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Reallocation and Technology: Evidence from the U.S. Steel Industry

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  • Collard-Wexler, Allan
  • De Loecker, Jan

Abstract

We measure the impact of a drastic new technology for producing steel, the minimill, on the aggregate productivity of U.S. steel producers, using unique plant-level data between 1963 and 2002. We find that the sharp increase in the industry's productivity is linked to this new technology, and operates through two distinct mechanisms. First, minimills displaced the older technology, called vertically integrated production, and this reallocation of output was responsible for a third of the increase in the industry's productivity. Second, increased competition, due to the expansion of minimills, drove a substantial reallocation process within the group of vertically integrated producers, driving a resurgence in their productivity, and consequently of the industry's productivity as a whole.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9331.

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Date of creation: Feb 2013
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Handle: RePEc:cpr:ceprdp:9331

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Keywords: competition; productivity; reallocation; technology;

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  1. Chris Edmond & Virgiliu Midrigan & Daniel Yi Xu, 2012. "Competition, Markups, and the Gains from International Trade," NBER Working Papers 18041, National Bureau of Economic Research, Inc.
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  16. Allan Collard-Wexler, 2010. "Productivity Dispersion and Plant Selection in the Ready-Mix Concrete Industry," 2010 Meeting Papers 105, Society for Economic Dynamics.
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Citations

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Cited by:
  1. Jan De Loecker & Pinelopi Koujianou Goldberg, 2013. "Firm Performance in a Global Market," NBER Working Papers 19308, National Bureau of Economic Research, Inc.
  2. Allen Tran, 2014. "The Aggregate Impact Of Online Retail," Working Papers 14-23, Center for Economic Studies, U.S. Census Bureau.
  3. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2013. "Healthcare Exceptionalism? Productivity and Allocation in the U.S. Healthcare Sector," NBER Working Papers 19200, National Bureau of Economic Research, Inc.

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