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Aggregation Bias in the Measurement of U.S. Global Value Chains
September 2024
Working Paper Number:
CES-24-49
This paper measures global value chain (GVC) activity, defined as imported content of exports, of U.S. manufacturing plants between 2002 and 2012. We assesses the extent of aggregation bias that arises from relying on industry-level exports, imports, and output to establish three results. First, GVC activity based on industry-level data underestimate the actual degree of GVC engagement by ignoring potential correlations between import and export activities across plants within industries. Second, the bias grew over the sample period. Finally, unlike with industry-level measures, we find little slowdown in GVC integration by U.S. manufacturers.
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The Impact of Immigration on Firms and Workers: Insights from the H-1B Lottery
April 2024
Working Paper Number:
CES-24-19
We study how random variation in the availability of highly educated, foreign-born workers impacts firm performance and recruitment behavior. We combine two rich data sources: 1) administrative employer-employee matched data from the US Census Bureau; and 2) firm level information on the first large-scale H-1B visa lottery in 2007. Using an event-study approach, we find that lottery wins lead to increases in firm hiring of college-educated, immigrant labor along with increases in scale and survival. These effects are stronger for small, skill-intensive, and high-productivity firms that participate in the lottery. We do not find evidence for displacement of native-born, college-educated workers at the firm level, on net. However, this result masks dynamics among more specific subgroups of incumbents that we further elucidate.
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Who's Most Exposed to International Shocks? Estimating Differences in Import Price Sensitivity across U.S. Demographic Groups
March 2023
Working Paper Number:
CES-23-13R
Differences in consumption patterns across demographic groups mean that international price shocks differentially affect such groups. We construct import price indexes for U.S. households that vary by age, race, marital status, education, and urban status. Black households and urban households experienced significantly higher import price inflation from 1996-2018 compared to other groups, such as white households and rural households. Sensitivity to international price shocks varies widely, implying movements in exchange rates and foreign prices, both during our sample and during the Covid-19 pandemic, drove sizable differences in import price inflation ' and total inflation ' across households.
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The Long-run Effects of the 1930s Redlining Maps on Children
December 2022
Working Paper Number:
CES-22-56
We estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps by linking children in the full count 1940 Census to 1) the universe of IRS tax data in 1974 and 1979 and 2) the long form 2000 Census. We use two identification strategies to estimate the potential long-run effects of differential access to credit along HOLC boundaries. The first strategy compares cross-boundary differences along HOLC boundaries to a comparison group of boundaries that had statistically similar pre-existing differences as the actual boundaries. A second approach only uses boundaries that were least likely to have been chosen by the HOLC based on our statistical model. We find that children living on the lower-graded side of HOLC boundaries had significantly lower levels of educational attainment, reduced income in adulthood, and lived in neighborhoods during adulthood characterized by lower educational attainment, higher poverty rates, and higher rates of single-headed households.
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Investment and Subjective Uncertainty
November 2022
Working Paper Number:
CES-22-52
A longstanding challenge in evaluating the impact of uncertainty on investment is obtaining measures of managers' subjective uncertainty. We address this challenge by using a detailed new survey measure of subjective uncertainty collected by the U.S. Census Bureau for approximately 25,000 manufacturing plants. We find three key results. First, investment is strongly and robustly negatively associated with higher uncertainty, with a two standard deviation increase in uncertainty associated with about a 6% reduction in investment. Second, uncertainty is also negatively related to employment growth and overall shipments (sales) growth, which highlights the damaging impact of uncertainty on firm growth. Third, flexible inputs like rental capital and temporary workers show a positive relationship to uncertainty, demonstrating that businesses switch from less flexible to more flexible factor inputs at higher levels of uncertainty.
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Trade Liberalization and Labor-Market Outcomes: Evidence from US Matched Employer-Employee Data
September 2022
Working Paper Number:
CES-22-42
We use matched employer-employee data to examine outcomes among workers initially employed within and outside manufacturing after trade liberalization with China. We find that exposure to this shock operates predominantly through workers' counties (versus industries), that larger own industry and downstream exposure typically reduce relative earnings, and that greater upstream exposure often raises them. The latter is particularly important outside manufacturing: while we find substantial and persistent predicted declines in relative earnings among manufacturing workers, those outside manufacturing are generally predicted to experience relative earnings gains. Investigation of employment reactions indicates they account for a small share of the earnings effect.
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Finding Needles in Haystacks: Multiple-Imputation Record Linkage Using Machine Learning
November 2021
Working Paper Number:
CES-21-35
This paper considers the problem of record linkage between a household-level survey and an establishment-level frame in the absence of unique identifiers. Linkage between frames in this setting is challenging because the distribution of employment across establishments is highly skewed. To address these difficulties, this paper develops a probabilistic record linkage methodology that combines machine learning (ML) with multiple imputation (MI). This ML-MI methodology is applied to link survey respondents in the Health and Retirement Study to their workplaces in the Census Business Register. The linked data reveal new evidence that non-sampling errors in household survey data are correlated with respondents' workplace characteristics.
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Business Formation: A Tale of Two Recessions
January 2021
Working Paper Number:
CES-21-01
The trajectory of new business applications and transitions to employer businesses differ markedly during the Great Recession and COVID-19 Recession. Both applications and transitions to employer startups decreased slowly but persistently in the post-Lehman crisis period of the Great Recession. In contrast, during the COVID-19 Recession new applications initially declined but have since sharply rebounded, resulting in a surge in applications during 2020. Projected transitions to employer businesses also rise but this is dampened by a change in the composition of applications in 2020 towards applications that are more likely to be nonemployers.
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Business-Level Expectations and Uncertainty
December 2020
Working Paper Number:
CES-20-41
The Census Bureau's 2015 Management and Organizational Practices Survey (MOPS) utilized innovative methodology to collect five-point forecast distributions over own future shipments, employment, and capital and materials expenditures for 35,000 U.S. manufacturing plants. First and second moments of these plant-level forecast distributions covary strongly with first and second moments, respectively, of historical outcomes. The first moment of the distribution provides a measure of business' expectations for future outcomes, while the second moment provides a measure of business' subjective uncertainty over those outcomes. This subjective uncertainty measure correlates positively with financial risk measures. Drawing on the Annual Survey of Manufactures and the Census of Manufactures for the corresponding realizations, we find that subjective expectations are highly predictive of actual outcomes and, in fact, more predictive than statistical models fit to historical data. When respondents express greater subjective uncertainty about future outcomes at their plants, their forecasts are less accurate. However, managers supply overly precise forecast distributions in that implied confidence intervals for sales growth rates are much narrower than the distribution of actual outcomes. Finally, we develop evidence that greater use of predictive computing and structured management practices at the plant and a more decentralized decision-making process (across plants in the same firm) are associated with better forecast accuracy.
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Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism
January 2020
Working Paper Number:
CES-20-01
We examine the impacts of the 2018-2019 U.S. import tariff increases on U.S. export growth through the lens of supply chain linkages. Using 2016 confidential firm-trade linked data, we document the implied incidence and scope of new import tariffs. Firms that eventually faced tariff increases on their imports accounted for 84% of all exports and represented 65% of manufacturing employment. For all affected firms, the implied cost is $900 per worker in new duties. To estimate the effect on U.S. export growth, we construct product-level measures of import tariff exposure of U.S. exports from the underlying firm micro data. More exposed products experienced 2 percentage point lower growth relative to products with no exposure. The decline in exports is equivalent to an ad valorem tariff on U.S. exports of almost 2% for the typical product and almost 4% for products with higher than average exposure.
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