Events at CERGE-EI
Thursday, 8 October, 2026 | 14:15 | Room 402 | Macro Research Seminar
Ricardo Reis (London School of Economics) "Why Do Firms Prefer the US over the EU?"
London School of Economics, United Kingdom
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Meeting number: 2744 328 2469
Meeting password: 228631
Authors: Hugo Reichardt and Ricardo Reis
Abstract: When a European firm moves its headquarters to the United States, when a US firm expands by hiring across many states, or when a Japanese firm raises funding from US investors, these choices reveal what makes the United States attractive to firms. This paper builds a model in which firms make location choices across multiple activities—where to hire production workers, where to expand their sales staff, where to raise funding, where to place the headquarters—and these choices reveal the sources of a region’s attractiveness. It constructs a new global database that tracks where firms locate these activities and it develops an econometric strategy to separately estimate the contribution of each source. Applying the framework to the EU–US comparison, it finds that the productivity gap between them is driven by higher efficiency of the US’s funding markets, higher costs of operating across the EU’s fragmented internal market, and a scale-dependent penalty on profits of larger EU firms.
Full Text: Why Do Firms Prefer the US over the EU?
