Human Capital Spillovers in Manufacturing: Evidence from Plant-Level Production Functions
November 2002
Working Paper Number:
CES-02-27
Abstract
I assess the magnitude of human capital spillovers in US cities by estimating plant level production functions. I use a unique firm-worker matched dataset, obtained by combining the Census of Manufacturers with the Census of Population. After controlling for a plant's own human capital, plant fixed effects, industry-specific and state-specific transitory shocks, I find that the output of plants located in cities that experience large increases in the share of college graduates rises more than the output of similar plants located in cities that experience small increases in the share of college graduates. Several specification tests indicate that the estimated effect is not completely spurious. First, within a city, the spillover between plants that are geographically and economically close is positive, while spillovers between plants that are geographically close but economically distant is zero. Second, most of the estimated spillover comes from hi-tech plants. For non hi-tech productions, the spillover is virtually zero. When I stratify the sample by the percentage of employees who are college educated, I find that the spillover is larger the larger the percentage of college educated workers in the plant. Third, density of physical capital in a city outside a plant has no effect on a plant's productivity. Consistent with a model that includes both standard and general equilibrium forces and spillovers, the estimated productivity differences between cities with high and low levels of human capital match remarkably well differences in labor costs that are typically observed between cities with high and low levels of human capital. This is important because, in equilibrium, any productivity gain generated by human capital spillover should be offset by increased costs.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Human Capital Spillovers in Manufacturing: Evidence from Plant-Level Production Functions' are listed below in order of similarity.
-
Working PaperIT Investment and Firm Performance in U.S. Retail Trade🔥
June 2002
Working Paper Number:
CES-02-14
We examine the relationships between investments in information technology (IT) and two measures of retail firm performance -- productivity and establishment growth -- over the 1992 to 1997 period. We use untapped firm and establishment micro data from the Censuses of Retail Trade and the Assets and Expenditures Survey. We show that large firms account for most retail IT investment, employment and establishment growth. We find evidence of a significant relationship between IT investment intensity and productivity growth. We found no such evidence of a link between IT growth in the number of establishments operated by retail firms.View Full Paper PDF
-
Working PaperGeographic Concentration as a Dynamic Process🔥
March 1998
Working Paper Number:
CES-98-03
This degree of geographic concentration of individual manufacturing industries in the U.S. has declined only slightly in the last twenty years. At the same time, new plant births, plant expansions, contractions and closures have shifted large quantities of employment across plants, firms and locations. This paper uses data from the Census Bureau's Longitudinal Research Database to examine how relatively stable levels of geographic concentration emerge from this dynamic process. While industries agglomeration levels tend to remain fairly constant we find that there is a greater variation in the locations of these agglomerations. We then decompose aggregate concentration changes into portions attributable to plant births, expansions, contractions, and closures, and find that the location choices of new firms and differences in growth rates have played the most significant role in reducing levels of geographic concentration, while plant closures have tended to reinforce agglomeration. Finally, we look at coagglomeration patterns to test three of Marshall's theories of industry agglomeration: (1) agglomeration saves transport costs by proximity to input suppliers or final consumers, (2) agglomeration allows for labor market pooling, and (3) agglomeration facilitates intellectual spillovers. While there is some truth behind all three theories, we find that industrial location is far more driven by labor mix than by any of the other explanatory variables.View Full Paper PDF
-
Working PaperOptimal Firm Size and the Growth of Conglomerate and Single-Industry Firms🔥
October 1998
Working Paper Number:
CES-98-14
We develop a profit-maximizing neoclassical model of optimal firm size and growth across different industries based on differences in industry fundamentals and firm productivity. The model predicts how conglomerate firms will allocate resources across divisions over the business cycle and how their responses to industry shocks will differ from those of single-segment firms. We test our model and find that growth of conglomerate and single-segment firms is related to fundamental industry factors and individual firm-segment productivity suggested by our simple neoclassical theory. Conglomerates grow less in a particular segment if their other segments are more productive and if their other segments experience a larger positve demand shock. We find that the growth rates of peripheral segments are very sensitive to relative productivity an that conglomerate sharply cut the growth of unproductive peripheral segments. We do find some evidence consistent with agency problems for conglomerate firms that are broken up. However, the majority of conglomerate firms exhibit growth across business segments that is consistent with optimal behavior.View Full Paper PDF
-
Working PaperDo Conglomerate Firms Allocate Resources Inefficiently?
February 1999
Working Paper Number:
CES-99-11
We develop a profit-maximizing neoclassical of optimal firm size and growth across different industries. The model predicts how conglomerate firms will allocate resources across divisions over the business cycle and how their responses to industry shocks will differ from those of single-segment firms. We test our model and find that growth of conglomerate and single-segment firms is related to neoclassical theory. Conglomerates grow less in a particular segment of their other segments are more productive and if their other segments experience a larger positive demand shock. We find that the growth rates of peripheral segments are very sensitive to relative productivity and that conglomerates sharply cut the growth of unproductive peripheral segments. We do find some evidence consistent with agency problems for conglomerate firms that are broken up. However, the majority of conglomerate firms exhibit growth across business segments that is consistent with optimal behavior.View Full Paper PDF
-
Working PaperAdjusting imperfect data: overview and case studies
November 2004
Working Paper Number:
tp-2004-05
View Full Paper PDF
-
Working PaperMeasuring Productivity Dynamics with Endogenous Choice of Technology and Capacity Utilization: An Application to Automobile Assembly
December 2000
Working Paper Number:
CES-00-16
During the 1980s, all Japanese automobile producers opened assembly plants in North America. Industry analysts and previous research claim that these transplants are more productive than incumbent plants and that they produce with a substantially different production process. We compare the two production processes by estimating a model that allows for heterogeneity in technology and productivity. We treat both types of heterogeneity as intrinsically unobservable. In the model, plants choose technology before production starts. They condition subsequent input decisions on this choice. Maximum likelihood estimation is used to estimate the unconditional distribution of the technology choice, output, and inputs. The model is applied to a sample of automobile assembly plants. We control for capacity utilization, unobserved productivity differences, and price effects. The results indicate that there exist two distinct technologies. In particular, the more recent technology uses labor less intensively and it has a higher elasticity of substitution between labor and capital. Hicks-neutral productivity growth is estimated to be lower, while capital-biased (labor-saving) productivity growth is estimated significantly higher, for the new technology. Using the estimation results, we decompose industry-wide productivity growth in plant-level changes and composition effects, for both technologies separately. Plant-level productivity growth is further decomposed to reveal the importance of capital-biased productivity growth, increase in capital-labor ratio, and returns to scale.View Full Paper PDF
-
Working PaperThe Market for Corporate Assets: Who Engages in Mergers and Asset Sales and are there Efficiency Gains?
September 1999
Working Paper Number:
CES-99-12
We analyze the market for firms, divisions, and plants of manufacturing firms using a large sample of plant-level data for the period 1974-92. There is an active market for corporate assets, with over 7 percent of plants transacted through mergers and asset sales in expansion years in the economy. Transactions through partial firm sales represent more than half of these transactions. The probability of asset sales and full firm transactions is related to firm organization and buyer and seller ex ante productivity. We find that these transactions result in ex post productivity increases especially for asset sales from peripheral divisions of selling firms to main divisions of other buyers. Finally we find that productivity increases are significantly higher the more productive the buying firm. This timing of sales and the pattern of productivity gains suggests that the transactions that occur, especially through asset sales of plants and divisions, tend to improve the allocation of resources and are consistent with a simple neoclassic model of profit maximizing by firms. The decision to participate in the market for corporate assets and the subsequent gains realized from transactions are affected both by firm productivity and firm organization.View Full Paper PDF
-
Working PaperUSING LINKED CENSUS R&D-LRD DATA TO ANALYZE THE EFFECT OF R&D INVESTMENT ON TOTAL FACTOR PRODUCTIVITY GROWTH
January 1989
Working Paper Number:
CES-89-02
Previous studies have demonstrated that productivity growth is positively correlated with the intensity of R&D investment. However, existing studies of this relationship at the micro (firm or line of business) level have been subject to some important limitations. The most serious of these has been an inability to adequately control for the diversified activities of corporations. This study makes use of linked Census R&D - LRD data, which provides comprehensive information on each firms' operations at the 4-digit SIC level. A marked improvement in explaining the association between R&D and TFP occurs when we make appropriate use of the data by firm by industry. Significant relationships between the intensities of investment in total, basic, and company-funded R&D, and TFP growth are confirmed.View Full Paper PDF
-
Working PaperClusters of Entrepreneurship
October 2009
Working Paper Number:
CES-09-36
Employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities, but there is little consensus on why this relationship exists. Traditional economic explanations emphasize factors that reduce entry costs or raise entrepreneurial returns, thereby increasing net returns and attracting entrepreneurs. A second class of theories hypothesizes that some places are endowed with a greater supply of entrepreneurship. Evidence on sales per worker does not support the higher returns for entrepreneurship rationale. Our evidence suggests that entrepreneurship is higher when fixed costs are lower and when there are more entrepreneurial people.View Full Paper PDF
-
Working PaperFirm Entry and Exit in the U.S. Retail Sector, 1977-1997
October 2004
Working Paper Number:
CES-04-17
The development of longitudinal micro datasets in recent years has helped economists develop a number of stylized facts about producer dynamics. However, most of the widely cited studies use only manufacturing data. This paper uses the newly constructed Longitudinal Business Database (LBD) to examine producer dynamics in the U.S. the retail sector. The LBD is constructed by linking twenty-six years (1975-2000) of the U.S. Census Bureau's Business Register at the establishment level. The result is a dataset on the universe of employer establishments in the U.S. on an annual basis with detailed geographic, industry, firm ownership, and employment information. We use the LBD to examine patterns of firm entry and exit in the U.S. retail sector. We find that many of the patterns observed by Dunne, Roberts, and Samuelson (1988) are also observed within the retail sector, but interesting and important differences do exist.View Full Paper PDF
