The Dynamics of Plant-Level Productivity in U.S. Manufacturing

Arpad Abraham () and T. Kirk White

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Using a unique database that covers the entire U.S. manufacturing sector from 1976 until 1999, we estimate plant-level total factor productivity for a large number of plants. We characterize time series properties of plant-level idiosyncratic shocks to productivity, taking into account aggregate manufacturing-sector shocks and industry-level shocks. Plant-level heterogeneity and shocks are a key determinant of the cross-sectional variations in output. We compare the persistence and volatility of the idiosyncratic plant-level shocks to those of aggregate productivity shocks estimated from aggregate data. We find that the persistence of plant level shocks is surprisingly low-we estimate an average autocorrelation of the plantspecific productivity shock of only 0.37 to 0.41 on an annual basis. Finally, we find that estimates of the persistence of productivity shocks from aggregate data have a large upward bias. Estimates of the persistence of productivity shocks in the same data aggregated to the industry level produce autocorrelation estimates ranging from 0.80 to 0.91 on an annual basis. The results are robust to the inclusion of various measures of lumpiness in investment and job flows, different weighting methods, and different measures of the plants’ capital stocks.

Keywords: productivity; manufacturing; microdata (search for similar items in EconPapers)
JEL-codes: D24 L6 O47 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-07
New Economics Papers: this item is included in nep-bec and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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https://www2.census.gov/ces/wp/2006/CES-WP-06-20.pdf First version, 2006 (application/pdf)

Related works:
Working Paper: The Dynamics of Plant-level Productivity in U.S. Manufacturing (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:06-20

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