Papers Containing Keywords(s): 'macroeconomic'
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Viewing papers 81 through 90 of 158
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Working PaperHow Firms Respond to Business Cycles: The Role of Firm Age and Firm Size
June 2013
Working Paper Number:
CES-13-30
There remains considerable debate in the theoretical and empirical literature about the differences in the cyclical dynamics of firms by firm size. This paper contributes to the debate in two ways. First, the key distinction between firm size and firm age is introduced. The evidence presented in this paper shows that young businesses (that are typically small) exhibit very different cyclical dynamics than small/older businesses. The second contribution is to present evidence and explore explanations for the finding that young/small businesses were hit especially hard in the Great Recession. The collapse in housing prices accounts for a significant part of the large decline of young/small businesses in the Great Recession.View Full Paper PDF
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Working PaperINTERNAL LABOR MARKETS AND INVESTMENT IN CONGLOMERATES
May 2013
Working Paper Number:
CES-13-26
The literature on conglomerates has focused on the misallocation of investments as the cause of the conglomerate discount. I study frictions in the internal labor market as a possible cause of misallocation of investments. Using detailed plant-level data, I document wage convergence in conglomerates: workersin low-wage industries collect higher-than-industry wages when the diversified rm is also present in high-wage industries (by 5.2%). I con rm this effect by exploiting a quasi-experiment involving the implementation of the NAFTA agreement that exogenously increases worker wages of exporting plants. I track the evolution of wages in non-exporting plants in diversi ed rms that also own exporting plants and nd a signi cant increase in wages of these plants relative to una liated non-exporting plants after the event. This pattern of wage convergence affects investments. Plants where workers collect higher-than-industry wages increase the capital-labor ratio in response to their higher labor cost -- and this response to higher wages is associated with higher investment in some divisions.View Full Paper PDF
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Working PaperThe United States Labor Market: Status Quo or A New Normal?
September 2012
Working Paper Number:
CES-12-28
The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of unemployment that prevailed in the recent past. Is this true? The question is important because central banks may be able to reduce unemployment that is cyclic in nature, but not that which is structural. An analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment. Although mismatch increased during the recession, it retreated at the same rate. The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more pronounced during the current recession than in prior recessions.View Full Paper PDF
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Working PaperDo SBA Loans Create Jobs? Estimates from Universal Panel Data and Longitudinal Matching Methods
September 2012
Working Paper Number:
CES-12-27
This pape reports estimates of the effects of the Small Business Administration (SBA) 7(a) and 504 loan programs on employment. The database links a complete list of all SBA loans in these programs to universal data on all employers in the U.S. economy from 1976 to 2010. Our method is to estimate firm fixed effect regressions using matched control groups for the SBA loan recipients we have constructed by matching exactly on firm age, industry, year, and pre-loan size, plus kernel-based matching on propensity scores estimated as a function of four years of employment history and other variables. The results imply positive average effects on loan recipient employment of about 25 percent or 3 jobs at the mean. Including loan amount, we find little or no impact of loan receipt per se, but an increase of about 5.4 jobs for each million dollars of loans. When focusing on loan recipients and control firms located in high-growth counties (average growth of 22 percent), places where most small firms should have excellent growth potential, we find similar effects, implying that the estimates are not driven by differential demand conditions across firms. Results are also similar regardless of distance of control from recipient firms, suggesting only a very small role for displacement effects. In all these cases, the results pass a "pre-program" specification test, where controls and treated firms look similar in the pre-loan period. Other specifications, such as those using only matching or only regression imply somewhat higher effects, but they fail the pre-program test.View Full Paper PDF
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Working PaperDecomposing Aggregate Trade Flows: New Evidence from U.S. Traders
September 2012
Working Paper Number:
CES-12-17
Using firm-level data on export transactions, we uncover a rich set of results about the extensive margins of exporting and exporter responses during periods of global downturns. We perform our analysis with respect to firm size, age, ownership status, and sector to emphasize the role of firm heterogeneity. We uncover a larger role for firm entry and exit in changes in annual export flows of single-unit, smaller, and younger firms. Young, small firms perform best during both periods of crises as well as non-crises periods. We also decompose the margins of U.S. imports at the U.S. importer, foreign supplier, and U.S. importer-foreign supplier pair levels. While export flows are closely correlated with global business cycles, import flows more closely approximate U.S. economic cycles. Additionally, both pair and foreign supplier flows are far more volatile than U.S. import flows, that is, U.S. importer-foreign supplier matches experience more churning on average than do either U.S. importers or foreign suppliers.View Full Paper PDF
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Working PaperMicro Data and the Macro Elasticity of Substitution
March 2012
Working Paper Number:
CES-12-05
We estimate the aggregate elasticity of substitution between capital and labor in the US manufacturing sector. We show that the aggregate elasticity of substitution can be expressed as a simple function of plant level structural parameters and sufficient statistics of the distribution of plant input cost shares. We then use plant level data from the Census of Manufactures to construct a local elasticity of substitution at various levels of aggregation. Our approach does not assume the existence of a stable aggregate production function, as we build up our estimate from the cross section of plants at a point in time. Accounting for substitution within and across plants, we find that the aggregate elasticity is substantially below unity at approximately 0.7. Lastly we assess the sources of the bias of aggregate technical change from 1987 to 1997. We find that the labor augmenting character of aggregate technical change is due almost exclusively to labor augmenting productivity growth at the plant level rather than relative growth in capital intensive plants.View Full Paper PDF
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Working PaperThe Spatial Extent of Agglomeration Economies: Evidence from Three U.S. Manufacturing Industries
January 2012
Working Paper Number:
CES-12-01
The spatial extent of localized agglomeration economies constitutes one of the central current questions in regional science. It is crucial for understanding firm location decisions and for assessing the influence of proximity in shaping spatial patterns of economic activity, yet clear-cut answers are difficult to come by. Theoretical work often fails to define or specify the spatial dimension of agglomeration phenomena. Existing empirical evidence is far from consistent. Most sources of data on economic performance do not supply micro-level information containing usable geographic locations. This paper provides evidence of the distances across which distinct sources of agglomeration economies generate benefits for plants belonging to three manufacturing industries in the United States. Confidential data from the Longitudinal Research Database of the United States Census Bureau are used to estimate cross-sectional production function systems at the establishment level for three contrasting industries in three different years. Along with relevant establishment, industry, and regional characteristics, the production functions include variables that indicate the local availability of potential labor and supply pools and knowledge spillovers. Information on individual plant locations at the county scale permits spatial differentiation of the agglomeration variables within geographic regions. Multiple distance decay profiles are investigated in order to explore how modifying the operationalization of proximity affects indicated patterns of agglomeration externalities and interfirm interactions. The results imply that industry characteristics are at least as important as the type of externality mechanism in determining the spatial pattern of agglomeration benefits. The research methods borrow from earlier work by the author that examines the relationships between regional industrial structure and manufacturing production.View Full Paper PDF
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Working PaperUsing the Survey of Plant Capacity to Measure Capital Utilization
July 2011
Working Paper Number:
CES-11-19
Most capital in the United States is idle much of the time. By some measures, the average workweek of capital in U.S. manufacturing is as low as 55 hours per 168 hour week. The level and variability of capital utilization has important implications for understanding both the level of production and its cyclical fluctuations. This paper investigates a number of issues relating to aggregation of capital utilization measures from the Survey of Plant Capacity and makes recommendations on expanding and improving the published statistics deriving from the Survey of Plant Capacity. The paper documents a number of facts about properties of capital utilization. First, after growing for decades, capital utilization started to fall in mid 1990s. Second, capital utilization is a useful predictor of changes in capacity utilization and other factors of production. Third, adjustment of productivity measures for variable capital utilization improves statistical and economic properties of these measures. Fourth, the paper constructs weights to aggregate firm level capital utilization rates to industry and economy level, which is the major enhancement to available data.View Full Paper PDF
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Working PaperThe Cyclicality of Productivity Dispersion
May 2011
Working Paper Number:
CES-11-15
Using plant-level data, I show that the dispersion of total factor productivity in U.S. durable manufacturing is greater in recessions than in booms. This cyclical property of productivity dispersion is much less pronounced in non-durable manufacturing. In durables, this phenomenon primarily reflects a relatively higher share of unproductive firms in a recession. In order to interpret these findings, I construct a business cycle model where production in durables requires a fixed input. In a boom, when the market price of this fixed input is high, only more productive firms enter and only more productive incumbents survive, which results in a more compressed productivity distribution. The resulting higher average productivity in durables endogenously translates into a lower average relative price of durables. Additionally, my model is consistent with the following business cycle facts: procyclical entry, procyclical aggregate total factor productivity, more procyclicality in durable than non-durable output, procyclical employment and countercyclicality in the relative price of durables and the cross section of stock returns.View Full Paper PDF
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Working PaperHow Does Size Matter? Investigating the Relationships Among Plant Size, Industrial Structure, and Manufacturing Productivity
March 2011
Working Paper Number:
CES-11-08
Industrial concentration and market power have been studied extensively at the national scale, in fields ranging from economics and industrial organization to regional science and economic development. At the regional scale, however, industrial structure and firm size relationships have received little attention outside of non-generalizable case studies, primarily because accurate measurements require difficult-to-obtain plant- or firm-level information. Readily available secondary data sources on establishment size distributions (such as County Business Patterns or the Census of Manufactures) cannot be linked to performance information for particular establishments or firms. Yet region-specific industrial structure may be a crucial determinant of firm performance and thus regional economic fortunes as well (Chinitz 1961; Christopherson and Clark 2007). This paper examines how industrial concentration and agglomeration economies impact plant performance, focusing on the influence of establishment size in mediating these effects. The Longitudinal Research Database of the U.S. Census Bureau is accessed to construct production functions for three manufacturing industries nationwide. These production functions, specified at the establishment level, incorporate characteristics of establishments, industries, and regions, including spatially-differentiated measures of agglomeration economies. Establishment size is evaluated both as an absolute metric and relative to other regional industry plants, as theory suggests that absolute size may be most pertinent to agglomeration benefits but relative size more relevant to industrial structure (Caves and Barton 1990; Bothner 2005). The research builds on earlier work by the author that establishes a direct link between regional industry concentration and the productivity of manufacturing establishments.View Full Paper PDF
