Propagation and Amplification of Local Productivity Spillovers

Xavier Giroud, Simone Lenzu, Quinn Maingi and Holger Mueller

No 29084, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper shows that local productivity spillovers propagate throughout the economy through the plant-level networks of multi-region firms. Using confidential Census plant-level data, we show that large manufacturing plant openings not only raise the productivity of local plants but also of distant plants hundreds of miles away, which belong to multi-region firms that are exposed to the local productivity spillover through one of their plants. To quantify the significance of plant-level networks for the propagation and amplification of local productivity shocks, we develop and estimate a quantitative spatial model in which plants of multi-region firms are linked through shared knowledge. Our model features heterogeneous regions, which interact through goods trade and labor markets, as well as within-location, across-plant heterogeneity in productivity, wages, and employment. Counterfactual exercises show that while knowledge sharing through plant-level networks amplifies the aggregate effects of local productivity shocks, it widens economic disparities between individual workers and regions in the economy.

JEL-codes: C51 C68 E23 E24 L23 O4 R12 R13 R3 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-eff, nep-geo, nep-isf, nep-mac, nep-net, nep-tid and nep-ure
Note: CF EFG ITI PR
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Propagation and Amplification of Local Productivity Spillovers (2022)
Working Paper: Propagation and Amplification of Local Productivity Spillovers (2021)
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