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Evaluating the Impact of MEP Services on Establishment Performance: A Preliminary Empirical Investigation
July 2012
Working Paper Number:
CES-12-15
This work examines the impact of manufacturing extension services on establishment productivity. It builds on an earlier study conducted by Jarmin in the 1990s, by matching the Census of Manufacturers (CMF) with the Manufacturing Extension Partnership (MEP) customer and activity datasets to generate treatment and comparison groups for analysis. The scope of the study is the period 1997 to 2002, which was a period of economic downturn in the manufacturing sector and budgetary challenges for the MEP. The paper presents some preliminary findings from this analysis. Both lagged dependent variable (LDV) and difference in difference (DiD) models are employed to estimate the relationship between manufacturing extension and labor productivity. The results presented are inconclusive and paint a mixed picture as they demonstrate the benefits and limitations of using Census microdata in program evaluation. They also point to the need to conduct analyses that could help to better understand the dynamic impact of MEP services.
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Nature Versus Nurture in the Origins of Highly Productive Businesses: An Exploratory Analysis of U.S. Manufacturing Establishments
September 2011
Working Paper Number:
CES-11-26
This paper investigates the origins of productivity leaders, those that operate close to and help push out the production frontier. Do such businesses emerge as top performers from the very beginning of their lives, for example as the consequence of an outstanding founding idea, technology, or location? Or, at the other extreme, do they appear initially as completely average (or even underperformers) that exhibit gradual improvement as they learn and develop with age? To answer this question we draw upon five decades of U.S. Census of Manufacturing (CM) establishment-level data, tracing the productivity leaders of the most recent CM (2007) back over their observed life spans. We also examine possible industry-level correlates of variation in the extent of nature versus nurture that are suggested by theories of industry dynamics and economic growth.
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Productivity Dispersion and Plant Selection in the Ready-Mix Concrete Industry
September 2011
Working Paper Number:
CES-11-25
This paper presents a quantitative model of productivity dispersion to explain why inefficient producers are slowly selected out of the ready-mix concrete industry. Measured productivity dispersion between the 10th and 90th percentile falls from a 4 to 1 difference using OLS, to a 2 to 1 difference using a control function. Due to volatile productivity and high sunk entry costs, a dynamic oligopoly model shows that to rationalize small gaps in exit rates between high and low productivity plants, a plant in the top quintile must produce 1.5 times more than a plant in the bottom quintile.
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Plant-Level Productivity and Imputation of Missing Data in the Census of Manufactures
January 2011
Working Paper Number:
CES-11-02
In the U.S. Census of Manufactures, the Census Bureau imputes missing values using a combination of mean imputation, ratio imputation, and conditional mean imputation. It is wellknown that imputations based on these methods can result in underestimation of variability and potential bias in multivariate inferences. We show that this appears to be the case for the existing imputations in the Census of Manufactures. We then present an alternative strategy for handling the missing data based on multiple imputation. Specifically, we impute missing values via sequences of classification and regression trees, which offer a computationally straightforward and flexible approach for semi-automatic, large-scale multiple imputation. We also present an approach to evaluating these imputations based on posterior predictive checks. We use the multiple imputations, and the imputations currently employed by the Census Bureau, to estimate production function parameters and productivity dispersions. The results suggest that the two approaches provide quite different answers about productivity.
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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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A Dynamic Structural Model of Contraceptive Use and Employment Sector Choice for Women in Indonesia
September 2010
Working Paper Number:
CES-10-28
This research investigates the impact of the Indonesian family planning program on the labor force participation decisions and contraceptive choices of women. I develop a discrete choice dynamic structural model, where each married woman in every period makes joint choices regarding the method of contraceptive used and the sector of employment in which to work in order to maximize her expected discounted lifetime utility function. Each woman obtains utility from pecuniary sources, nonpecuniary sources, and choice-specific time shocks. In addition to the random shocks, there is uncertainty in the model as a woman can only imperfectly control her fertility. Dynamics in the model are captured by several forms of state and duration dependence. Women in this model make different choices due to different preferences, differences in observable characteristics, and realization of uncertainty. The choices made by a woman depend on the compatibility between raising children and the sector of employment (including wages). While making decisions regarding contraceptive use, a woman considers the trade-off between costs (monetary and nonmonetary) of having a child and the benefits from having one. The primary source of data for this study is the first wave of the Indonesia Family Life Survey (IFLS 1), a retrospective panel. In my research, I use the geographic expansion and the changing nature of the Indonesian family planning program as sources of exogenous variation to identify the parameters of the structural model. I estimate the model using maximum likelihood techniques with data from IFLS 1 for the periods 1979-1993. Structural model estimates indicate that informal sector jobs offer greater compatibility between work and childcare. Parameter estimates indicate that choices of contraception method and employment sector vary by exogenous characteristics.
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Computer Networks and Productivity Revisited: Does Plant Size Matter? Evidence and Implications
September 2010
Working Paper Number:
CES-10-25
Numerous studies have documented a positive association between information technology (IT) investments and business- and establishment-level productivity, but these studies usually pay sole or disporportionate attention to small- or medium-sized entities. In this paper, we revisit the evidence for manufacturing plants presented in Atrostic and Nguyen (2005) and show that the positive relationship between computer networks and labor productivity is only found among small- and medium-sized plants. Indeed, for larger plants the relationship is negative, and employment-weighted estimates indicate computer networks have a negative relationship with the productivity of employees, on average. These findings indicate that computer network investments may have an ambiguous relationship with aggregate labor productivity growth.
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The Impact of Plant-Level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth
December 2009
Working Paper Number:
CES-09-43
We build up from the plant level an "aggregate(d) Solow residual" by estimating every U.S. manufacturing plant's contribution to the change in aggregate final demand between 1976 and 1996. We decompose these contributions into plant-level resource reallocations and plant-level technical efficiency changes. We allow for 459 different production technologies, one for each 4- digit SIC code. Our framework uses the Petrin and Levinsohn (2008) definition of aggregate productivity growth, which aggregates plant-level changes to changes in aggregate final demand in the presence of imperfect competition and other distortions and frictions. On average, we find that aggregate reallocation made a larger contribution than aggregate technical efficiency growth. Our estimates of the contribution of reallocation range from 1:7% to2:1% per year, while our estimates of the average contribution of aggregate technical efficiency growth range from 0:2% to 0:6% per year. In terms of cyclicality, the aggregate technical efficiency component has a standard deviation that is roughly 50% to 100% larger than that of aggregate total reallocation, pointing to an important role for technical efficiency in macroeconomic fluctuations. Aggregate reallocation is negative in only 3 of the 20 years of our sample, suggesting that the movement of inputs to more highly valued activities on average plays a stabilizing role in manufacturing growth.
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Plant-Level Responses to Antidumping Duties: Evidence from U.S. Manufacturers
October 2009
Working Paper Number:
CES-09-38R
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.
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Computer Network Use and Firms' Productivity Performance: The United States vs. Japan
September 2008
Working Paper Number:
CES-08-30
This paper examines the relationship between computer network use and firms' productivity performance, using micro-data of the United States and Japan. To our knowledge, this is the first comparative analysis using firm-level data for the manufacturing sector of both countries. We find that the links between IT and productivity differ between U.S. and Japanese manufacturing. Computer networks have positive and significant links with labor productivity in both countries. However, that link is roughly twice as large in the U.S. as in Japan. Differences in how businesses use computers have clear links with productivity for U.S. manufacturing, but not in Japan. For the United States, the coefficients of the intensity of network use are positive and increase with the number of processes. Coefficients of specific uses of those networks are positive and significant. None of these coefficients are significant for Japan. Our findings are robust to alternative econometric specifications. They also are robust to expanding our sample from single-unit manufacturing firms, which are comparable in the two data sets, to the entire manufacturing sector in each country, as well as to the wholesale and retail sector of Japan.
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