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Whittling Away At Productivity Dispersion

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  • Douglas W Dwyer
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    Abstract

    In any time period, in any industry, plant productivity levels differ widely and this dispersion is persistent. This paper explores the sources of this dispersion and their relative magnitudes in the textile industry. Plants that are measured as being more productive but pay higher wages are not necessarily more profitable; wage dispersion can account for approximately 15 percent of productivity dispersion. A plant that is highly productive today may not be as productive tomorrow. I develop a new method for measuring ex-ante dispersion and the percentage of dispersion "explained" by mean reversion. Mean reversion accounts for as much as one half the observed productivity dispersion. A portion of the dispersion, however, appears to reflect real quality differences between plants; plants that are measured as being more productive expand faster and are less likely to exit.

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    File URL: ftp://ftp2.census.gov/ces/wp/1995/CES-WP-95-05.pdf
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    Bibliographic Info

    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 95-5.

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    Date of creation: Mar 1995
    Date of revision:
    Handle: RePEc:cen:wpaper:95-5

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    Keywords: CES; economic; research; micro; data; microdata; chief; economist;

    References

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    1. Kovenock, D. & Phillips, G.M., 1995. "Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions," UFAE and IAE Working Papers 313.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Wayne B Gray & Ronald J Shadbegian, 1993. "Environmental Regulation And Manufacturing Productivity At The Plant Level," Working Papers 93-6, Center for Economic Studies, U.S. Census Bureau.
    3. Kenneth R Troske, 1994. "Evidence on the Employer Size-Wage Premium From Worker-Establishment Matched Data," Working Papers 94-10, Center for Economic Studies, U.S. Census Bureau.
    4. Michael Ollinger & Jorge Fernandez-Cornejo, 1994. "Regulation and Firm Size, Foreign-Based Company Market Presence, Merger Choice In The U.S. Pesticide Industry," Working Papers 94-6, Center for Economic Studies, U.S. Census Bureau.
    5. Timothy Bates, 1990. "Self-Employment Trends Among Mexican Americans," Working Papers 90-9, Center for Economic Studies, U.S. Census Bureau.
    6. Timothy Bates, 1995. "Small Businesses Do Appear To Benefit From State/Local Government Economic Development Assistance," Working Papers 95-2, Center for Economic Studies, U.S. Census Bureau.
    7. Baily, Martin Neil & Bartelsman, Eric J & Haltiwanger, John, 1996. " Downsizing and Productivity Growth: Myth or Reality?," Small Business Economics, Springer, vol. 8(4), pages 259-78, August.
    8. Edward Kokkelenberg & Sang Nguyen, 1989. "Modeling technical progress and total factor productivity: A plant level example," Journal of Productivity Analysis, Springer, vol. 1(1), pages 21-42, March.
    9. Timothy Bates & Darrell Williams, 1995. "Preferential Procurement Programs Do Not Necessarily Help Minority-Owned Business," Working Papers 95-1, Center for Economic Studies, U.S. Census Bureau.
    10. James D Adams, 1994. "Recent Twists of the Wage Structure and Technology Diffusion," Working Papers 94-5, Center for Economic Studies, U.S. Census Bureau.
    11. Timothy Dunne & Mark J Roberts, 1993. "The Long-Run Demand for Labor: Estimates From Census Establishment Data," Working Papers 93-13, Center for Economic Studies, U.S. Census Bureau.
    12. Dan Kovenock & Gordon M Phillips, 1995. "Capital Structure And Product Market Rivalry: How Do We Reconcile Theory And Evidence?," Working Papers 95-3, Center for Economic Studies, U.S. Census Bureau.
    13. Doms, Mark E, 1996. "Estimating Capital Efficiency Schedules within Production Functions," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 78-92, January.
    14. Ron Jarmin, 1993. "Asymmetric Learning Spillovers," Working Papers 93-7, Center for Economic Studies, U.S. Census Bureau.
    15. Donald Siegel & Frank R Lichtenberg, 1989. "Using Linked Census R&D-Lrd Data To Analyze The Effect Of R&D Investment On Total Factor Productivity Growth," Working Papers 89-2, Center for Economic Studies, U.S. Census Bureau.
    16. Robert H Mcguckin & Thomas A Abbott Iii & Paul E Herrick & Leroy Norfolk, 1989. "Measuring The Trade Balance In Advanced Technology Products," Working Papers 89-1, Center for Economic Studies, U.S. Census Bureau.
    17. James A Schmitz & Thomas J Holmes, 1992. "Managerial Tenure, Business Age And Small Business Dynamics," Working Papers 92-11, Center for Economic Studies, U.S. Census Bureau.
    18. Timothy Dunne & Mark J Roberts, 1992. "Costs, Demand, and Imperfect Competition as Determinants of Plant_level Output Prices," Working Papers 92-5, Center for Economic Studies, U.S. Census Bureau.
    19. James D Adams & Suzanne Peck, 1994. "A Guide To R&D Data At The Center For Economic Studies U.S. Bureau Of THe Census," Working Papers 94-9, Center for Economic Studies, U.S. Census Bureau.
    20. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
    21. Kenneth R Troske, 1992. "The Time-Series Pattern Of Firm Growth In Two Industries," Working Papers 92-10, Center for Economic Studies, U.S. Census Bureau.
    22. Mark E Doms, 1993. "Inter Fuel Substitution And Energy Technology Heterogeneity In U.S. Manufacturing," Working Papers 93-5, Center for Economic Studies, U.S. Census Bureau.
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    Citations

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    Cited by:
    1. Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth Troske, 2000. "Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment," Working Papers 00-01, Center for Economic Studies, U.S. Census Bureau.
    2. Jensen, J Bradford & McGuckin, Robert H, 1997. "Firm Performance and Evolution: Empirical Regularities in the US Microdata," Industrial and Corporate Change, Oxford University Press, vol. 6(1), pages 25-47.
    3. Douglas W Dwyer, 1997. "Productivity Races II: The Issue of Capital Measurement," Working Papers 97-3, Center for Economic Studies, U.S. Census Bureau.
    4. Douglas Dwyer, 1998. "Technology Locks, Creative Destruction, and Non-Convergence in Productivity Levels," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 430-473, April.
    5. Douglas W Dwyer, 1996. "Whittling Away At Productivity Dispersion Futher Notes: Persistent Dispersion or Measurement Error?," Working Papers 96-11, Center for Economic Studies, U.S. Census Bureau.
    6. Douglas W Dwyer, 1997. "Productivity Races I: Are Some Productivuty Measures Better Than Others?," Working Papers 97-2, Center for Economic Studies, U.S. Census Bureau.
    7. Boyan Jovanovic, 1998. "Michael Gort's Contribution to Economics," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 327-337, April.

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