This paper examines the trend in the importance of small producers in the Canadian and U.S. manufacturing sectors from the early 1970s to the late 1990s in order to investigate whether there was a common North American trend in changes in plant size. It finds that small plants in both countries increased their share of employment up to the 1990s, but their share remained stable in the 1990s. Small plants increased their share of output up to the 1990s, but then saw their share of output decline. Over the entire time period, their share of output increased less than their share of employment and, therefore, their relative labour productivity has fallen. The similarity in the trends in the two countries suggests that causes of this phenomenon should be sought in similarities such as the technological environment rather than in country-specific factors like unionization or trade intensities.
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A Comparison of Job Creation and Job Destruction in Canada and the United States
May 1994
Working Paper Number:
CES-94-02
In recent years a growing number of countries have constructed data series on job creation and job destruction using establishment-level data sets. This paper provides a description and detailed comparison of these new data series for the United States and Canada. First, the Canadian and United States industry-level job creation and destruction data are remarkably similar. Industries with high (low) job creation in the US are evidenced by high (low) job creation in Canada. The same is true for job destruction. In addition, the overall magnitude of gross job flows in the two countries is comparable. Second, the time-series patterns of creation and destruction are qualitatively similar but do differ in a number of important respects. In both countries, job destruction is much more cyclically volatile than job creation. This cyclical asymmetry is, however, more pronounced in the United States. The paper finishes with a characterization of the job flow patterns using a modified Blanchard and Diamond (1992) model.
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Job Reallocation And The Business Cycle: New Facts An Old Debate
September 1998
Working Paper Number:
CES-98-11
This paper provides new facts on the nature of job reallocation over the business cycle, and addresses the question of whether reallocation causes recessions or recessions cause reallocation. Although we do not resolve the question of causality, two general findings emerge that advance our understanding of job reallocation and business cycles. First, much of the cyclical fluctuation in gross job flows occurs in larger plants with relatively moderate employment growth that tends to be transitory, especially at medium-term horizons (up to five years). Unusually large employment growth rates, especially plant startups and shutdowns, are primarily small-plant phenomena and tend to be permanent, less cyclical, and occur later in recessions. Further, high job flow rates occur primarily in plants previously experiencing sharp employment contractions or expansions. Second, key variables that should determine the allocation factors of production across plants and sectors do in fact appear to be related to gross job flows, particularly job destruction. Relative prices, productivity, and investment exhibit time series correlations with job reallocation that suggest that allocative driving forces may contribute significantly to business cycle fluctuations.
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Mergers and Acquisitions and Productivity in the U.S. Meat Products Industries: Evidence from the Micro Data
March 2002
Working Paper Number:
CES-02-07
This paper investigates the motives for mergers and acquisitions in the U.S. meat products industry from1977-92. Results show that acquired meat and poultry plants were highly productive before mergers, and that meat plants significantly improved productivity growth in the post-merger periods, but poultry plants did not.
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Mergers and Acquisitions in the United States: 1990-1994
September 1998
Working Paper Number:
CES-98-15
Business merger and acquisition activity has been brisk in the United States in the recent past. Yet very little information has been available to help researchers understand the effects of this activity on jobs, businesses, and the American economy. This paper takes a first look at examining merger and acquisition activity using the newly available Longitudinal Establishment and Enterprise Microdata (LEEM) file. The analysis focuses on industries, establishments, and employment by employment size of firm. A first-time comparison of establishments that were acquired and survived over the 1990-1994 period with those that survived but were not acquired finds that the acquired establishments experienced more job change and, in the end, more net job loss than the nonacquired establishments. Establishments in small firms that were acquired by new or large firms experienced especially rapid job growth; however; job losses in establishments acquired from large firms more than offset these job gains.
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Manufacturing Establishments Reclassified Into New Industries: The Effect Of Survey Design Rules
November 1992
Working Paper Number:
CES-92-14
Establishment reclassification occurs when an establishment classified in one industry in one year is reclassified into another industry in another year. Because of survey design rules at the Census Bureau these reclassifications occur systematically over time, and affect the industry-level time series of output and employment. The evidence shows that reclassified establishments occur most often in two distinct years over the life of a sample panel. Switches are not only numerous in these years, they also contribute significantly to measured industry change in industry output and employment. The problem is that reclassifications are not necessarily processed in the year that they occur. The survey rules restrict most change to certain years. The effect of these rules is evidenced by looking at the variance across industry growth rates which increases greatly in these two years. Whatever the reason for reclassifying an establishment, the way the switches are processed raises the possibility of measurement errors in the industry level statistics. Researchers and policymakers relying upon observations in annual changes in industry statistics should be aware of these systematic discontinuities, discrepancies and potential data distortions.
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Differences in Job Growth and Persistence in Services and Manufacturing
March 2000
Working Paper Number:
CES-00-04
Employment flows in services have greatly exceeded those in manufacturing over the recent decade. We examine these differences and their variation over establishment sizes and types. We test three hypotheses which have been offered to explain these differences: (1) that the difference in behavior of single and multi-unit establishments accounts for much of the difference in the net and gross growth rates of jobs in services and manufacturing; (2) that relative wage differences have a disparate effect on employment growth for services and manufacturing, and (3) that the rates of persistence (or retention) of new jobs are higher in multi-unit establishments than in single unit firms, and similar between the sectors after controlling for this. We find that it is primarily the underlying differences in establishment age and size distributions that account for the substantial differences in the average gross and net job flow rates of the two sectors, and that relative wage differences have a similar effect on employment growth in services and manufacturing.
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Longitudinal Economic Data At The Census Bureau: A New Database Yields Fresh Insight On Some Old Issues
January 1990
Working Paper Number:
CES-90-01
This paper has two goals. First, it illustrates the importance of panel data with examples taken from research in progress using the U.S. Census Bureau's Longitudinal Research Database ( LRD ). Although the LRD is not the result of a "true" longitudinal survey, it provides both balanced and unbalanced panel data sets for establishments, firms, and lines of business. The second goal is to integrate the results of recent research with the LRD and to draw conclusions about the importance of longitudinal microdata for econometric research and time series analysis. The advantages of panel data arise from both the micro and time series aspects of the observations. This also leads us to consider why panel data are necessary to understand and interpret the time series behavior of aggregate statistics produced in cross-section establishment surveys and censuses. We find that typical homogeneity assumptions are likely to be inappropriate in a wide variety of applications. In particular, the industry in which an establishment is located, the ownership of the establishment, and the existence of the establishment (births and deaths) are endogenous variables that cannot simply be taken as time invariant fixed effects in econometric modeling.
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Import Competition from and Offshoring to Low-Income Countries: Implications for Employment and Wages at U.S. Domestic Manufacturers
January 2017
Working Paper Number:
CES-17-31
Using confidential linked firm-level trade transactions and census data between 1997 and 2012, we provide new evidence on how American firms without foreign affiliates adjust employment and wages as they adapt to import competition from low-income countries. We provide stylized facts on the input sourcing strategies of these domestic firms, contrasting them with multinationals operating in the same industry. We then investigate how changes in firm input purchases from low-income countries as well as domestic market import penetration from these sources are correlated with changes in employment and wages at surviving domestic firms. Greater offshoring by domestic firms from low-income countries correlates with larger declines in manufacturing employment and in the average production workers' wage. Given the negative association, however, the estimated magnitudes are small, even for a narrow measure of offshoring that includes only intermediate goods. Import penetration of U.S. markets from these sources is associated with relatively larger changes in employment for arm's length importing firms, but has no significant correlation with employment changes at firms that do not trade. Given differences in the degree of both offshoring and import penetration, we find substantial variation across industries in the magnitude of changes associated with low-income country imports.
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Exploring The Role Of Acquisition In The Performance Of Firms: Is The "Firm" The Right Unit Of Analysis?
November 1995
Working Paper Number:
CES-95-13
In this article, we examine the effect of acquisitions on productivity performance of acquiring firms using the conventional regression analysis and a method of productivity decomposition. Our empirical work uses both plant- and firm-level data taken from the Longitudinal Research Database (LRD) on the entire population of U.S. food manufacturing firms that operated continuously during 1977-87. We find that (1) acquisitions had a significant, positive effect on acquiring firms' productivity growth, but this effect becomes insignificant when only firm-level data on multi-unit firms are included in the regressions; and (2) the decomposition results show that while the productivity contribution of the external component (acquired plants) is positive, the contribution of the internal component (existing plants) is negative; the two components offset each other leaving productivity of multi-unit acquiring firms virtually unchanged after acquisitions. These results suggest that assessing the impact of acquisitions on the structure and performance of firms requires a careful look at the individual components (i.e., plants) of the firms, particularly for large multi-unit firms.
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Competition and Productivity: Evidence from the Post WWII U.S. Cement Industry
September 2010
Working Paper Number:
CES-10-29
In the mid 1980s, the U.S. cement industry faced a large increase in foreign competition. Foreign cement producers began offering cement at very large discounts on U.S. prices. We show that productivity (measured by TFP) in the industry was falling during the 1960s and 1970s, but that following the increase in competition, productivity has reversed course and is growing strongly. When foreign competition was weak, productivity fell. When it was strong, productivity grew robustly. We explore the reasons for the large productivity increase. We argue that a large share of the productivity gains resulted from significant changes in management practices at plants.
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