Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-26T21:05:55.400Z Has data issue: false hasContentIssue false
  • English
  • Français

JOB FLOWS AND PRODUCTIVITY DYNAMICS: EVIDENCE FROM U.S. MANUFACTURING

Published online by Cambridge University Press:  19 March 2007

CHRISTOPHER H. WHEELER
CHRISTOPHER H. WHEELER
Affiliation:
Federal Reserve Bank of St. Louis
Get access Rights & Permissions [Opens in a new window]

Abstract

Through their influence on the cross-sectional distribution of productivity across firms and workers, job creation and destruction likely have an impact on the rate at which aggregate productivity changes over time. However, the nature of this effect is not, a priori, clear. Although a broad consensus has emerged suggesting that job destruction enhances productivity by eliminating inefficient production units, theories disagree with regard to the effect of job creation. If job flows represent the reallocation of labor from low- to high-productivity positions, job creation would boost productivity growth. If, instead, they represent changes in employment along a primarily low-skill dimension, the effect would be negative. This paper estimates the influence of job creation and destruction on total factor productivity (TFP) growth using annual data on four-digit U.S. manufacturing. As expected, the results reveal a positive association between job destruction and changes in TFP. Yet, they also indicate that job creation tends to have a negative effect on productivity growth.

Keywords

Productivity GrowthJob FlowsCreative DestructionJob Matching
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 11 , Issue 2 , April 2007 , pp. 175 - 201
Copyright
© 2007 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu Daron 1996 A microfoundation for social increasing returns in human capital accumulation. Quarterly Journal of Economics 111, 779– 804.Google Scholar
Baily Martin Eric Bartelsman, and John Haltiwanger 1996 Downsizing and productivity growth: Myth or reality? Small Business Economics 8, 259– 278.Google Scholar
Baily Martin Charles Hulten, and David Campbell 1992 Productivity dynamics in manufacturing plants. Brookings Papers on Economic Activity: Microeconomics 1992, 187– 249.Google Scholar
Barlevy Gadi 2000 Is There a Cleansing Effect in Recessions? Evidence from Wage Data. Manuscript, Northwestern University.
Bartelsman Eric and Wayne Gray 1996 The NBER Manufacturing Productivity Database. NBER Technical Working Paper No. 205.Google Scholar
Basu Susanto and Miles Kimball 1997 Cyclical Productivity with Unobserved Input Variation. NBER Working Paper No. 5915.Google Scholar
Becker Gary and Kevin Murphy 1992 The division of labor, coordination costs, and knowledge. Quarterly Journal of Economics 107, 1137– 1160.Google Scholar
Bowlus Audra 1995 Matching workers and jobs: Cyclical fluctuations in match quality. Journal of Labor Economics 13, 335– 350.Google Scholar
Burnside Craig, Martin Eichenbaum, and Sergio Rebelo 1993 Labor hoarding and the business cycle. Journal of Political Economy 101, 245– 273.Google Scholar
Caballero Ricardo and Mohammed Hammour 1994 The cleansing effect of recessions. American Economic Review 84, 1350– 1368.Google Scholar
Caballero Ricardo, Eduardo Engel, and John Haltiwanger 1997 Aggregate employment dynamics: Building from microeconomic evidence. American Economic Review 87, 115– 137.Google Scholar
Campbell John and Jonas Fisher 2000 Aggregate employment fluctuations with microeconomic asymmetries. American Economic Review 90, 1323– 1345.Google Scholar
Davis Steven and John Haltiwanger 1999a On the driving forces behind cyclical movements in employment and job reallocation. American Economic Review 89, 1234– 1258.Google Scholar
Davis Steven and John Haltiwanger 1999b Gross job flows. In Orley Ashenfelter and David Card (eds.), Handbook of Labor Economics, Vol. 3, pp. 2711– 2805. New York: Elsevier.
Davis Steven, John Haltiwanger, and Scott Schuh 1996 Job Creation and Destruction. Cambridge, MA: MIT Press.
Den Haan Wouter, Garey Ramey, and Joel Watson 2000 Job destruction and propagation of shocks. American Economic Review 90, 482– 498.Google Scholar
Doms Mark, Timothy Dunne, and Kenneth Troske 1997 Workers, wages, and technology. Quarterly Journal of Economics 112, 253– 290.Google Scholar
Dunne Timothy 1994 Plant age and technology use in U.S. manufacturing industries. RAND Journal of Economics 25, 488– 499.Google Scholar
Dunne Timothy, Mark Roberts, and Larry Samuelson. 1989 The growth and failure of U.S. manufacturing plants. Quarterly Journal of Economics 104, 671– 698.Google Scholar
Farber Henry 1993 The incidence and costs of job loss: 1982–91. Brookings Papers on Economic Activity: Microeconomics, 73– 119.Google Scholar
Foster Lucia, John Haltiwanger, and C.J. Krizan 1998 Aggregate Productivity Growth: Lessons from Microeconomic Evidence. NBER Working Paper No. 6803.Google Scholar
Gibbons Robert and Lawrence Katz 1991 Layoffs and lemons. Journal of Labor Economics 9, 351– 380.Google Scholar
Greene William 2000 Econometric Analysis. Upper Saddle River, NJ: Prentice Hall.
Griliches Zvi and Haim Regev. 1995 Firm productivity in Israeli industry 1979–1988. Journal of Econometrics 65, 175– 203.Google Scholar
Hall Robert 2000 Reorganization. Carnegie-Rochester Conference Series on Public Policy 52, 1– 22.Google Scholar
Klenow Peter 1998 Ideas versus rival human capital: Industry evidence on growth models. Journal of Monetary Economics 42, 3– 23.Google Scholar
Lilien David 1982 Sectoral shifts and cyclical unemployment. Journal of Political Economy 90, 777– 793.Google Scholar
Loungani Prakash and Richard Rogerson 1989 Cyclical fluctuations and sectoral reallocation: Evidence from the PSID. Journal of Monetary Economics 23, 259– 273.Google Scholar
Merz Monika 1999 Heterogeneous job-matches and the cyclical behavior of labor turnover. Journal of Monetary Economics 43, 91– 124.Google Scholar
Mortensen Dale and Christopher Pissarides 1994 Job creation and job destruction in the theory of unemployment. Review of Economic Studies 61, 397– 415.Google Scholar
Olley Steven and Ariel Pakes 1996 The dynamics of productivity in the telecommunications equipment industry. Econometrica 64, 1263– 1297.Google Scholar
Shapiro Matthew 1993 Cyclical productivity and the workweek of capital. American Economic Review: Papers and Proceedings 83, 229– 233.Google Scholar
Solon Gary, Robert Barsky, and Jonathan Parker 1994 Measuring the cyclicality of real wages: How important is composition bias. Quarterly Journal of Economics 109, 1– 25.Google Scholar
Stevens Ann Huff 1997 Persistent effects of job displacement: The importance of multiple job losses. Journal of Labor Economics 15, 165– 188.Google Scholar
White Halbert 1980 A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48, 817– 838.Google Scholar
Williamson Oliver 1967 Hierarchical control and optimum firm size. Journal of Political Economy 75, 123– 138.Google Scholar