Papers Containing Tag(s): 'Columbia University'
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Authors
Tania Babina - 3
Douglas W Dwyer - 3
Viewing papers 21 through 24 of 24
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Working PaperPrice 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.View Full Paper PDF
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Working PaperThe 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.View Full Paper PDF
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Working PaperPrice Dispersion in U.S. Manufacturing
October 1989
Working Paper Number:
CES-89-07
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. The question of price dispersion is important for two reasons. First, if prices vary across producers, the standard method of using industry price deflators leads to errors in measuring real output at the firm or establishment level. These errors in turn lead to biased estimates of the production function and productivity growth equation as shown in Abbott (1988). Second, if prices vary across producers, it suggests that producers do not take prices as given but use price as a competitive variable. This has several implications for how economists model competitive behavior.View Full Paper PDF
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Working PaperThe Effect Of Takeovers On The Employment And Wages Of Central-Office And Other Personnel
June 1989
Working Paper Number:
CES-89-03
Recent high rates of takeover activity have stimulated considerable interest and concern among policymakers and the public about changes in corporate ownership, but relatively little evidence about the "read" (as opposed to financial) effects of takeovers has been available. This paper presents evidence concerning the effects of ownership change on the employment and wages of central-office workers -- according to some views, those likely to be most affected by takeovers -- and contracts them with the effects on manufacturing plant employees. The evidence is based on a large, longitudinal, plant-level data set derived from Census Bureau surveys of both administrative and production establishments. The major findings of the analysis are as follows. Central offices that changed owners between 1977 and 1982 had substantially lower -- about 16 percent lower -- employment growth during that period than central offices not changing owners. (There was, however, no significant difference in the growth of R&D employment.) They also had slower growth in wages -- about 9 percent lower. Changing owners had a much more negative effect on employment growth in central offices than it did in manufacturing plants: 16 percent compared to 5 percent. This implies that the ratio of central-office to plant employees declines about 11 percent in firms changing owners: about 7.2 administrators per 10-00 plant employees are eliminated. These findings are consistent with the view that reduction of administrative overhead is an important motive for changes in ownership. Failure to account for reductions in central-office employment results in a substantial (about 40 percent) underestimate of the productivity gains associated with ownership change. We also provide evidence concerning the relationship between firm size and administrative-intensity.View Full Paper PDF
