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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.

Suggested Citation

  • Collard-Wexler, Allan & De Loecker, Jan, 2013. "Reallocation and Technology: Evidence from the U.S. Steel Industry," CEPR Discussion Papers 9331, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9331
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    Cited by:

    1. Kun Li, 2016. "Privatization, Distortions, and Productivity," 2016 Meeting Papers 993, Society for Economic Dynamics.
    2. Peng Bin & Xiaolan Chen & Andrea Fracasso & Chiara Tomasi, 2017. "Resource allocation and productivity across provinces in China," DEM Working Papers 2017/02, Department of Economics and Management.
    3. Catherine Fuss & Angelos Theodorakopoulos, 2018. "Compositional changes in aggregate productivity in an era of globalisation and financial crisis," Working Paper Research 336, National Bank of Belgium.
    4. Mauro Caselli & Stefano Schiavo & Lionel Nesta, 2017. "Markups and markdowns," Documents de Travail de l'OFCE 2017-11, Observatoire Francais des Conjonctures Economiques (OFCE).
    5. Marco Bee & Maria Michela Dickson & Flavio Santi, 2017. "Likelihood-based Risk Estimation for Variance-Gamma Models," DEM Working Papers 2017/03, Department of Economics and Management.
    6. Geoffrey Barrows & Helene Ollivier, 2016. "Emission intensity and firm dynamics: reallocation, product mix, and technology in India," GRI Working Papers 245, Grantham Research Institute on Climate Change and the Environment.
    7. Allen Tran, 2014. "The Aggregate Impact Of Online Retail," Working Papers 14-23, Center for Economic Studies, U.S. Census Bureau.
    8. repec:eee:proeco:v:193:y:2017:i:c:p:465-478 is not listed on IDEAS
    9. Jan De Loecker & Pinelopi Koujianou Goldberg, 2014. "Firm Performance in a Global Market," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 201-227, August.
    10. Caroline Stiel, 2017. "Modern Public Enterprises: Organisational Innovation and Productivity," Discussion Papers of DIW Berlin 1713, DIW Berlin, German Institute for Economic Research.
    11. Jan De Loecker & Johannes Van Biesebroeck, 2016. "Effect of International Competition on Firm Productivity and Market Power," NBER Working Papers 21994, National Bureau of Economic Research, Inc.
    12. OHYAMA Atsushi, 2017. "Industry Growth through Spinoffs and Startups," Discussion papers 17057, Research Institute of Economy, Trade and Industry (RIETI).
    13. Hashiguchi, Yoshihiro, 2015. "Allocation efficiency in China : an extension of the dynamic Olley-Pakes productivity decomposition," IDE Discussion Papers 544, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    14. Gabriella Berloffa & Eleonora Matteazzi & Paola Villa, 2017. "The intergenerational transmission of worklessness in Europe.The role of fathers and mothers," DEM Working Papers 2017/04, Department of Economics and Management.
    15. 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.
    16. Gabriella Berloffa & Eleonora Matteazzi & Alina Sandor & Paola Villa, 2017. "The quality of employment in the early labour market experience of young Europeans," DEM Working Papers 2017/05, Department of Economics and Management.
    17. C. A. K. Lovell, 2016. "Recent Developments in Productivity Analysis," Pacific Economic Review, Wiley Blackwell, vol. 21(4), pages 417-444, October.

    More about this item

    Keywords

    competition; productivity; reallocation; technology;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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