Changing Business Dynamism and Productivity: Shocks vs. Responsiveness

Ryan Decker, John Haltiwanger, Ron Jarmin and Javier Miranda

No 24236, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The pace of job reallocation has declined in all U.S. sectors since 2000. In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on aggregate productivity.

JEL-codes: D24 E24 J23 L26 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-eff, nep-lma, nep-mac and nep-tid
Note: EFG LS PR
References: Add references at CitEc
Citations: View citations in EconPapers (89)

Published as Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2020. "Changing Business Dynamism and Productivity: Shocks versus Responsiveness," American Economic Review, vol 110(12), pages 3952-3990.

Downloads: (external link)
http://www.nber.org/papers/w24236.pdf (application/pdf)

Related works:
Working Paper: Changing Business Dynamism and Productivity: Shocks vs. Responsiveness (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:24236

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24236

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().