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Testing the Advantages of Using Product Level Data to Create Linkages Across Industrial Coding Systems
October 1993
Working Paper Number:
CES-93-14
After the major revision of the U.S. Standard Industrial Classification system (SIC) in the 1987, the problem arose of how to evaluate industrial performance over time. The revision resulted in the creation of new industries, the combination of old industries, and the remixing of other industries to better reflect the present U.S. economy. A method had to be developed to make the old and new sets of industries comparable over time. Ryten (1991) argues for performing the conversion at the "most micro level," the product level. Linking industries should be accomplished by reclassifying product data of each establishment to a standard system, reassigning the primary activity of the establishment, reaggregating the data to the industry level, and then making the desired statistical comparison (Ryten, 1991). This paper discusses linking the data at the very micro, product level, and at the more macro, industry level. The results suggest that with complete product information the product level conversion is preferable for most industries in manufacturing because it recognizes that establishments may switch their primary industry because of the conversion. For some industries, especially those having no substantial changes in SIC codes over time, the conversion at the industry level is fairly accurate. A small group of industries lacks complete product information in 1982 to link the 1982 product codes to the 1987 codes. This results in having to rely on the industry concordance to create a time series of statistics.
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CONSTRUCTION OF REGIONAL INPUT-OUTPUT TABLES FROM ESTABLISHMENT-LEVEL MICRODATA: ILLINOIS, 1982
August 1993
Working Paper Number:
CES-93-12
This paper presents a new method for use in the construction of hybrid regional input-output tables, based primarily on individual returns from the Census of Manufactures. Using this method, input- output tables can be completed at a fraction of the cost and time involved in the completion of a full survey table. Special attention is paid to secondary production, a problem often ignored by input-output analysts. A new method to handle secondary production is presented. The method reallocates the amount of secondary production and its associated inputs, on an establishment basis, based on the assumption that the input structure for any given commodity is determined not by the industry in which the commodity was produced, but by the commodity itself -- the commodity-based technology assumption. A biproportional adjustment technique is used to perform the reallocations.
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The Importance of Establishment Data in Economic Research
August 1993
Working Paper Number:
CES-93-10
The importance and usefulness of establishment microdata for economic research and policy analysis is outlined and contrasted with traditional products of statistical agencies -- aggregate cross-section tabulations. It is argued that statistical agencies must begin to seriously rethink the way they view establishment data products.
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Evidence on IO Technology Assumptions From the Longitudinal Research Database
May 1993
Working Paper Number:
CES-93-08
This paper investigates whether a popular IO technology assumption, the commodity technology model, is appropriate for specific United States manufacturing industries, using data on product composition and use of intermediates by individual plants from the Census Longitudinal Research Database. Extant empirical research has suggested the rejection of this model, owing to the implication of aggregate data that negative inputs are required to make particular goods. The plant-level data explored here suggest that much of the rejection of the commodity technology model from aggregative data was spurious; problematic entries in industry-level IO tables generally have a very low Census content. However, among the other industries for which Census data on specified materials use is available, there is a sound statistical basis for rejecting the commodity technology model in about one-third of the cases: a novel econometric test demonstrates a fundamental heterogeneity of materials use among plants that only produce the primary products of the industry.
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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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Managerial Tenure, Business Age And Small Business Dynamics
September 1992
Working Paper Number:
CES-92-11
This paper studies a Census Bureau survey of the small business sector that contains information on business age, business size and other proxies for business quality, information, typically available on business data sets, as well as proxies for the quality of the manager of each business, information that is not common to such data sets. One of the key proxies for managerial quality is the length of time the manager has been running the business, that is, managerial tenure. With proxies for both the underlying quality of each business and for the quality of the manager running the business, we are able to begin separating the influences of the manager from that of the underlying business on such factors as business discontinuance and business transfer. An example of the questions we explore is: Holding business quality fixed, what is the impact of the manager on the probability of business discontinuance? Regarding this question, we find that managers have a large impact on the course of their businesses, in particular, among businesses of the same age, managerial tenure has a significant impact on the probability of business discontinuance and transfer.
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The Time-Series Pattern Of Firm Growth In Two Industries
September 1992
Working Paper Number:
CES-92-10
Using a unique firm-level longitudinal data set that covers both the manufacturing and finance, insurance and real estate (FIRE) industries, this paper examines the time-series pattern of firm growth both immediately after entry and immediately prior to exit, and compares these patterns across the two industries. While previous research has examined the post-entry time-series behavior of firms, this research has focused exclusively on manufacturing firms. Examining the behavior of nonmanufacturing firms is important for two reasons. First, since the relative importance of the manufacturing industry has been declining recently, the behavior of manufacturing firms may be much different than the behavior of firms in an expanding industry, such as FIRE. Thus, comparing the growth of firms in a nonmanufacturing industry, with the growth of manufacturing firms provides more general knowledge about firm behavior. Second, since any good theory of firm dynamics should explain cross-industry differences in firm behavior, cross-industry differences in behavior must be documented before models of this type can be developed. The main finding of this paper are: (1) relative to FIRE firms, manufacturing firms experience more periods of above average growth immediately after entry; (2) relative to FIRE firms, manufacturing firms experience more periods of below average growth immediately prior to exit; and (3) relative to the growth of manufacturing firms, the growth of the typical FIRE firm is much more responsive to transitory shocks.
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Returns to Scale in Small and Large U.S. Manufacturing Establishments
September 1990
Working Paper Number:
CES-90-11
The objective of this study is to assess the possibility of differences in the production technologies between large and small establishments in five selected 4-digit SIC manufacturing industries. We particularly focus on estimating returns to scale and then make interferences regarding the efficiency of small businesses relative to large businesses. Using cross-section data for two census years, 1977 and 1982, we estimate a transcendental logarithmic (translog) production model that provides direct estimates of economies of scale parameters for both small and large establishments. Our primary findings are: (i) there are significant differences in the production technologies between small and large establishments; and (ii) based on the scale parameter estimates, small establishments appear to be as efficient as large establishments under normal economic conditions, suggesting that large size is not a necessary condition for efficient production. However, small establishments seem to be unable to maintain constant returns to scale production during economic recession such as that in 1982.
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Gross Job Creation, Gross Job Destruction and Employment Reallocation
June 1990
Working Paper Number:
CES-90-04
This paper measures the heterogeneity of establishment-level employment changes in the U.S. manufacturing sector over the 1972 to 1986 period. Our empirical work exploits a rich data set with approximately 860,000 annual observations on 160,000 manufacturing establishments to calculate rates of gross job creation, gross job destruction, and their sum, gross job reallocation. The central empirical findings are as follows: (1) Based on March-to-March establishment-level employment changes, gross job reallocation averages more than 20% of employment per year. (2) For the manufacturing sector as a whole, March-to-March gross job reallocation varies over time from 17% to 23% of employment per year. (3) Time variation in gross job reallocation is countercyclic-gross job reallocation rates covary negatively with own-sector and manufacturing net employment growth rates. (4) Virtually all of the time variation in gross job reallocation is accounted for by idiosyncratic effects on the establishment growth rate density. Changes in the shape and location of the growth rate density due to aggregate-year effects and sector-year effects cannot explain the observed variation in gross job reallocation. (5) The part of gross job reallocation attributable to idiosyncratic effects fluctuates countercyclically. Combining (3) ' (5), we conclude that the intensity of shifts in the pattern of employment opportunities across establishments exhibits significant countercyclic variation. In preparing the data for this study, we have greatly benefited from the assistance of Robert Bechtold, Timothy Dunne, Cyr Linonis, James Monahan, Al Nucci and other Census Bureau employees at the Center for Economic Studies. We have also benefited from helpful comments by Katherine Abraham, Martin Baily, Fischer Black, Timothy Dunne, David Lilien, Robert McGuckin, Kevin M. Murphy, Larrty Katz, John Wallis, workshop participants at the University of Maryland, the Resource Mobility Session of the Econometric society (Winter 1988 meetings), an NBER conference on Alternative Explanations of Employment Fluctuations, and the NBER's Economic Fluctuations Program Meeting (Summer 1989). Scott Schuh provided excellent research assistance. We gratefully acknowledge the financial assistance of the National Science Foundation (SES-8721031 and SES-8720931), the Hoover Institution, and the Office of Graduate Studies and Research at the University of Maryland. Davis also thanks the National Science Foundation for it's support through a grant to the National Fellows Program at the Hoover Institution. Most of the research for this paper was conducted while Davis was a National Fellow at the Hoover Institution.
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Multifactor Productivity And Sources of Growth In Chinese Industry: 1980-85
October 1989
Working Paper Number:
CES-89-08
This paper examines the economic performance of the Chinese industrial sector in the post-reform period 1980-1985. A multifactor productivity model is used to isolate the contributions of labor, capital, and technical efficiency to growth in industrial output. Using information from the National Industrial Census of China (1988) for large and medium-size enterprises, we find that growth in industrial labor productivity in the post-reform period is attributable to increases in capital intensity not technical efficiency. Moreover, collective and other nonstate enterprises show higher partial labor and multifactor productivity gains than do state enterprises. We also find that multifactor productivity gains are closely tied to increases in retained profits and the proportion of total employees that are technical workers. Surprisingly, labor bonuses have a near zero or negative effect on multifactor productivity growth although this result is not very robust.
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