CES-WP-05-30
The Role of Retail Chains: National, Regional, and Industry Results
Ronald Jarmin, Shawn Klimek, Javier Miranda
December 01, 2005
We use the establishment level data in the Longitudinal Business Database to
measure changes in market structure in the U.S. Retail Trade sector during the period,
1976 to 2000. We use firm ownership information to construct measures of firm entry
and exit and also to categorize four types of retail firms: single location, and local,
regional, and national chains. We use detailed location data to examine market structure
in both national and county markets. We summarize the county level results into three
groups: metropolitan, micropolitan, and rural.
We find that retail activity is increasingly occurring at establishments owned by chain
firms, especially large national chains. On average, we find that all types of retail firms
are increasing in size during the period. We also find that larger markets experience
more firm turnover. Finally, we see that entry and exit rates vary across two-digit retail
industries.
View Paper 34 Pages 198583 Bytes
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CES-WP-05-29
The Industry Life Cycle and Acquisitions and Investment: Does Firm Organization Matter?
Vojislav Maksimovic, Gordon Phillips
December 01, 2005
We examine the effect of financial dependence on the acquisition and investment of
single segment and conglomerate firms for different long-run changes in industry conditions.
Conglomerates and single-segment firms differ in the investments they make. The main
differences are in the investment in acquisitions rather than in the level of capital expenditure.
Financial dependence, a deficit in a segment’s internal financing, decreases the likelihood of
acquisitions and opening new plants, especially for single-segment firms. These effects are
mitigated for conglomerates in growth industries and also for firms that are publicly traded. In
declining industries, plants of segments that are financially dependent are less likely to be closed
by conglomerate firms. These findings persist after controlling for firm size and segment
productivity. We also find that plants acquired by conglomerate firms in growth industries
increase in productivity post-acquisition. The results are consistent with the comparative
advantages of different firm organizations differing across long-run industry conditions.
View Paper 44 Pages 458353 Bytes
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CES-WP-05-28
The Impact of Minimum Quality Standards on Firm Entry, Exit and Product Quality: The Case of the Child Care Market
V. Joseph Hotz, Mo Xiao
December 01, 2005
We examine the impact of minimum quality standards on the supply side of the child care
market, using a unique panel data set merged from the Census of Services Industries, state
regulation data, and administrative accreditation records from the National Association of
Education for Young Children. We control for state-specific and time-specific fixed effects in
order to mitigate the biases associated with policy endogeneity. We find that the effects of
quality standards specifying the labor intensiveness of child care services are strikingly different
from those specifying staff qualifications. Higher staff-child ratio requirements deter entry and
reduce the number of operating child care establishments. This entry barrier appears to select
establishments with better quality into the market and alleviates competition among existing
establishments: existing establishments are more likely to receive accreditation and higher
profits, and are less likely to exit. By contrast, higher staff-education requirements do not have
entry-deterrence effects. They do have the unintended effects of discouraging accreditation,
reducing owners’ profits, and driving firms out of businesses.
View Paper 55 Pages 197445 Bytes
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CES-WP-05-27
Contributions to Health Insurance Premiums: When Does the Employer Pay 100 Percent?
Alice Zawacki, Amy Taylor
December 01, 2005
We identify the characteristics of establishments that paid 100 percent of health insurance
premiums and the policies they offered from 1997-2001, despite increased premium costs.
Analyzing data from the MEPS-IC, we see little change in the percent of establishments that paid
the full cost of premiums for employees. Most of these establishments were young, small, singleunits,
with a relatively high paid workforce. Plans that were fully paid generally required
referrals to see specialists, did not cover pre-existing conditions or outpatient prescriptions, and
had the highest out-of-pocket expense limits. These plans also were more likely than plans not
fully paid by employers to have had a fee-for-service or exclusive provider arrangement, had the
highest premiums, and were less likely to be self-insured.
View Paper 18 Pages 327404 Bytes
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CES-WP-05-26
Using Census Business Data to Augment the MEPS-IC
Kristin McCue, Alice Zawacki
December 01, 2005
This paper has two aims: first to describe methods, issues, and outcomes involved in
matching data from the Insurance Component of the Medical Expenditure Panel Survey (MEPSIC)
to other business microdata collected by the U.S. Census Bureau, and second to present some
simple results that illustrate the usefulness of such combined data. We present the results of
linking the MEPS-IC with data from the 1997 Economic Censuses (EC), but also discuss other
possible sources of business data. An issue in any linkage is whether the linked sample remains
representative and large enough to be useful. The EC data are attractive because, given the
survey’s broad coverage and large sample, most of the MEPS-IC sample can be matched to it.
We use the combined EC/MEPS-IC data to construct productivity measures that are useful
auxiliary data in examining employers’ health insurance offering decisions.
View Paper 25 Pages 513469 Bytes
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CES-WP-05-25
What Has Been Capitalized into Property Values: Human Capital, Social Capital, or Cultural Capital?
Shihe Fu
October 01, 2005
Urban amenities can be capitalized into land values or property values. However, little attention has been paid to the capitalization of social amenities. This paper classifies three types of social-interaction-based social amenities: human capital, social capital, and cultural capital at residential neighborhood levels. We use the restricted version of the 1990 Massachusetts Census data and estimate hedonic housing models with social amenities. The findings are as follows: (1) Human capital has significant positive effects on property values. This tests the Lucas conjecture. (2) Different types of social capital have different effects on property values: an increase in the percentage of new residents has significant positive effects on property values, probably due to the strength of weak ties. However, an increase in the percentage of single-parent households has negative effects on property values. An increase in the home ownership rate has positive effects at large geographic levels. (3) Cultural capital effects vary from high to low geographic levels, the effects of English proficiency and racial homogeneity are positive at and beyond the tract level, but insignificant at the block level. This may imply that cultural capital is more important in social interactions at large geographic scale.
View Paper 32 Pages 167168 Bytes
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CES-WP-05-24
Smart Cafe Cities: Testing Human Capital Externalities in the Boston Metropolitan Area
Shihe Fu
October 01, 2005
Existing studies have explored either only one or two of the mechanisms that human capital externalities percolate at only macrogeographic levels. This paper uses the 1990 Massachusetts Census data and tests four mechanisms at the microgeographic levels in the Boston metropolitan area labor market. We propose that individual workers can learn from their occupational and industrial peers in the same local labor market through four channels: depth of human capital stock, Marshallian labor market externalities, Jacobs labor market externalities, and thickness of the local labor market. We find that all types of human capital externalities are significant across Census blocks. Different types of externalities attenuate at different speeds over distances. For example, the effect of human capital depth decays rapidly beyond three miles away from block centroid. We conclude that knowledge spillovers are very localized within microgeographic scope in cities that we call Smart Café Cities.
View Paper 45 Pages 186796 Bytes
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CES-WP-05-23
Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes
Giorgio Topa, Stephen Ross, Patrick Bayer
October 01, 2005
We use a novel dataset and research design to empirically detect the effect of social
interactions among neighbors on labor market outcomes. Specifically, using Census data
that characterize residential and employment locations down to the city block, we
examine whether individuals residing in the same block are more likely to work together
than those in nearby blocks. We find evidence of significant social interactions operating
at the block level: residing on the same versus nearby blocks increases the probability of
working together by over 33 percent. The results also indicate that this referral effect is
stronger when individuals are similar in sociodemographic characteristics (e.g., both have
children of similar ages) and when at least one individual is well attached to the labor
market. These findings are robust across various specifications intended to address
concerns related to sorting and reverse causation. Further, having determined the
characteristics of a pair of individuals that lead to an especially strong referral effect, we
provide evidence that the increased availability of neighborhood referrals has a
significant impact on a wide range of labor market outcomes including employment and
wages.
View Paper 50 Pages 246365 Bytes
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CES-WP-05-22
Product Choice and Product Switching
Stephen Redding, Andrew Bernard, Peter Schott
October 01, 2005
This paper develops a model of endogenous product selection within industries by firms. The model is motivated by new evidence we present on the prevalence and importance of product changing activity by U.S. manufacturers. Three-fifths of continuing firms alter their product mix within an industry every five years, and added and dropped products account for a substantial portion of firm output. In the model, firms make decisions about both industry entry and product choice. Product choice is shaped by the interaction of heterogeneous firm characteristics and diverse product attributes. Changes in market conditions within an industry result in simultaneous adjustment along a number of margins, including both entry/exit and product choice.
View Paper 36 Pages 403540 Bytes
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CES-WP-05-21
Factor Price Equality and the Economies of the United States
Andrew Bernard, Stephen Redding, Peter Schott
October 01, 2005
We develop a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this methodology to the United States reveals substantial and increasing deviations in relative skilled wages across labor markets in both 1972 and 1992 . These deviations vary systematically with labor markets’ industry structure both in cross section and over time.
View Paper 34 Pages 631214 Bytes
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