuk Akcigit holds the position of Professor of Economics at University of Chicago and he is a Fellow of the Econometric Society. He received his PhD from Massachusetts Institute of Technology (MIT).

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Professor Ufuk Akcigit, PhD
Professor Ufuk Akcigit, PhD
- Department Structural Change and Productivity
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Publications

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Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory

Ufuk Akcigit Sina T. Ates

in: American Economic Journal: Macroeconomics, No. 1, 2021

Abstract

In this paper, we review the literature on declining business dynamism and its implications in the United States and propose a unifying theory to analyze the symptoms and the potential causes of this decline. We first highlight 10 pronounced stylized facts related to declining business dynamism documented in the literature and discuss some of the existing attempts to explain them. We then describe a theoretical framework of endogenous markups, innovation, and competition that can potentially speak to all of these facts jointly. We next explore some theoretical predictions of this framework, which are shaped by two interacting forces: a composition effect that determines the market concentration and an incentive effect that determines how firms respond to a given concentration in the economy. The results highlight that a decline in knowledge diffusion between frontier and laggard firms could be a significant driver of empirical trends observed in the data. This study emphasizes the potential of growth theory for the analysis of factors behind declining business dynamism and the need for further investigation in this direction.

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Lack of Selection and Limits to Delegation: Firm Dynamics in Developing Countries

Ufuk Akcigit Harun Alp Michael Peters

in: American Economic Review, No. 1, 2021

Abstract

Delegating managerial tasks is essential for firm growth. Most firms in developing countries, however, do not hire outside managers but instead rely on family members. In this paper, we ask if this lack of managerial delegation can explain why firms in poor countries are small and whether it has important aggregate consequences. We construct a model of firm growth where entrepreneurs have a fixed time endowment to run their daily operations. As firms grow large, the need to hire outside managers increases. Firms’ willingness to expand therefore depends on the ease with which delegation can take place. We calibrate the model to plant-level data from the U.S. and India. We identify the key parameters of our theory by targeting the experimental evidence on the effect of managerial practices on firm performance from Bloom et al. (2013). We find that inefficiencies in the delegation environment account for 11% of the income per capita difference between the U.S. and India. They also contribute to the small size of Indian producers, but would cause substantially more harm for U.S. firms. The reason is that U.S. firms are larger on average and managerial delegation is especially valuable for large firms, thus making delegation efficiency and other factors affecting firm growth complements.

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History, Microdata, and Endogenous Growth

Ufuk Akcigit Tom Nicholas

in: Annual Review of Economics, 2019

Abstract

The study of economic growth is concerned with long-run changes, and therefore, historical data should be especially influential in informing the development of new theories. In this review, we draw on the recent literature to highlight areas in which study of history has played a particularly prominent role in improving our understanding of growth dynamics. Research at the intersection of historical data, theory, and empirics has the potential to reframe how we think about economic growth in much the same way that historical perspectives helped to shape the first generation of endogenous growth theories.

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Working Papers

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Credit Card Entrepreneurs

Ufuk Akcigit Raman Chhina Seyit Cilasun Javier Miranda Nicolas Serrano-Velarde

in: IWH Discussion Papers, No. 5, 2025

Abstract

<p>Utilizing near real-time QuickBooks data from over 1.6 million small businesses and a targeted survey, this paper highlights the critical role credit card financing plays for small business activity. We examine a two year period beginning in January of 2021. A turbulent period during which, credit card usage by small U.S. businesses nearly doubled, interest payments rose by 60%, and delinquencies reached 2.8%. We find, first, monthly credit card payments were up to three times higher than loan payments during this time. Second, we use targeted surveys of these small businesses to establish credit cards as a key financing source in response to firm-level shocks, such as uncertain cash flows and overdue invoices. Third, we establish the importance of credit cards as an important financial transmission mechanism. Following the Federal Reserve’s rate hikes in early 2022, banks cut credit card supply, leading to a 15.75% drop in balances and a 10% decline in revenue growth, as well as a 1.5% decrease in employment growth among U.S. small businesses. These higher rates also rendered interest payments unsustainable for many, contributing to half of the observed increase in delinquencies. Lastly, a simple heterogeneous firm model with a cash-in-hand constraint illustrates the significant macroeconomic impact of credit card financing on small business activity.</p>

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Committing to Grow: Employment Targets and Firm Dynamics

Ufuk Akcigit Harun Alp André Diegmann Nicolas Serrano-Velarde

in: IWH Discussion Papers, No. 17, 2023

Abstract

<p>We examine effects of government-imposed employment targets on firm behavior. Theoretically, such policies create “polarization,“ causing low-productivity firms to exit the market while others temporarily distort their employment upward. Dynamically, firms are incentivized to improve productivity to meet targets. Using novel data from East German firms post-privatization, we find that firms with binding employment targets experienced 25% higher annual employment growth, a 1.1% higher annual exit probability, and 10% higher annual productivity growth over the target period. Structural estimates reveal substantial misallocation of labor across firms and that subsidizing productivity growth would yield twice the long term increases in employment.</p>

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Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK

Ufuk Akcigit Raman Chhina Seyit Cilasun Javier Miranda Eren Ocakverdi Nicolas Serrano-Velarde

in: IWH Discussion Papers, No. 9, 2023

Abstract

Small and young businesses are essential for job creation, innovation, and economic growth. Even most of the superstar firms start their business life small and then grow over time. Small firms have less internal resources, which makes them more fragile and sensitive to macroeconomic conditions. This suggests the need for frequent and real-time monitoring of the small business sector’s health. Previously this was difficult due to a lack of appropriate data. This paper fills this important gap by developing a new Intuit QuickBooks Small Business Index that focuses on the smallest of small businesses with at most 9 workers in the US and the UK and at most 19 workers in Canada. The Index aggregates a sample of anonymous Quick- Books Online Payroll subscriber data (QBO Payroll sample) from 333,000 businesses in the US, 66,000 in Canada, and 25,000 in the UK. After comparing the QBO Payroll sample data to the official statistics, we remove the seasonal components and use a Flexible Least Squares method to calibrate the QBO Payroll sample data against official statistics. Finally, we use the estimated model and the QBO Payroll sample data to generate a near real-time index of economic activity. We show that the estimated model performs well both in-sample and out-of-sample. Additionally, we use this analysis for different regions and industries. Keywords:

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Topics

East Germany Innovations Productivity
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