CES-WP-00-16
Measuring Productivity Dynamics with Endogenous Choice of Technology and Capacity Utilization: An Application to Automobile Assembly
Johannes Van Biesebroeck
December 01, 2000
During the 1980s, all Japanese automobile producers opened assembly plants in North America. Industry analysts and previous research claim that these transplants are more productive than incumbent plants and that they produce with a substantially different production process. We compare the two production processes by estimating a model that allows for heterogeneity in technology and productivity. We treat both types of heterogeneity as intrinsically unobservable. In the model, plants choose technology before production starts. They condition subsequent input decisions on this choice. Maximum likelihood estimation is used to estimate the unconditional distribution of the technology choice, output, and inputs. The model is applied to a sample of automobile assembly plants. We control for capacity utilization, unobserved productivity differences, and price effects. The results indicate that there exist two distinct technologies. In particular, the more recent technology uses labor less intensively and it has a higher elasticity of substitution between labor and capital. Hicks-neutral productivity growth is estimated to be lower, while capital-biased (labor-saving) productivity growth is estimated significantly higher, for the new technology. Using the estimation results, we decompose industry-wide productivity growth in plant-level changes and composition effects, for both technologies separately. Plant-level productivity growth is further decomposed to reveal the importance of capital-biased productivity growth, increase in capital-labor ratio, and returns to scale.
View Paper 32 Pages 466864 Bytes
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CES-WP-00-15
An Economist's Primer on Survey Samples
William Carrington, John Eltinge, Kristin McCue
September 01, 2000
Survey data underlie most empirical work in economics, yet economists typically have little familiarity
with survey sample design and its effects on inference. This paper describes how sample designs depart from the
simple random sampling model implicit in most econometrics textbooks, points out where the effects of this
departure are likely to be greatest, and describes the relationship between design-based estimators developed by
survey statisticians and related econometric methods for regression. Its intent is to provide empirical economists
with enough background in survey methods to make informed use of design-based estimators. It emphasizes
surveys of households (the source of most public-use files), but also considers how surveys of businesses differ.
Examples from the National Longitudinal Survey of Youth of 1979 and the Current Population Survey illustrate
practical aspects of design-based estimation.
View Paper 43 Pages 131129 Bytes
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CES-WP-00-13
Technology Use and Worker Outcomes: Direct Evidence from Linked Employee-Employer Data
Adela Luque, Javier Miranda
August 01, 2000
We investigate the impact of technology adoption on workers’ wages and mobility in U.S.
manufacturing plants by constructing and exploiting a unique Linked Employee-Employer data set containing
longitudinal worker and plant information. We first examine the effect of technology use on wage
determination, and find that technology adoption does not have a significant effect on high-skill workers, but
negatively affects the earnings of low-skill workers after controlling for worker-plant fixed effects. This
result seems to support the skill-biased technological change hypothesis. We next explore the impact of
technology use on worker mobility, and find that mobility rates are higher in high-technology plants, and that
high-skill workers are more mobile than their low and medium-skill counterparts. However, our
technology-skill interaction term indicates that as the number of adopted technologies increases, the
probability of exit of skilled workers decreases while that of unskilled workers increases.
View Paper 55 Pages 189179 Bytes
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CES-WP-00-12
An Option-Value Approach to Technology in U.S. Maufacturing: Evidence from Plant-Level Data
Adela Luque
July 01, 2000
Numerous empirical studies have examined the role of firm and industry heterogeneity in the decision to
adopt new technologies using a Net Present Value framework. However, as suggested by the recently
developed option-value theory, these studies may have overlooked the role of investment reversibility and
uncertainty as important determinants of technology adoption. Using the option-value investment model
as my underlying theoretical framework, I examine how these two factors affect the decision to adopt three
advanced manufacturing technologies. My results support the option-value model’s prediction that plants
operating in industries facing higher investment reversibility and lower degrees of demand and technological
uncertainty are more likely to adopt advanced manufacturing technologies.
View Paper 53 Pages 269961 Bytes
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CES-WP-00-11
County-Level Estimates of the Employment Prospects of Low-Skill Workers
David Ribar
July 01, 2000
This study examines low-skill wage and employment opportunities for men and women at the county level over the period 1989-96. Currently, reliable direct measures of wages and employment rates for different demographic and skill groups are only available for large geographic areas such as regions and populous states or at infrequent intervals (e.g., from the Decennial Census) for some smaller areas. This study constructs indirect annual measures for all counties from 1989-96 by combining skill-specific information on earnings and employment from the Sample Edited Detail File (SEDF) of the 1990 Decennial Census and the 1990-97 Annual Demographic files of the Current Population Survey (CPS) with annual industry-specific information from the Regional Economic Information System (REIS). Special versions of the SEDF and CPS files that identify county of residence are used. The study regresses the low-skill wage and employment data from the SEDF and CPS files on a set of personal variables from the combined files and local employment measures derived from the REIS. The wage regressions are corrected for selectivity from the employment decision and account for county-specific effects as well as general time effects. Estimates from the regressions are then combined with the available employment data from the REIS to impute wage and employment rates for low-skill adults across counties.
View Paper 55 Pages 334585 Bytes
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CES-WP-00-10
Measuring the Electronic Economy: Current Status and Next Steps
Barbara Atrostic, John Gates, Ron Jarmin
June 01, 2000
The recent growth of consumer retailing over the Internet draws attention to the
electronic economy. However, businesses also conduct other business processes over computer
networks, and many have been doing so for some time. Uses of computer networks attract
attention because of assertions that they lead to new products and services, new delivery
methods, streamlined or re-engineered business processes, new business structures, and
enhanced business performance. These changes, in turn, potentially affect the performance of
the entire economy, including economic growth, productivity, prices, employment, trade, and the
structures of businesses, regions, and markets.
Evaluating these assertions, and their effects on economic performance, requires solid
statistical information about the electronic economy. This paper develops principles for
identifying information critical to measuring the size and evaluating the potential effects of the
electronic economy, relates that information to current data collection programs, and notes
relevant measurement issues. Some of the required information about the electronic economy
can be collected by adding questions to existing surveys, making the scope of existing surveys
consistent, or developing new surveys. However, many key pieces of information pose
significant challenges to economic measurement. While some of those challenges are specific to
the electronic economy, others are long-standing ones. Interest in the electronic economy
highlights the importance of continuing attempts to address these challenges. Improving and
enhancing the statistical system to provide information about the electronic economy, therefore,
would also substantially improve the baseline information available for evaluating the
performance of the entire economy.
View Paper 38 Pages 116303 Bytes
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CES-WP-00-09
The 1989 Change in the Definition of Capacity: A Plant-Level Perspective
Maura Doyle
June 01, 2000
The Survey of Plant Capacity (SPC) is the primary source of data used to
construct the Federal Reserve's manufacturing utilization rates. A major restructuring of
the SPC in 1989 presents a potential obstacle to constructing measures of utilization that are
consistent over time. The object of this study is to take advantage of plant-level data that is
available at the Census Bureau's O±ce of the Chief Economist to thoroughly reexamine the
link between the historical and current measures of capacity. The preponderance of evidence
in this study suggests that preferred utilization is consistent with \full" utilization and,
therefore, supports the underlying Federal Reserve methodology for estimating capacity
utilization.
View Paper 70 Pages 607813 Bytes
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CES-WP-00-06
The Impact of Vintage and Survival on Productivity: Evidence from Cohorts of U.S. Manufacturing Plants
J. Bradford Jensen, Robert McGuckin, Kevin Stiroh
May 01, 2000
This paper examines the evolution of productivity in U.S. manufacturing plants from 1963 to 1992. We
define a “vintage effect” as the change in productivity of recent cohorts of new plants relative to earlier cohorts
of new plants, and a “survival effect” as the change in productivity of a particular cohort of surviving plants as
it ages. The data show that both factors contribute to industry productivity growth, but play offsetting roles in
determining a cohort’s relative position in the productivity distribution. Recent cohorts enter with significantly
higher productivity than earlier entrants did, while surviving cohorts show significant increases in productivity
as they age. These two effects roughly offset each other, however, so there is a rough convergence in
productivity across cohorts in 1992 and 1987. (JEL Code: D24, L6)
View Paper 25 Pages 103578 Bytes
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CES-WP-00-08
Plants and productivity in international trade
Andrew Bernard, Jonathan Eaton, J. Bradford Jensen, Samuel Kortum
May 00, 2000
View Paper 53 Pages 324588 Bytes
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CES-WP-00-05
Technological Change and Economies of Scale in U.S. Poultry Slaughter
Milton Madison, James MacDonald, Michael Ollinger
April 01, 2000
This paper uses a unique data set provided by the Census Bureau to empirically examine technological
change and economies of scale in the chicken and turkey slaughter industries. Results reveal substantial
scale economies that show no evidence of diminishing with plant size and that are much greater than those
realized in cattle and hog slaughter. Additionally, it is shown that controlling for plant product mix is critical
to cost estimation and animal inputs are much more elastic to prices than in either cattle or hogs. Results
suggest that consolidation is likely to continue, particularly if demand growth diminishes.
View Paper 41 Pages 81316 Bytes
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