TABLE OF CONTENTS
Prefatory Note
Introduction Producer Dynamics - Timothy Dunne, J. Bradford Jensen, Mark J. Roberts
DOI: 10.7208/chicago/9780226172576.003.0001
[producer dynamics, firm entry, turnover, employment dynamics, retailing, service industries, agriculture, human capital, export markets]
This book deals with the measurement and explanation of producer dynamics. The first section of the book describes the data of a project undertaken to develop comparable cross-country data on firm entry, exit, and turnover. The second section uses the new data series on employment dynamics. The next section looks beyond the traditional data sources, concentrating on producer dynamics in retailing, service industries, and agriculture, and extending the measurement of producer dynamics to the nonemployer segment of the business universe. The fourth section utilizes the linked employer and employee data to present a more detailed picture of worker turnover and the human capital present at a workplace. The final section employs micro data to examine transitions of firms into and out of import and export markets. Finally, an overview of the chapters included in this book is given. (pages 1 - 12)
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I. CROSS-COUNTRY COMPARISON OF PRODUCER DYNAMICS
Measuring and Analyzing Cross-Country Differences in Firm Dynamics - Eric Bartelsman, John Haltiwanger, Stefano Scarpetta
DOI: 10.7208/chicago/9780226172576.003.0002
[producer dynamics, labor productivity, net entry, surviving firms, allocative efficiency]
This chapter reports the results from a large research project bringing together researchers from twenty-four countries to standardize data definitions and construct comparable statistics on producer dynamics and productivity. It shows that within-firm changes in productivity and net entry are the major sources of labor productivity growth in most countries. The measurement errors affect aggregation indicators such as the mean or sum of firm-level data. Differences in average firm size appear to be largely driven by within-sector differences, although in some countries sectoral specialization also plays a significant role. Moreover, the entry of small firms is relatively easy while larger-scale entry is more difficult, but survival among small firms is also more difficult. Surviving firms are relatively larger and tend to grow rapidly. The data show that virtually all the countries exhibit positive allocative efficiency. (pages 15 - 80)
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II. EMPLOYMENT DYNAMICS
Studying the Labor Market with the Job Openings and Labor Turnover Survey - R. Jason Faberman
DOI: 10.7208/chicago/9780226172576.003.0003
[labor market dynamics, Beveridge Curve, vacancies, unemployment, hires, quits, layoffs]
This chapter is concerned with the characteristics of the Job Openings and Labor Turnover Survey (JOLTS) data and provides some descriptive evidence at both the aggregate and establishment level. It also reports some basic evidence on the aggregate and establishment-level relations of vacancies and worker flows to state-level unemployment and other labor market conditions. The data shows that the covariation of vacancies and unemployment occurs more from time variation within states than from level differences across states. Higher growth, lower unemployment, and decreases in unemployment at the state level are related to more hires and more quits. Vacancies, hires, and quits all exhibit persistent, procyclical behavior between 2001 and 2005, while layoffs exhibit an episodic, countercyclical pattern. Vacancies also exhibit a cyclical relation to unemployment consistent with the Beveridge Curve. The JOLTS data generally provide many opportunities to increase the understanding of labor market dynamics. (pages 83 - 108)
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What Can We Learn About Firm Recruitment from the Job Openings and Labor Turnover Survey? - Éva Nagypál
DOI: 10.7208/chicago/9780226172576.003.0004
[labor turnover, Job Openings and Labor Turnover Survey, matching function, employment growth, U.S. economy, Center for Economic Studies, vacancies, hires]
This chapter describes some methodological and conceptual issues that arise when using the Job Openings and Labor Turnover Survey (JOLTS) data. It uses the publicly available JOLTS data to empirically explore the widely used theoretical construct of the matching function. The data shows that the mismeasurement of labor turnover in the JOLTS is a larger problem than at first appears from the aggregate data. The understatement of the separation rate is a key reason that the JOLTS data overstate employment growth in the U.S. economy. The chapter then evaluates the influence of the employment growth discrepancy between the JOLTS and the Center for Economic Studies on the measurement of labor turnover. There is variation in the process of matching across industries due to the different characteristics of jobs and workers in these industries. Also, it is possible that the measurement issues discussed systematically affect the measurement of vacancies and hires across industries. (pages 109 - 124)
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Business Employment Dynamics - Richard L. Clayton, James R. Spletzer
DOI: 10.7208/chicago/9780226172576.003.0005
[Business Employment Dynamics, Bureau of Labor Statistics, job gains, job losses, 2001 recession, employment growth]
This chapter presents an overview of the Business Employment Dynamics (BED) database at the Bureau of Labor Statistics (BLS). It also provides a detailed analysis of job creation and destruction in the 2001 recession and the subsequent years. It is observed that the relatively few establishments with large gross job gains and large gross job losses were the drivers of the 2001 recession. The declining net employment growth during the first three quarters of 2001 can be attributed to both falling gross job gains and rising gross job losses. Moreover, 64 percent of the net job losses in the most severe recessionary quarter are attributable to the relatively few establishments gaining or losing 20 or more jobs. It can be concluded that the BLS was able to create the BED data with no new data collection efforts and with no new additional respondent burden. (pages 125 - 148)
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The LEHD Infrastructure Files and The Creation of The Quarterly Workforce Indicators - John M. Abowd, Bryce E. Stephens, Lars Vilhuber, Fredrik Andersson, Kevin L. McKinney, Marc Roemer, Simon Woodcock
DOI: 10.7208/chicago/9780226172576.003.0006
[Census Bureau, Infrastructure Files, Quarterly Workforce Indicators, entity identifiers, wage record, time series, job creations]
This chapter reports a detailed documentation of the Longitudinal Employer-Households Dynamics Program (LEHD) data sources and the methods used to construct the Quarterly Workforce Indicators (QWI). It provides a valuable reference source for users of the QWI and the LEHD. The procedures implemented in the LEHD Infrastructure Files to detect, edit, and manage entity identifiers are addressed. The wage record editing process takes place in a secure computing area distinct from the rest of the LEHD processing. The edits and imputations associated with missing job-level data are explained. The three time series reveal considerable seasonality, but job creations and recalls are considerably more variable. The Census Bureau maintains lists of establishments to develop the frames for economic censuses and surveys. Finally, some of the ongoing efforts to enhance the LEHD Infrastructure Files are discussed. (pages 149 - 230)
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III. SECTOR STUDIES OF PRODUCER TURNOVER
The Role of Retail - Ronald S. Jarmin, Shawn D. Klimek, Javier Miranda
DOI: 10.7208/chicago/9780226172576.003.0007
[firm entry, firm exit, firm turnover, U.S. retail sector, Census Bureau, Longitudinal Business Database, retail firms, mom-and-pop stores, chain stores]
This chapter addresses the entry and exit of establishments and firms in the U.S. retail sector based on analysis of the Census Bureau's newly developed Longitudinal Business Database (LBD). It demonstrates that firm turnover has declined over time in most retail industries but differs systematically by market size and ownership structure. Metro areas have the highest producer turnover while rural areas have the lowest. Independently-owned stores experience higher turnover compared to chain stores. Single location retail firms have on average increased in size since 1976. The firm exit rates are highest in metropolitan markets and slightly higher in micropolitan markets than in rural markets. The mom-and-pop stores have the largest exit rates, regardless of industry or unit of measure. Chain stores and mom-and-pop stores appear to be able to coexist in some industries better than others. (pages 237 - 270)
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Entry, Exit, and Labor Productivity in U. K. Retailing - Jonathan Haskel, Raffaella Sadun
DOI: 10.7208/chicago/9780226172576.003.0008
[producer dynamics, labor productivity, U.K. retailing, producer turnover, exiting firms, entering firms, retailers]
This chapter reviews the producer dynamics and labor productivity growth in U.K. retailing. The data indicate that producer turnover in U.K. retailing improves productivity by replacing lower productivity exiting firms with higher productivity entering firms. In 2003, there were 285,291 stores in U.K. retailing and 196,286 firms/chains. Entry/exit/one-year/stayers are fairly stable fractions of all stores, being about 11 percent, 11 percent, 5 percent, and 63 percent. Entry and exit rates are lowest in “Pharmaceuticals” and highest in “Not in Stores.” The variation in labor productivity across retailers is somewhat larger than in the U.S. If anything, the contribution of entry and exit to productivity growth is somewhat smaller than in the U.S. There was a change in planning regulations in 1996 that greatly stopped retailers developing out-of-town shops. (pages 271 - 302)
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The Dynamics of Market Structure and Market Size in Two Health Services Industries - Timothy Dunne, Shawn D. Klimek, Mark J. Roberts, Daniel Yi Xu
DOI: 10.7208/chicago/9780226172576.003.0009
[dynamic models, entry flows, exit flows, market structure, market size, dentists, chiropractors]
This chapter models the entry and exit flows in two medical services industries—dentists and chiropractors—using data for small geographic markets in the United States. The models show that the number of entering and exiting firms is a function of the market characteristics that influence current and future profits, the distribution of scrap values and entry costs, and the number of firms and potential entrants that are present. The significance of N and NPE as control variables in the regressions provides some support for the dynamic framework. The implication of the dynamic models is that entry flows, exit flows, and current market structure depend on current demand and cost conditions, and also on the history of participation decisions. As market size increases, the number of firms rises less than proportionally, firm average size increases, and average productivity in the market increases. (pages 303 - 328)
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Measuring the Dynamics of Young and Small Businesses - Steven J. Davis, John Haltiwanger, Ronald S. Jarmin, C. J. Krizan, Javier Miranda, Alfred Nucci, Kristin Sandusky
DOI: 10.7208/chicago/9780226172576.003.0010
[business population, producer dynamics, businesses, nonemployer firms, migrants, young employers, U.S. economy]
This chapter presents an attempt to measure producer dynamics for the business population. The analysis concentrates on forty industries for which smaller and younger businesses play especially important roles. The data reveals that fluctuations in nonemployer size, measured in terms of revenue, from year to year are much larger for nonemployer firms than employer firms. But as nonemployer firms age and grow, the volatility of their revenue stream declines. Migrants are on a trajectory of rapid growth before and during the transition to employer status. In addition, migrants from the nonemployer universe account for a sizable share of young employers in the industries studied. The Integrated Longitudinal Business Database (ILBD) makes it possible to explore the behavior over time of virtually all businesses in the U.S. economy, employers and nonemployers alike, with robust samples and even entire populations. (pages 329 - 366)
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Producer Dynamics in Agriculture Empirical Evidence - Mary Clare Ahearn, Penni Korb, Jet Yee
DOI: 10.7208/chicago/9780226172576.003.0011
[agriculture, entering farms, U.S. Census of Agricultures, farms, acres, turnovers, farm structure]
This chapter provides new statistics on the entry, exit, and growth of farms using data from the U.S. Census of Agricultures from 1978 to 1997. Entry and exit statistics can reflect sales or leases of an existing farm and thus do not directly correspond to the movement of land in or out of agricultural production. Both the small farms and the very largest farms are increasing as a share of the total farms during the period 1978 to 1997. The average farm size in acres is larger for surviving farms than it was for either exiting or entering farms during the four subperiods. The microanalysis of turnovers reveals considerable structural change underlying the traditional aggregate indicators of farm structure. There is large-scale reallocation of outputs and inputs in agriculture. The majority of surviving farms change their farm size. (pages 369 - 391)
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IV. EMPLOYER-EMPLOYEE DYNAMICS
Ownership Change, Productivity, and Human Capital - Donald S. Siegel, Kenneth L. Simons, Tomas Lindstrom
DOI: 10.7208/chicago/9780226172576.003.0012
[matched employer-employee data, Swedish manufacturing, corporate ownership changes, firms, female workers, employment, education, Sweden]
This chapter utilizes the matched employer-employee data from the Swedish manufacturing sector to explore how corporate ownership changes affect the performance of the firm and the composition of the firm's workforce. In the downsizing of operations, it appears that plants shed workers with short job tenures and these are more likely to be younger and female workers. Plants that changed owners apparently had higher output and employment than comparable plants both before and after ownership change. Plants involved in an ownership change also became more productive after the transaction. Workers with the highest levels of education had the greatest mobility across firms. New employees in ownership change plants experienced lower earnings growth than employees being hired by other plants. It is noted that Sweden has influential unions, with a membership rate of about 70 percent. (pages 397 - 446)
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The Link between Human Capital, Mass Layoffs, and Firm Deaths - John M. Abowd, Kevin L. McKinney, Lars Vilhuber
DOI: 10.7208/chicago/9780226172576.003.0013
[human capital, upskilling, firm failure, mass layoffs, workforce, single displacement event]
This chapter uses the Longitudinal Employer-Household Dynamics (LEHD) data set to assess the human capital embodied in a firm's workforce and relate it to the performance of the firm. It observes that mass layoffs and firm failure are much more likely in firms with a large proportion of low human capital workers. Firms that do not fail generally upgrade the human capital of their workforce. Moreover, firms with a single displacement event are more likely to die. A single displacement event is linked with a significant reduction in the upskilling of the continuing firm's workforce. Furthermore, the analysis indicates that firms that disproportionately employ workers in the highest quartile of the skill distribution are less likely to close, even given a displacement event, than are other firms that experience displacement events. (pages 447 - 472)
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The Role of Fringe Benefits in Employer and Workforce Dynamics - Anja Decressin, Tomeka Hill, Kristin Mccue, Martha Stinson
DOI: 10.7208/chicago/9780226172576.003.0014
[benefits, growth rates, employee turnover, firms, higher-skilled workers, labor productivity, wage compensation, churning rates]
This chapter explores the richness of the Longitudinal Employer-Household Dynamics (LEHD) data set by augmenting it with publicly-available data on employee benefits offered by different companies. It demonstrates that the level of benefits offered by a firm is negatively associated with employee turnover. Firms that offer benefits have higher-skilled workers and these skilled workers have lower turnover rates. Moreover, firms offering benefits have higher labor productivity and are more likely to survive, even after controlling for worker and firm characteristics and wage compensation. Benefits in general are negatively related to churning rates. Firms with high churning rates tend to grow more slowly. The firm wage effect has a strong positive relationship with growth rates. The results generally confirm that there is a correlation between a firm's decision to offer benefits and the mobility and productivity of its labor force as well as the firm's length of life. (pages 473 - 510)
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V. PRODUCER DYNAMICS IN INTERNATIONAL MARKETS
Importers, Exporters, and Multinationals - Andrew B. Bernard, J. Bradford Jensen, Peter K. Schott
DOI: 10.7208/chicago/9780226172576.003.0015
[import market, dollar value, multinationals, nonexporters, employment growth, retail trade, U.S. trade flows, trading firms]
This chapter develops a new data set on import and export activity of U.S. firms. Firms that export had higher employment growth than nonexporters, and firms that entered the export or import market between 1993 and 2000 experienced very high employment growth rates. Firms that stopped exporting and/or importing suffered decline in employment. The greatest share of exporting and especially importing firms are found in wholesale and retail trade. The most globally engaged firms dominate U.S. trade flows and employment among trading firms. Multinationals are still heavily linked with goods production and the extent of their intra-firm trade varies substantially with the characteristics of the source or destination country. There is substantial growth in the number of firms that export, import, and trade with related parties. Trading firms are becoming increasingly more import- and export-intensive in terms of their dollar value of trade per worker. (pages 513 - 556)
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The Impact of Trade on Plant Scale, Production-Run Length, and Diversification - John Baldwin, Wulong Gu
DOI: 10.7208/chicago/9780226172576.003.0016
[trade liberalization, Canada-U.S. Free Trade Agreement, Canadian manufacturers, export market, nonexporting firms, tariff cuts, Canada, United States]
This chapter examines the effect of trade liberalization resulting from the 1989 Canada-U.S. Free Trade Agreement (FTA) on the decision of Canadian manufacturers to enter or exit the export market. It shows that nonexporting firms decrease the number of product lines and reduce plant size in response to a lowering of tariffs. Additionally, it finds that exporting firms become more specialized and larger but these changes are not strongly linked with industry-specific tariff reductions. In Canada and the United States, the tariff cuts resemble symmetric bilateral trade liberalization, particularly during the FTA period. While exporters decrease product ranges relative to nonexporters, the decline in the number of products is not connected to tariff cuts. Tariff cuts reduce the product diversification and size of nonexporting plants, and have no effect on the production-run length of those plants. (pages 557 - 596)
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Contributors
Author Index
Subject Index
