Downsizing and Productivity Growth: Myth or Reality?
AbstractThe conventional wisdom is that the rising productivity in the U.S. manufacturing sector in the 1980s has been driven by the apparently pervasive downsizing over this period. Aggregate evidence clearly shows falling employment accompanying the rise in productivity. In this paper, we examine the microeconomic evidence using the plant level data from the Longitudinal Research Database (LRD). In contrast to the conventional wisdom, we find that plants that increased employment as well as productivity contribute almost as much to overall productivity growth in the 1980s as the plants that increased productivity at the expense of employment. Further, there are striking differences by sector (defined by industry, size, region, wages, and ownership type) in the allocation of plants in terms of whether they upsize or downsize and whether they increase or decrease productivity. Nevertheless, in spite of the striking differences across sectors defined in a variety of ways, most of the variance of productivity and employment growth is accounted for by idiosyncratic factors.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4741.
Date of creation: May 1994
Date of revision:
Note: EFG PR
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- 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.
- Martin N. Baily & Eric J. Bartelsman & John Haltiwanger, 1994. "Downsizing and productivity growth: myth or reality?," Finance and Economics Discussion Series 94-7, Board of Governors of the Federal Reserve System (U.S.).
- John Haltiwanger & Martin N Baily & Eric J Bartelsman, 1994. "Downsizing and Productivity Growth: Myth or Reality?," Working Papers 94-4, Center for Economic Studies, U.S. Census Bureau.
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Venables, Anthony J, 1985. "The Economic Implications of a Discrete Technical Change," Oxford Economic Papers, Oxford University Press, vol. 37(2), pages 230-48, June.
- Bernanke, Ben S & Parkinson, Martin L, 1991.
"Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 439-59, June.
- Ben S. Bernanke & Martin L. Parkinson, 1990. "Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries," NBER Working Papers 3503, National Bureau of Economic Research, Inc.
- Bruce Chelimsky Fallick, 1993.
"The hiring of new labor by expanding industries,"
Working Paper Series / Economic Activity Section
139, Board of Governors of the Federal Reserve System (U.S.).
- Giuseppe Nicoletti & Lucrezia Reichlin, 1993.
"Trends and Cycles in Labour Productivity in the Major OECD Countries,"
OECD Economics Department Working Papers
129, OECD Publishing.
- Nicoletti, Giuseppe & Reichlin, Lucrezia, 1993. "Trends and Cycles in Labour Productivity in the Major OECD Countries," CEPR Discussion Papers 808, C.E.P.R. Discussion Papers.
- Steve J. Davis & John Haltiwanger, 1991.
"Gross Job Creation, Gross Job Destruction and Employment Reallocation,"
NBER Working Papers
3728, National Bureau of Economic Research, Inc.
- Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 819-63, August.
- Steve J. Davis & John Haltiwanger, 1991. "Gross job creation, gross job destruction and employment reallocation," Working Paper Series, Macroeconomic Issues 91-5, Federal Reserve Bank of Chicago.
- Alan Manning, 1992. "Productivity Growth, Wage Setting and the Equilibrium Rate of Unemployment," CEP Discussion Papers dp0063, Centre for Economic Performance, LSE.
- Aghion, Philippe & Howitt, Peter, 1991. "Unemployment : A symptom of stagnation or a side-effect of growth?," European Economic Review, Elsevier, vol. 35(2-3), pages 535-541, April.
- Donald Siegel & Zvi Griliches, 1992.
"Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing,"
in: Output Measurement in the Service Sectors, pages 429-460
National Bureau of Economic Research, Inc.
- Donald Siegel & Zvi Griliches, 1991. "Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing," NBER Working Papers 3678, National Bureau of Economic Research, Inc.
- Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
- Nickell, S. & Komg, P., 1989. "Technical Progress And Jobs," Papers 366, London School of Economics - Centre for Labour Economics.
- Steven J. Davis & John Haltiwanger & Scott Schuh, 1993.
"Small Business and Job Creation: Dissecting the Myth and Reassessing theFacts,"
NBER Working Papers
4492, National Bureau of Economic Research, Inc.
- Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. " Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, vol. 8(4), pages 297-315, August.
- Robert J. Gordon, 1993. "The Jobless Recovery: Does It Signal a New Era of Productivity-led Growth?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1), pages 271-316.
- Hellerstein, J-K & Neumark, D, 1995.
"Sex, Wages, and Productivity : an Empirical Analysis of Israeli, Firm-Level Data,"
9501, Michigan State - Econometrics and Economic Theory.
- Hellerstein, Judith K & Neumark, David, 1999. "Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm-Level Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 95-123, February.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.