| Title |
Date |
Publication |
Author(s) |
Type |
| Entry, Exit, and Plant-Level Dynamics over the Business Cycle
|
November, 2007 |
WP07-18R |
Yoonsoo Lee; Toshihiko Mukoyama; |
Working Papers |
| Abstract: This paper analyzes the implications of plant-level dynamics over the business cycle. We first document basic patterns of entry and exit of U.S. manufacturing plants, in terms of employment and productivity, between 1972 and 1997. We show how entry and exit patterns vary during the business cycle, and that the cyclical pattern of entry is very different from the cyclical pattern of exit. Second, we build a general equilibrium model of plant entry, exit, and employment and compare its predictions to the data. In our model, plants enter and exit endogenously, and the size and productivity of entering and exiting plants are also determined endogenously. Finally, we explore the policy implications of the model. Imposing a firing tax that is constant over time can destabilize the economy by causing fluctuations in the entry rate. Entry subsidies are found to be effective in
stabilizing the entry rate and output.
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| Regional Productivity Growth and Plant-Level Dynamics
|
October, 2007 |
Federal Reserve Bank of Cleveland, Economic Commentary |
Yoonsoo Lee; |
Economic Commentary |
| Abstract: The mix of companies in the economy is always changing. The more-productive ones expand, and the less-productive ones are driven out of the market, freeing resources such as labor and capital for new ventures. This reallocation contributes more to aggregate productivity growth than the productivity gains achieved by individual businesses. The efficiency with which the process takes place is a key factor affecting rates of productivity growth in different regions and explaining why they differ.
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| Regional Variation in Job Creation and Destruction
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September, 2007 |
Federal Reserve Bank of Cleveland, Economic Commentary |
Yoonsoo Lee; Paul W Bauer; |
Economic Commentary |
| Abstract: As companies and consumers adapt to a changing marketplace, jobs are eliminated and new ones are created. Rates at which this happens vary across states and reflect the flexibility of the labor market. More flexible markets are associated with faster growth.
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| Relocation Patterns in U.S. Manufacturing
|
December, 2006 |
Working Paper, No. WP06-24 |
Yoonsoo Lee; |
Working Papers |
| Abstract: This paper summarizes relocation patterns in the U.S. manufacturing industry over the period 1972-1992, using plant- and firm-level data from the U.S. Census of Manufactures. This study contributes to the existing literature on firm dynamics by distinguishing entry due to relocation from entry by new firms, and exit due to relocation from permanent exit. In contrast to previous studies which report that entering plants experience relatively lower productivity, I find that some entering plants--specifically, those that are not new but merely relocated--have higher productivity. I also find a pattern of relocation that suggests that plants tend to be relocated to areas that are becoming new centers for the industry; namely, plants are moved out of areas in which the industry is heavily concentrated to areas where it is not, but these areas also have higher employment growth rates than other areas.
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| Estimating GSP and Labor Productivity by State
|
April, 2006 |
Federal Reserve Bank of Cleveland, Policy Discussion Paper, no. 16 |
Yoonsoo Lee; Paul W Bauer; |
Policy Discussion Papers |
| Abstract: In gauging the health of state economies, arguably the two most important series to track are employment and output. While employment by state is available about three weeks after the end of a month, data on output, as measured by Gross State Product (GSP), are only available annually and with a significant lag. This Policy Discussion Paper details how more current estimates of GSP can be generated using U.S. Gross Domestic Product and personal income along with individual states' personal income. A straightforward share approach yields reasonable GSP estimates, but a more sophisticated econometric approach, at a cost of imposing more structure, yields even better ones. Both techniques are also applied to estimate nonfarm-business GSP in order to calculate a measure of labor productivity at the state level that follows as closely as possible the method used by the Bureau of Labor Statistics to calculate the national measure of labor productivity. We then briefly examine how labor productivity varies across states.
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| Employment Growth, Job Creation, and Job Destruction in Ohio
|
April, 2006 |
Federal Reserve Bank of Cleveland, Economic Commentary |
Yoonsoo Lee; Brian Rudick; |
Economic Commentary |
| Abstract: Over the past several years, Ohio's employment has grown much more slowly than the national average. If we look at patterns of job creation and destruction in the state, we can start to get a handle on why. In the late 1990s, not only was the rate of job creation sluggish relative to the nation, but the rate of job destruction climbed rapidly.
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| The Importance of Reallocations in Cyclical Productivity and Returns to Scale: Evidence from Plant-level Data
|
September, 2005 |
Federal Reserve Bank of Cleveland Working Paper 05-09 |
Yoonsoo Lee; |
Working Papers |
| Abstract: Procyclical productivity plays an important role in many models of aggregate fluctuations. However, recent studies using aggregate data to directly measure technology shocks in the Solow residual find that technology shocks are not procyclical. This paper provides new evidence that, due to countercyclical composition changes between producers, the procyclicality of productivity observed in aggregate data may be understated. Using plant-level microdata, this paper finds that the reallocation of output shares across continuing plants, as well as the entry and exit of plants, creates a countercyclical component in aggregate productivity. This paper shows that such composition changes may cause a downward bias in industry-level estimates of returns to scale. The findings of this paper suggest that, without correcting for the countercyclical effects of reallocations, estimates based on aggregate data may not reflect the true cyclicality of technology shocks, which a representative agent faces over the business cycle.
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| Labor Productivity Growth across States
|
June, 2005 |
Federal Reserve Bank of Cleveland, Economic Commentary |
Yoonsoo Lee; Paul W Bauer; |
Economic Commentary |
| Abstract: Labor productivity growth, a measure of output per unit of work, is closely tied to gains in wages and living standards, and it provides a direct measure of a country’s competitive position over time. The same holds true for states. Since the last business cycle peak in 2000, states boosted their average labor productivity growth to 2.3 percent. In Ohio, this growth came as a result of modest output growth accompanied by sharp employment losses. Although this has been a painful transition for the Fourth District, solid productivity gains have made the remaining firms and workers more competitive and may prepare the way for future growth.
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| Geographic Redistribution of U.S. Manufacturing and the Role of State Development Policy
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December, 2004 |
Federal Reserve Bank of Cleveland, Working Paper, no. 04-15 |
Yoonsoo Lee; |
Working Papers |
| Abstract: Competition among state and local governments to lure businesses has attracted considerable interest from economists, as well as legislators and policymakers. This paper quantifies the role of plant relocations in the geographic redistribution of manufacturing employment and examines the effectiveness of state development policy. Only a few studies have looked at how manufacturing firms geographically locate their production facilities and have used either small manufacturing samples or small geographic regions. This paper provides broader evidence of the impact of plant relocations using confidential establishment level data from the U.S. Census Longitudinal Research Database (LRD), covering the full population of manufacturing establishments in the United States over the period 1972 to 1992. This paper finds a relatively small role for relocation in explaining the disparity of manufacturing employment growth rates across states. Moreover, it finds evidence of very weak effects of incentive programs on plant relocations.
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