We document the adoption of self-service pumps in U.S. gasoline stations from 1977 to 1992. Using establishment-level data from the Census of Retail Trade over this period, we show that self-service stations employ approximately one quarter fewer attendants per pump, all else equal. The work done by these attendants has shifted to customers, biasing upwards conventional measures of productivity growth.
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Raising the Barcode Scanner: Technology and Productivity in the Retail Sector
May 2011
Working Paper Number:
CES-11-16R
Barcodes and barcode scanners transformed the grocery industry in the 1970s. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scanners' effect on labor productivity. I find that early scanners increased a store's labor productivity, on average, by approximately 4.5 percent in the first few years. The effect was larger in stores carrying more packaged products, consistent with the presence of network externalities. Short-run gains were small relative to fixed costs, suggesting that the impediment to widespread adoption of the new technology was profitability, not coordination problems.
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Competition, Productivity, and Survival of Grocery Stores in the Great Depression
April 2018
Working Paper Number:
CES-18-24
We study the grocery industry in Washington, DC, during the Great Depression using data from the 1929 Census of Distribution, a 1929'1930 survey by the Federal Trade Commission, and a 1935 business directory. We first document the differences between chains and independents in the Washington, DC, grocery market circa 1929 to better understand chains' competitive advantages. Second, we study correlates of survival from 1929 to 1935, a period of major contraction and upheaval. We find that more productive stores survived at higher rates, as did stores with greater assortment and lower prices. Presaging the supermarket revolution, combination stores were much more likely to survive to 1935 than other grocery formats.
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Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format
August 2008
Working Paper Number:
CES-08-23R
This paper documents and explains the recent rise of "big-box" general merchandisers. Data from the Census of Retail Trade for 1977-2007 show that general-merchandise chains grew much faster than specialist retail chains, and that general merchandisers that added the most stores also made the biggest increases to their product offerings. We explain these facts with a stylized model in which a retailer's scale economies interact with consumer gains from one-stop shopping to generate a complementarity between a retailer's scale and scope.
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Making a Motivated Manager: A Census Data Investigation into Efficiency Differences Between Franchisee and Franchisor-Owned Restaurants
January 2016
Working Paper Number:
CES-16-54
While there has been significant research on the reasons for franchising, little work has examined the effects of franchising on establishment performance. This paper attempts to fill that gap. We use restricted-access US Census Bureau microdata from the 2007 Census of Retail Trade to examine establishment-level productivity of franchisee- and franchisor-owned restaurants. We do this by employing a two-stage data envelopment analysis model where the first stage uses DEA to measure each establishment's efficiency. The DEA efficiency score is then used as the second-stage dependent variable. The results show a strong and robust effect attributed to franchisee ownership for full service restaurants, but a smaller and insignificant difference for limited service restaurants. We believe the differences in task programability between limited and full service restaurants results in a very different role for managers/franchisees and is the driving factor behind the different results.
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TAKEN BY STORM: BUSINESS SURVIVAL IN THE AFTERMATH OF HURRICANE KATRINA
April 2014
Working Paper Number:
CES-14-20
We use Hurricane Katrina's damage to the Mississippi coast in 2005 as a natural experiment to study business survival in the aftermath of a cost shock. We find that damaged establishments that returned to operation were more resilient than those that had never been damaged. This effect is particularly strong for establishments belonging to younger and smaller rms. The effect of damage on establishments in older and larger chains was more limited, and they were subsequently less resilient having survived the damage. These selection effects persist up to five years after the initial shock. We interpret these findings as evidence that the effect of the shock is tied to the presence of financial and other constraints.
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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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THE AGGREGATE IMPACT OF ONLINE RETAIL
April 2014
Working Paper Number:
CES-14-23
To study the impact of online retail on aggregate welfare, I use a spatial model to calculate a new measure of store level retail productivity and each store's equilibrium response to increased competitive pressure from online retailers. The model is estimated on confidential store-level data spanning the universe of US retail stores, detailed local-level demographic data and shortest-route data between locations. From counterfactual exercises mimicking improvements in shipping and increased internet access, I estimate that improvements in online retail increased aggregate welfare from retail activities by 13.4 per cent. Roughly two-thirds of the increase can be attributed to welfare improvements holding fixed market shares, with the remainder due to reallocation. Surprisingly, 8.2 percent of firms actually benefit as they absorb market share from closed stores. Finally, I estimate that the proposed Marketplace Fairness Act would claw back roughly one-third of sales that would otherwise have gone to online retailers between 2007-12.
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Tip of the Iceberg: Tip Reporting at U.S. Restaurants, 2005-2018
November 2024
Working Paper Number:
CES-24-68
Tipping is a significant form of compensation for many restaurant jobs, but it is poorly measured and therefore not well understood. We combine several large administrative and survey datasets and document patterns in tip reporting that are consistent with systematic under-reporting of tip income. Our analysis indicates that although the vast majority of tipped workers do report earning some tips, the dollar value of tips is under-reported and is sensitive to reporting incentives. In total, we estimate that about eight billion in tips paid at full-service, single-location, restaurants were not captured in tax data annually over the period 2005-2018. Due to changes in payment methods and reporting incentives, tip reporting has increased over time. Our findings have implications for downstream measures dependent on accurate measures of compensation including poverty measurement among tipped restaurant workers.
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The Structure Of Technology, Substitution, And Productivity In The Interstate Natural Gas Transmission Industry Under The NGPA Of 1978
August 1992
Working Paper Number:
CES-92-09
The structure of production in the natural gas transmission industry is estimated using the dual restricted cost function based on panel data for twenty four firms. A standard translog variable cost function with firm fixed effects is augmented with controls for capacity utilization, technical change, and shifting regulatory regimes. During the implementation of the Natural Gas Policy Act (NGPA), 1978-1985, the industry exhibited no significant increase in productivity, largely attributable to the decline in output for the industry. Regulatory efforts to promote voluntary non-contract transmission appear to have enabled some firms to mitigate the overall industry productivity stagnation. The NGPA instituted a complex schedule of partial and gradual decontrol of natural gas prices at the well head. This form of deregulation costs natural gas producers over $100 billion in lost revenues, relative to immediate and full price deregulation. However, the transmission firms benefited by paying $1.5 billion less for natural gas than they would have under total deregulation. The benefits to consumers, totaling $98.7 billion, were unevenly distributed. On average, for the 1978-1985 period, utilities, commercial, and industrial users paid less for their gas than they would have under total decontrol and residential users paid $8.6 billion more. The NGPA and Federal Regulatory Commission oversight practices allow the transmission industry to price discriminate among customers.
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Technical Inefficiency And Productive Decline In The U.S. Interstate Natural Gas Pipeline Industry Under The Natural Gas Policy Act
October 1991
Working Paper Number:
CES-91-06
The U.S. natural gas industry has undergone substantial change since the enactment of the Natural Gas Policy Act of 1978. Although the major focus of the NGPA was to initiate partial and gradual price deregulation of natural gas at the well-head, the interstate transmission industry was profoundly affected by changes in the relative prices of competing fuels and contractual relationships among producers, transporters, distributors, and end-users. This paper assesses the impact of the NGPA on the technical efficiency and productivity of fourteen interstate natural gas transmission firms for the period 1978-1985. We focus on the distortionary effects that resulted in the industry during a period in which changes in regulatory policy could neither anticipate changing market conditions nor rapidly adjust to those changes. Two alternative estimating methodologies, stochastic frontier production analysis and data envelopment analysis, are used to measure the firm-specific and temporal distortionary effects. Concordant findings from these alternative methodologies suggest a pervasive pattern of declining technical efficiency in the industry during the period in which this major regulatory intervention was introduced and implemented. The representative firms experience an average annual decline in efficiency of .55 percent over the sample period. In addition, it appears that the industry suffered a decline in productivity during the sample period, averaging -1.18 percent annually.
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