Structural change within versus across firms: evidence from the United States

Xiang Ding, Teresa C. Fort, Stephen Redding and Peter K. Schott

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We document the role of intangible capital in manufacturing firms' substantial contribution to non-manufacturing employment growth from 1977-2019. Exploiting data on firms' "auxiliary" establishments, we develop a novel measure of proprietary in-house knowledge and show that it is associated with increased growth and industry switching. We rationalize this reallocation in a model where firms combine physical and knowledge inputs as complements, and where producing the latter in-house confers a sector-neutral productivity advantage facilitating within-firm structural transformation. Consistent with the model, manufacturing firms with auxiliary employment pivot towards services in response to a plausibly exogenous decline in their physical input prices.

Keywords: structural transformation; professional services; intangible knowledge; economic growth (search for similar items in EconPapers)
Date: 2022-06-01
New Economics Papers: this item is included in nep-cse, nep-knm, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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https://cep.lse.ac.uk/pubs/download/dp1852.pdf (application/pdf)

Related works:
Working Paper: Structural Change Within Versus Across Firms: Evidence from the United States (2022)
Working Paper: Structural Change Within versus Across Firms: Evidence from the United States (2022)
Working Paper: Structural change within versus across firms: evidence from the United States (2022)
Working Paper: Structural Change Within versus Across Firms: Evidence from the United States (2022)
Working Paper: Structural Change Within Versus Across Firms: Evidence from the United States (2022)
Working Paper: Structural Change Within Versus Across Firms: Evidence from the United States (2022)
Working Paper: Structural Change Within Versus Across Firms: Evidence from the United States (2019)
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