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Analytic Use Of Economic Microdata; A Model For Researcher Access With Confidentiality Protection
August 1992
Working Paper Number:
CES-92-08
A primary responsibility of the Center for Economic Studies (CES) of the U.S. Bureau of the Census is to facilitate researcher access to confidential economic microdata files. Benefits from this program accrue not only to policy makers--there is a growing awareness of the importance of microdata for analyzing both the descriptive and welfare implications of regulatory and environmental changes--but also and importantly to the statistical agencies themselves. In fact, there is substantial recent literature arguing for the proposition that the largest single improvement that the U.S. statistical system could make is to improve its analytic capabilities. In this paper I briefly discuss these benefits to greater access for analytical work and ways to achieve them. Due to the nature of business data, public use databases and masking technologies are not available as vehicles for releasing useful microdata files. I conclude that a combination of outside and inside research programs, carefully coordinated and integrated is the best model for ensuring that statistical agencies reap the gains from analytic data users. For the United States, at least, this is fortuitous with respect to justifying access since any direct research with confidential data by outsiders must have a "statistical purpose". Until the advent of CES, it was virtually impossible for researchers to work with the economic microdata collected by the various economic censuses. While the CES program is quite large, as it now stands, researchers, or their representatives, must come to the Census Bureau in Washington, D.C. to access the data. The success of the program has led to increasing demands for data access in facilities outside of the Washington, D.C. area. Two options are considered: 1) Establish Census Bureau facilities in various universities or similar nonprofit research facilities and 2) Develop CES regional operations in existing Census Bureau regional offices.
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Price Dispersion In U.S. Manufacturing: Implications For The Aggregation Of Products And Firms
March 1992
Working Paper Number:
CES-92-03
This paper addresses the question of whether products in the U.S. Manufacturing sector sell at a single (common) price, or whether prices vary across producers. Price dispersion is interesting for at least two reasons. First, if output prices vary across producers, standard methods of using industry price deflators lead to errors in measuring real output at the industry, firm, and establishment level which may bias estimates of the production function and productivity growth. Second, price dispersion suggests product heterogeneity which, if consumers do not have identical preferences, could lead to market segmentation and price in excess of marginal cost, thus making the current (competitive) characterization of the Manufacturing sector inappropriate and invalidating many empirical studies. In the course of examining these issues, the paper develops a robust measure of price dispersion as well as new quantitative methods for testing whether observed price differences are the result of differences in product quality. Our results indicate that price dispersion is widespread throughout manufacturing and that for at least one industry, Hydraulic Cement, it is not the result of differences in product quality.
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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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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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The Structure Of Production Technology Productivity And Aggregation Effects
August 1991
Working Paper Number:
CES-91-05
This is a sequel to an earlier paper by the author, Dhrymes (1990). Using the LRD sample, that paper examined the adequacy of the functional form specifications commonly employed in the literature of US Manufacturing production relations. The "universe" of the investigation was the three digit product group; the basic unit of observation was the plant; the sample consisted of all "large" plants, defined by the criterion that they employ 250 or more workers. The study encompassed three digit product groups in industries 35, 36 and 38, over the period 1972-1986, and reached one major conclusion: if one were to judge the adequacy of a given specification by the parametric compatibility of the estimates of the same parameters, as derived from the various implications of each specification, then the three most popular (production function) specifications, Cobb-Douglas, CES and Translog all fell very wide of the mark. The current paper focuses the investigation on two digit industries (but retains the plant as the basic unit of observation), i.e., our sample consists of all "large" manufacturing plants, in each of Industry 35, 36 and 38, over the period 1972-1986. It first replicates the approach of the earlier paper; the results are basically of the same genre, and for that reason are not reported herein. Second, it examines the extent to which increasing returns to scale characterize production at the two digit level; it is established that returns to scale at the mean, in the case of the translog production function are almost identical to those obtained with the Cobb-Douglas function.1 Finally, it examines the robustness and characteristics of measures of productivity, obtained in the context of an econometric formulation and those obtained by the method of what may be thought of as the "Solow Residual" and generally designated as Total Factor Productivity (TFP). The major finding here is that while there are some differences in productivity behavior as established by these two procedures, by far more important is the aggregation sensitivity of productivity measures. Thus, in the context of a pooled sample, introduction of time effects (generally thought to refer to productivity shifts) are of very marginal consequence. On the other hand, the introduction of four digit industry effects is of appreciable consequence, and this phenomenon is universal, i.e., it is present in industry 35, 36 as well as 38. The suggestion that aggregate productivity behavior may be largely, or partly, an aggregation phenomenon is certainly not a part of the established literature. Another persistent phenomenon uncovered is the extent to which productivity measures for individual plants are volatile, while two digit aggregate measures appear to be stable. These findings clearly calls for further investigation.
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Decomposing Technical Change
May 1991
Working Paper Number:
CES-91-04
A production function is specified with human capital as a separate argument and with embodied technical change proxied by a variable that measures the average vintage of the stock of capital. The coefficients of this production function are estimated with cross section data for roughly 2,150 new manufacturing plants in 41 industries, and for subsets of this sample. The question of interactions between new investment and initial endowments of capital is then examined with data for roughly 1,400 old plants in 15 industries.
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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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Estimating A Multivariate Arma Model with Mixed-Frequency Data: An Application to Forecasting U.S. GNP at Monthly Intervals
July 1990
Working Paper Number:
CES-90-05
This paper develops and applies a method for directly estimating a multivariate, autoregressive moving-average (ARMA) model with mixed-frequency, time-series data. Unlike standard, single-frequency methods, the method does not require the data to be transformed to a single frequency (by temporally aggregating higher-frequency data to lower frequencies for interpolating lower-frequency data to higher frequencies) or the model to be restricted by frequency. Subject to computational constraints, the method can handle any number of variable and frequencies. In addition, variable can be treated as temporally aggregated and observed with errors and delays. The key to the method is to view lower-frequency data as periodically missing and to use the missing-data variant of the Kalman filter.
In the application, a bivariate, ARMA model is estimated with monthly observations on total employment and quarterly observations on real GNP, in the U.S., for January 1958 to December 1978. The estimated model is, then, used to compute monthly forecasts of the variables for 1 to 12 months ahead, for January 1979 to December 1988. Compared with GNP forecasts, in particular, for similar periods produced by established econometric and time series models, present GNP forecasts are generally more accurate for 1 to 4 months ahead and about equally or slightly less accurate for 5 to 12 months ahead. The application, thus, shows that the present method is tractable and able to effectively exploit cross-frequency sample information, in ARMA estimate and forecasting, which standard methods cannot exploit at all.
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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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Export Performance and State Industrial Growth
January 1990
Working Paper Number:
CES-90-03
This research examines whether state industrial growth over the past decade has occurred independently of changes in manufacturing exports and whether export employment growth responds to the same economic and locational forces as employment growth in domestic production. The empirical results indicate that employment and value added growth are not independent of export sales growth; however, a shift toward export markets is not strongly associated with higher manufacturing growth rates. Traditional factors account for a far greater proportion of the variation in domestic than export employment growth. The results suggest the need for additional research on the sources of state comparative advantage in export markets.
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