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

Teresa Fort, Xiang Ding, Stephen Redding and Peter Schott

No 17352, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: 2022-06
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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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