Using detailed plant- level data from the 1988 and 1993 Surveys of Manufacturing Technology, this paper examines the impact of skill mix in U.S. local labor markets on the use and adoption of automation technologies in manufacturing. The level of automation differs widely across U.S. metropolitan areas. In both 1988 and 1993, in markets with a higher relative availability of lessskilled labor, comparable plants ' even plants in the same narrow (4-digit SIC) industries ' used systematically less automation. Moreover, between 1988 and 1993 plants in areas experiencing faster less-skilled relative labor supply growth adopted automation technology more slowly, both overall and relative to expectations, and even de-adoption was not uncommon. This relationship is stronger when examining an arguably exogenous component of local less-skilled labor supply derived from historical regional settlement patterns of immigrants from different parts of the world. These results have implications for two long-standing puzzles in economics. First, they potentially explain why research has repeatedly found that immigration has little impact on the wages of competing native-born workers at the local level. It might be that the technologies of local firms'rather than the wages that they offer'respond to changes in local skill mix associated with immigration. A modified two-sector model demonstrates this theoretical possibility. Second, the results raise doubts about the extent to which the spread of new technologies have raised demand for skills, one frequently forwarded hypothesis for the cause of rising wage inequality in the United States. Causality appears to at least partly run in the opposite direction, where skill supply drive s the spread of skill-complementary technology.
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The Effect Of Technology Use On Productivity Growth
April 1996
Working Paper Number:
CES-96-02
This paper examines the relationship between the use of advanced technologies and productivity and productivity growth rates. We use data from the 1993 and 1988 Survey of Manufacturing Technology (SMT) to examine the use of advanced (computer based) technologies at two different points in time. We are also able to combine the survey data with the Longitudinal Research Database (LRD) to examine the relationships between plant performance, plant characteristics, and the use of advanced technologies. In addition, a subset of these plants were surveyed in both years, enabling us to directly associate changes in technology use with changes in plant productivity performance. The main findings of the study are as follows. First, diffusion is not the same across the surveyed technologies. Second, the adoption process is not smooth: plants added and dropped technologies over the six-year interval 1988-93. In fact, the average plant showed a gross change of roughly four technologies in achieving an average net increase of less than one new technology. In this regard, technology appears to be an experience good: plants experiment with particular technologies before deciding to add additional units or drop the technology entirely. We find that establishments that use advanced technologies exhibit higher productivity. This relationship is observed in both 1988 and 1993 even after accounting for other important factors associated with productivity: size, age, capital intensity, labor skill mix, and other controls for plant characteristics such as industry and region. In addition, the relationship between productivity and advanced technology use is observed both in the extent of technologies used and the intensity of their use. Finally, while there is some evidence that the use of advanced technologies is positively related to improved productivity performance, the data suggest that the dominant explanation for the observed cross-section relationship is that good performers are more likely to use advanced technologies than poorly performing operations.
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Technology Usage in U.S. Manufacturing Industries: New Evidence from the Survey of Manufacturing Technology
October 1991
Working Paper Number:
CES-91-07
Using a new dataset on technology usage in U.S. manufacturing plants, this paper describes how technology usage varies by plant and firm characteristics. The paper extends the previous literature in three important ways. First, it examines a wide range of relatively new technologies. Second, the paper uses a much larger and more representative set of firms and establishments than previous studies. Finally, the paper explores the role of firm R&D expenditures in the process of technology adoption. The main findings indicate that larger plants more readily use new technologies, plants owned by firms with high R&D-to-sales ratios adopt technologies more rapidly, and the relationship between plant age and technology usage is relatively weak.
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Energy Intensity, Electricity Consumption, and Advanced Manufacturing Technology Usage
July 1993
Working Paper Number:
CES-93-09
This paper reports on the relationship between the usage of advanced manufacturing technologies (AMTs) and energy consumption patterns in manufacturing plants. Using data from the Survey of Manufacturing Technology and the 1987 Census of Manufactures, we model the energy intensity and the electricity intensity of plants as functions of AMT usage and plant age. The main findings are that plants which utilize AMTs are less energy intensive than plants not using AMTs but consume proportionately more electricity as a fuel source. Additionally, older plants are generally more energy intensive and rely on fossil fuels to a greater extent than younger plants.
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Recent Twists of the Wage Structure and Technology Diffusion
March 1994
Working Paper Number:
CES-94-05
This paper is an empirical study of the impact on U.S. wage structure of domestic technology, foreign technology, and import penetration. A model is presented which combines factor proportions theory with a version of growth theory. The model, which assumes two levels of skill, suggests that domestic technology raises both wages, while foreign technology, on a simple interpretation, lowers both. Trade at a constant technology, as usual, lowers the wage of that class of labor used intensively by the affected industry, and raises the other wage. The findings support the predictions of the model for domestic technology. On the other hand, they suggest that technological change, and perhaps other factors, have obscured the role of factor proportions in the data. Indeed, foreign technology and trade have the same effect on wages at different skill levels, not the opposite effects suggested by factor proportions. Finally, a simple diffusion story, in which foreign technology lowers all U.S. wages, is also rejected. Instead, uniformly higher U.S. wages, not lower, appear to be associated with the technology and trade of the oldest trading partners of the U.S., the economies of the West. Not so for Asia, especially the smaller countries which have recently accelerated their trade with the U.S. Their effects are uniformly negative on wages, suggesting a distinction between shock and long run effects of foreign technology and trade.
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Wages, Employer Size-Wage Premia and Employment Structure: Their Relationship to Advanced-Technology Usage at U.S. Manufacturing Establishments
December 1992
Working Paper Number:
CES-92-15
We study wages, size-wage premia and the employment structure (measured as the fraction of production workers in an establishment) and their relationship to the extent of advanced-technology usage at U.S, manufacturing plants. We begin by sketching a model of technology adoption based on Lucas (1978) that provides a framework for interpreting the data analysis. We then study a new Census Bureau survey of technology use at manufacturing plants. Workers in establishments that are classified as the most technology intensive earn a premium of 16 percent as compared to those in plants that are the least premium earned by workers in all but the very largest plants. The inclusion of the technology classification variables in standard wage regressions reduced the size-wage premia by as much as 60 percent for some size categories.
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Tracking Firm Use of AI in Real Time: A Snapshot from the Business Trends and Outlook Survey
March 2024
Working Paper Number:
CES-24-16R
Timely and accurate measurement of AI use by firms is both challenging and crucial for understanding the impacts of AI on the U.S. economy. We provide new, real-time estimates of current and expected future use of AI for business purposes based on the Business Trends and Outlook Survey for September 2023 to February 2024. During this period, bi-weekly estimates of AI use rate rose from 3.7% to 5.4%, with an expected rate of about 6.6% by early Fall 2024. The fraction of workers at businesses that use AI is higher, especially for large businesses and in the Information sector. AI use is higher in large firms but the relationship between AI use and firm size is non-monotonic. In contrast, AI use is higher in young firms. Common uses of AI include marketing automation, virtual agents, and data/text analytics. AI users often utilize AI to substitute for worker tasks and equipment/software, but few report reductions in employment due to AI use. Many firms undergo organizational changes to accommodate AI, particularly by training staff, developing new workflows, and purchasing cloud services/storage. AI users also exhibit better overall performance and higher incidence of employment expansion compared to other businesses. The most common reason for non-adoption is the inapplicability of AI to the business.
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Choices of Metropolitan Destinations by the 1995-2000 New Immigrants Born in Mexico and India: Characterization and Multivariate Explanation
September 2008
Working Paper Number:
CES-08-27
Using the confidential long-form records of the 2000 population census, we study the choices of metropolitan destinations made by the Mexican-born and Indian-born immigrants who arrived in the United States in 1995-2000. Based on the application of a multinomial logit model to the data of each of these two ethnic groups, our main findings are as follows. The destination choice behaviors of both ethnic groups were in general consistent with the major theories of migration. Both groups were subject to (1) the attraction of co-ethnic communities and (2) the positive effects of wage level and total employment growth. With respect to the job increases in different wage deciles, both ethnic groups share the pattern that the less educated were subject to the pull of increase in low-wage jobs, whereas the better educated were subject to the pull of increase in high-wage jobs. With respect to the possibility of competitions against other foreignborn ethnics, both ethnic groups were found to be more prone to selecting destinations where their co-ethnics represented a relatively high proportion of the foreign-born population. The main differences in destination choice behaviors between the two ethnic groups resulted partly from the fact that the relative explanatory powers of our chosen explanatory factors differed substantially between the two ethnic groups. The Mexican-born were more subject to the attractions of (1) larger co-ethnic communities, (2) greater overall employment growth, (3) more job increases in low wage deciles, and (4) greater share of the foreign-born population by coethnics. In contrast, the Indian-born were more attracted by (1) higher wage level, and (2) more job increases in high wage deciles.
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The Impact of Immigration on the Labor Market Outcomes of Native Workers: Evidence using Longitudinal Data from the LEHD
January 2016
Working Paper Number:
CES-16-56
Empirical estimates of the effect of immigration on native workers that rely on spatial comparisons have generally found small effects, but have been subject to the criticism that out-migration by native workers dampens the observed effect by spreading it over a larger area. In contrast, studies that rely on variation in immigration across industries, occupations, or education-based skill-levels often report large negative effects, but rely primarily on repeated cross-sectional data sets which also cannot account for the adjustment of native workers over time. In this paper, we use a newly available data set, the Longitudinal Employer Household Data (LEHD), which provides quarterly earnings records, geographic location, and firm and industry identifiers for 97% of all privately employed workers in 29 states. We use this data to analyze the impact of immigration on earnings changes and the mobility response of native workers. Overall, we find that although immigration has a negative effect on the earnings and employment of native workers, and positive effects on their firm, industry, and cross-state mobility, the overall size of the effects is small.
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An Option-Value Approach to Technology in U.S. Maufacturing: Evidence from Plant-Level Data
July 2000
Working Paper Number:
CES-00-12
Numerous empirical studies have examined the role of firm and industry heterogeneity in the decision to adopt new technologies using a Net Present Value framework. However, as suggested by the recently developed option-value theory, these studies may have overlooked the role of investment reversibility and uncertainty as important determinants of technology adoption. Using the option-value investment model as my underlying theoretical framework, I examine how these two factors affect the decision to adopt three advanced manufacturing technologies. My results support the option-value model's prediction that plants operating in industries facing higher investment reversibility and lower degrees of demand and technological uncertainty are more likely to adopt advanced manufacturing technologies.
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Market Forces, Plant Technology, and the Food Safety Technology Use
June 2008
Working Paper Number:
CES-08-14
Economists (Ollinger and Mueller, 2003; Golan et al., 2004) have considered some of the economic forces, such as demands from major customers, that encourage plants to maintain food safety process control. Other economists, such as Roberts (2005), have identified food safety technologies that enable better control harmful pathogens. However, economists have not put the two together. The purpose of this paper is to examine the impact of economic forces, including firm effects and plant technology, customer demands, and regulation, on food safety technology use. Preliminary results suggest that customer demand has the greatest impact.
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