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Heroic Plants: Persistently Rapid Job Creators in the Longitudinal Research Database - Their Distinguishing Characteristics and Contribution to Employment Growth

  • Nathan Musick

    (Office of Policy Development, US Department of Commerce)

Heroic Plant research shows that persistently-rapid job creation by a select group of plants can be an important source of overall employment growth in manufacturing. Establishments in SICs 34 - 38 whose residual growth (after controlling for differences in plant age, size, industry, etc.) ranks in the top quarter of establishment growth rates across both 1977-1982 and 1982-1987, account for roughly 25% of total job creation by plants operating throughout this time. While these exceptional job creators tend to participate especially in growing sectors of the economy (favoring, for example, commercial over industrial markets), they are active across a variety of product markets, production processes and price ranges. Thus, sustained job growth does not appear simply to be a sectoral phenomenon within particular industries. Neither does Heroic Plant job creation appear to be the result of random shocks to establishment growth. Rather, in spite of the difficulties in measuring performance characteristics using time-series data, Heroic Plants display numerous characteristics of successful plants. For example, when their exceptional growth begins to be tracked (1977), these establishments are more capital intensive and productive, and they pay higher wages, than do plants whose growth will be less rapid and/or persistent during the next decade. They also distinguish themselves by larger gross investment ratios (relative to their current employment, value added or capital stock). In 1987, Heroic Plants are more productive than other establishments, in spite of their labor-intensive operations. These plants share with other persistent (although less rapid) growers an above-average tendency to use advanced technologies in 1988. Heroic Plants also pay lower wages to production workers than do other establishments, raising questions about the division of returns, between management and workers, from superior business performance.

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Paper provided by EconWPA in its series Industrial Organization with number 9811001.

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Date of creation: 08 Nov 1998
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Handle: RePEc:wpa:wuwpio:9811001
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