This paper describes the effects of a temporary increase in tariffs on the performance and behavior of U.S. manufacturers. Using antidumping duties as an example of temporary protection, I compare the responses of protected manufacturers to those predicted by models of trade with heterogeneous firms. I find that apparent increases in revenue productivity associated with antidumping duties are primarily due to increases in prices and mark-ups, as physical productivity falls among protected plants. Moreover, antidumping duties slow the reallocation of resources from less productive to more productive uses by reducing product-switching behavior among protected plants.
-
Antidumping Duties and Plant-Level Restructuring
December 2013
Working Paper Number:
CES-13-60
This paper examines the effect of antidumping duties on the restructuring activities of protected
plants. Using a dataset that contains the full population of U.S. manufacturers, I find that protected plants increase their capital intensities modestly relative to unprotected plants, but only when antidumping duties have been in place for a sufficient duration. I find little effect of antidumping duties on a proxy for the skilled labor intensity of protected plants.
View Full
Paper PDF
-
Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas
September 2010
Working Paper Number:
CES-10-27
The steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based, over the past decades. This extensive heterogeneity in trade protection provides the opportunity to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Robust to a variety of empirical specifications with U.S. Census data on the population of U.S. steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not for tariff-based protection. There is only weak evidence that antidumping protection increases market power.
View Full
Paper PDF
-
Outstanding Outsourcers: A Firm- and Plant-Level Analysis of Production Sharing
January 2006
Working Paper Number:
CES-06-02
This paper examines the differences in characteristics between outsourcers and nonoutsourcers with a particular focus on productivity. The measure of outsourcing comes from a question in the 1987 and 1992 Census of Manufactures regarding plant-level purchases of foreign intermediate materials. There are two key findings. First, outsourcers are 'outstanding.' That is, all else equal, outsourcers tend to have premia for plant and firm characteristics, such as being larger, more capital intensive, and more productive. One exception to this outsourcing premia is that wages tend to be the same for both outsourcers and non-outsourcers. Second, outsourcing firms, but not plants, have significantly higher productivity growth.
View Full
Paper PDF
-
Globalization and Price Dispersion: Evidence from U.S. Trade Flows
March 2010
Working Paper Number:
CES-10-07
Historically, the integration of international markets has corresponded with decreasing prices for traded goods due to higher competition among suppliers, scale economies, and consumption demand. In recent years, product differentiation and multinational firm pricing behavior across markets and between suppliers make it difficult to assess the degree to which this still occurs. Using a confidential panel dataset comprising the universe of U.S. import trade transactions between 1992 and 2007, this paper explores the change in prices for imported commodities across American trade partners. Overall price dispersion appears to decline, albeit unevenly, over time; nevertheless, there is considerable heterogeneity within commodity groups, geographic regions, and income levels, which may owe to increased product and quality differentiation within commodity categories. Unusually, after controlling for gravity trade factors, trade openness and extensive measures of globalization are positively associated with price dispersion, which suggests a more disaggregated approach both at the commodity and firm level to account for these differences.
View Full
Paper PDF
-
Tax Preparers, Refund Anticipation Products, and EITC Noncompliance
December 2017
Working Paper Number:
carra-2017-10
This work examines whether the availability of tax refund anticipation products (either in the form of a loan or a temporary bank account) is associated with higher non-compliance rates for the Earned Income Tax Credit (EITC). Refund anticipation products are offered by tax preparers as a way for taxpayers to receive a refund faster or to have the tax preparation fee paid from the refund (or both). These products are, on average, costly for taxpayers compared with the average value of a refund, and they are often marketed to low-income taxpayers who may be liquidity constrained or unbanked. Both tax preparers and taxpayers have perverse incentives to use these products, and the temptation of a large refund (for the taxpayer) and added fees and interest (for the tax preparer) may induce erroneous claiming of credits. The paper examines the association between refund anticipation product use and the overpayment of EITC using tax records and survey data linked at the individual level. For taxpayers in the Current Population Survey Annual and Social Economic Supplement, EITC eligibility is estimated based on household characteristics and combined survey and administrative income information; the data include EITC credit receipt, the use of paid tax preparation or online filing, and the receipt of a refund anticipation product. Both the incorrect payment of EITC and the value of EITC overpayment are associated with preparer use, and to a lesser extent with the use of online filing, when compared with paper filing. Incorrect payment is exacerbated for preparer and online filing when a refund anticipation product is purchased. Finally, an exogenous price shock to the tax preparation industry occurred in 2010. This allows for separately identifying a 'preparer effect' on EITC noncompliance. The rate of incorrect payment and the dollar value of overpayment increased in the tax year of the shock for those using a preparer and buying a product.
View Full
Paper PDF
-
MEASURING 'FACTORYLESS' MANUFACTURING: EVIDENCE FROM U.S. SURVEYS
August 2013
Working Paper Number:
CES-13-44
'Factoryless' manufacturers, as defined by the U.S. OMB, perform underlying entrepreneurial components of arranging the factors of production but outsource all of the actual transformation activities to other specialized units. This paper describes efforts to measure 'factoryless' manufacturing through analyzing data on contract manufacturing services (CMS). We explore two U.S. firm surveys that report data on CMS activities and discuss challenges with identifying and collecting data on entities that are part of global value chains.
View Full
Paper PDF
-
The Effects of Productvity and Demand-Specific Factors on Plant Survival and Ownership Change in the U.S. Poultry Industry
July 2015
Working Paper Number:
CES-15-20
In this paper we study the productivity-survival link in the U.S. poultry processing industry using the longitudinal data constructed from five Censuses of Manufactures between 1987 and 2007. First, we study the effects of physical productivity and demand-specific factors on plant survival and ownership change. Second, we analyze the determinants of the firm-level expansion. The results show that higher demand-specific factors decrease the probability of exit and increase the probability of ownership change. The effect of physical productivity on the probability of exit or ownership change is generally insignificant. Also, firms with higher demand-specific factors have higher probability to expand whereas the average firm-level physical productivity turns out to be an insignificant determinant of firm expansion.
View Full
Paper PDF
-
Product Quality and Firm Heterogeneity in International Trade
March 2013
Working Paper Number:
CES-13-08
I develop and implement a methodology for obtaining plant-level estimates of product quality from revenue and physical output data. Intuitively, firms that sell large quantities of output conditional on price are classified as high quality producers. I use this method to decompose cross-plant variation in price and export status into a quality and an efficiency margin. The empirical results show that prices are increasing in quality and decreasing in efficiency. However, selection into exporting is driven mainly by quality. The finding that changes in quality and efficiency have different impact on the firm's export decision is shown to be inconsistent with the traditional iceberg trade cost formulation and points to the importance of per unit transport costs.
View Full
Paper PDF
-
The Effects of Environmental Regulation on the Competiveness of U.S. Manufacturing
January 2011
Working Paper Number:
CES-11-03
Whether and to what extent environmental regulations influence the competitiveness of firms remains a hotly debated issue. Using detailed production data from tens of thousands of U.S. manufacturing plants drawn from Annual Survey of Manufactures, we estimate the effects of environmental regulations'captured by the Clean Air Act Amendments' division of counties into pollutant-specific nonattainment and attainment categories'on manufacturing plants' total factor productivity (TFP) levels. We find that among surviving polluting plants, a nonattainment designation is associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly discernable effects on productivity, though effects are also seen among particulates and sulfur dioxide emitters. Carbon monoxide nonattainment, on the other hand, appears to increase measured TFP, though this appears to be concentrated among refineries. When we apply corrections for two likely sources of positive bias in these estimates (price mismeasurement and sample selection on survival), we estimate that the total TFP loss for polluting plants in nonattaining counties is 4.8 percent. This corresponds to an annual lost output in the manufacturing sector of roughly $14.7 billion in 1987 dollars ($24.4 billion in 2009 dollars). These costs have important implications for both the intensity and location of firm expansions.
View Full
Paper PDF
-
Output Market Segmentation and Productivity
June 2001
Working Paper Number:
CES-01-07
Recent empirical investigations have shown enormous plant-level productivity heterogeneity, even within narrowly defined industries. Most of the theoretical explanations for this have focused on factors that influence the production process, such as idiosyncratic technology shocks or input price differences. I claim that characteristics of the output demand markets can also have predictable influences on the plant-level productivity distribution within an industry. Specifically, an industry's degree of output market segmentation (i.e., the substitutability of one plant's output for another's in that industry) should impact the dispersion and central tendency of the industry's plant-level productivity distribution. I test this notion empirically by seeing if measurable cross-sectional variation in market segmentation affects moments of industry's plant-level productivity distribution moments. I find significant and robust evidence consistent with this notion.
View Full
Paper PDF