Structural Change Within Versus Across Firms: Evidence from the United States

Xiang Ding, Teresa Fort, Stephen Redding and Peter Schott
Additional contact information
Xiang Ding: Georgetown University
Teresa Fort: Tuck School of Business, CEPR, and NBER
Peter Schott: Yale School of Management, CEPR, and NBER

Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

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)
Date: 2022-05
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 (17)

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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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