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The Characteristics and Geographic Distribution of Robot Hubs in U.S. Manufacturing Establishments
March 2023
Working Paper Number:
CES-23-14
We use data from the Annual Survey of Manufactures to study the characteristics and geography of investments in robots across U.S. manufacturing establishments. We find that robotics adoption and robot intensity (the number of robots per employee) is much more strongly related to establishment size than age. We find that establishments that report having robotics have higher capital expenditures, including higher information technology (IT) capital expenditures. Also, establishments are more likely to have robotics if other establishments in the same Core-Based Statistical Area (CBSA) and industry also report having robotics. The distribution of robots is highly skewed across establishments' locations. Some locations, which we call Robot Hubs, have far more robots than one would expect even after accounting for industry and manufacturing employment. We characterize these Robot Hubs along several industry, demographic, and institutional dimensions. The presence of robot integrators and higher levels of union membership are positively correlated with being a Robot Hub.
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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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Capital Investment and Labor Demand
February 2022
Working Paper Number:
CES-22-04
We study how bonus depreciation, a policy designed to lower the cost of capital, impacted investment and labor demand in the US manufacturing sector. Difference-in-differences estimates using restricted-use US Census Data on manufacturing establishments show that this policy increased both investment and employment, but did not lead to wage or productivity gains. Using a structural model, we show that the primary effect of the policy was to increase the use of all inputs by lowering overall costs of production. The policy further stimulated production employment due to the complementarity of production labor and capital. Supporting this conclusion, we nd that investment is greater in plants with lower labor costs. Our results show that recent policies that incentivize capital investment do not lead manufacturing plants to replace workers with machines.
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Incidence and Performance of Spinouts and Incumbent New Ventures: Role of Selection and
Redeployability within Parent Firms
September 2021
Working Paper Number:
CES-21-27
Using matched employer-employee data from 30 U.S. states, we compare spinouts with new ventures formed by incumbents (INCs). We propose a selection-based framework comprising idea selection by parents to internally implement ideas as INCs, entrepreneurial selection by founders to form spinouts, and managerial selection to close ventures. Consistent with parents choosing better ideas in the idea selection stage, we find that INCs perform relatively better than spinouts, and more so with larger parents. Regarding the entrepreneurial selection stage, we find evidence consistent with resource requirements being a greater entry barrier to spinouts and greater information asymmetry promoting spinout formation. Parents' resource redeployment opportunities are associated with lower relative survival of INCs, consistent with their being subject to greater selection pressures in the managerial selection stage.
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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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Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms
February 2020
Working Paper Number:
CES-20-06
This paper examines how employee earnings at small firms respond to a cash flow shock in the form of a government R&D grant. We use ranking data on applicant firms, which we link to IRS W2 earnings and other U.S. Census Bureau datasets. In a regression discontinuity design, we find that the grant increases average earnings with a rent-sharing elasticity of 0.07 (0.21) at the employee (firm) level. The beneficiaries are incumbent employees who were present at the firm before the award. Among incumbent employees, the effect increases with worker tenure. The grant also leads to higher employment and revenue, but productivity growth cannot fully explain the immediate effect on earnings. Instead, the data and a grantee survey are consistent with a backloaded wage contract channel, in which employees of financially constrained firms initially accept relatively low wages and are paid more when cash is available.
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Human Capital, Parent Size and the Destination Industry of Spinouts
October 2019
Working Paper Number:
CES-19-30
We study how spinout founders' human capital and parent size relate to founders' propensity to stay in the same industry as their parents or to go outside the industry. Individuals with high human capital face a higher performance penalty if they form spinouts outside the parent industry, but they also face greater deterrence from large parents if they stay in that industry. Using matched employer employee data on spinout founders and their coworkers, we find that individuals with higher human capital are less likely to form spinouts in distant industries than in the parent's industry. Further, we find that as parent size increases, such individuals are less likely to form spinouts in the parent's industry and more likely to form spinouts in distant industries.
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Early-Stage Business Formation: An Analysis of Applications for Employer Identification Numbers
December 2018
Working Paper Number:
CES-18-52
This paper reports on the development and analysis of a newly constructed dataset on the early stages of business formation. The data are based on applications for Employer Identification Numbers (EINs) submitted in the United States, known as IRS Form SS-4 filings. The goal of the research is to develop high-frequency indicators of business formation at the national, state, and local levels. The analysis indicates that EIN applications provide forward-looking and very timely information on business formation. The signal of business formation provided by counts of applications is improved by using the characteristics of the applications to model the likelihood that applicants become employer businesses. The results also suggest that EIN applications are related to economic activity at the local level. For example, application activity is higher in counties that experienced higher employment growth since the end of the Great Recession, and application counts grew more rapidly in counties engaged in shale oil and gas extraction. Finally, the paper provides a description of new public-use dataset, the 'Business Formation Statistics (BFS),' that contains new data series on business applications and formation. The initial release of the BFS shows that the number of business applications in the 3rd quarter of 2017 that have relatively high likelihood of becoming job creators is still far below pre-Great Recession levels.
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The Management and Organizational Practices Survey (MOPS): Collection and Processing
December 2018
Working Paper Number:
CES-18-51
The U.S. Census Bureau partnered with a team of external researchers to conduct the first-ever large-scale survey of management practices in the United States, the Management and Organizational Practices Survey (MOPS), for reference year 2010. With the help of the research team, the Census Bureau expanded and improved the survey for a second wave for reference year 2015. The MOPS is a supplement to the Annual Survey of Manufacturing (ASM), and so the collection and processing strategy for the MOPS built on the methodology for the ASM, while differing on key dimensions to address the unique nature of management relative to other business data. This paper provides detail on the mail strategy pursued for the MOPS, the collection methods for paper and electronic responses, the processing and estimation procedures, and the official Census Bureau data releases. This detail is useful for all those who have interest in using the MOPS for research purposes, those wishing to understand the MOPS data more deeply, and those with an interest in survey methodology.
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Punctuated Entrepreneurship (Among Women)
May 2018
Working Paper Number:
CES-18-26
The gender gap in entrepreneurship may be explained in part by employee non-compete agreements. Exploiting exogenous state-level variation in non-compete policy, I find that women more strictly subject to non-competes are 11-17% more likely to start companies after their employers dissolve. This result is not explained by the incidence of non-competes or lawsuits; however, women face higher relative costs in defending against potential litigation and in returning to paid employment after abandoning their ventures. Thus entrepreneurship among women may be 'punctuated' in that would-be female founders are throttled by non-competes, their potential unleashed only by the failure of their employers.
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