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

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

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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)
JEL-codes: D24 L16 O47 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2022-06-01
New Economics Papers: this item is included in nep-cse, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://eprints.lse.ac.uk/117886/ Open access version. (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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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:117886

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