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The Missing Link: Technology, Productivity, and Investment

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  • Laura Power

Abstract

This paper examines the relationship between productivity, investment, and age for over 14,000 plants in the U.S. manufacturing sector in the 1972-1988 period. Productivity patterns vary significantly due to plant heterogeneity. Productivity first increases and then decreases with respect to plant age, and size and industry are systematically correlated with productivity and productivity growth. However, there is virtually no observable relationship between investment and productivity or productivity growth. Overall, the results indicate that plant heterogeneity and fixed effects are more important determinants of observable productivity patterns than sunk costs or capital reallocation. Key Words: productivity, investment, technical change

Suggested Citation

  • Laura Power, 1995. "The Missing Link: Technology, Productivity, and Investment," Working Papers 95-12, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:95-12
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    File URL: https://www2.census.gov/ces/wp/1995/CES-WP-95-12.pdf
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    Cited by:

    1. Jensen, J Bradford & McGuckin, Robert H, 1997. "Firm Performance and Evolution: Empirical Regularities in the US Microdata," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 6(1), pages 25-47.

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