Productivity Dispersion and Structural Change in Retail Trade
December 2023
Working Paper Number:
CES-23-60R
Abstract
The retail sector has changed from a sector full of small firms to one dominated by large, national firms. We study how this transformation has impacted productivity levels, growth, and dispersion between 1987 and 2017. We describe this transformation using three overlapping phases: expansion (1980s and 1990s), consolidation (2000s), and stagnation (2010s). We document five findings that help us understand these phases. First, productivity growth was high during the consolidation phase but has fallen more recently. Second, entering establishments drove productivity growth during the expansion phase, but continuing establishments have increased in importance more recently. Third, national chains have more productive establishments than single-unit firms on average, but some single-unit establishments are highly productive. Fourth, productivity dispersion is significant and increasing over time. Finally, more productive firms pay higher wages and grow more quickly. Together, these results suggest that the increasing importance of large national retail firms has been an important driver of productivity and wage growth in the retail sector.
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production,
productive,
manufacturing,
enterprise,
industrial,
sale,
productivity growth,
growth,
commerce,
productivity increases,
industry productivity,
produce,
growth productivity,
sector,
recession,
firms grow,
industry growth,
employment growth,
establishment,
consolidated,
reallocation productivity,
retailer,
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warehouse,
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Department of Commerce,
Standard Industrial Classification,
Bureau of Labor Statistics,
Center for Economic Studies,
Longitudinal Business Database,
IQR,
Retail Trade,
Census of Retail Trade,
Economic Census,
North American Industry Classification System,
Current Employment Statistics,
Census Bureau Disclosure Review Board
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