Ron S. Jarmin

Evaluating the impact of manufacturing extension on productivity growth

This article combines the richest data set and most rigorous econometric methodology used, to date, to evaluate the impact of manufacturing extension services on client productivity growth. Client plants are identified in the Longitudinal Research Database (LRD) and their labor productivity growth between 1987 and 1992 is compared to nonclients. Both simple OLS and two-stage models are used to estimate the effect of manufacturing extension on productivity growth. The first-stage probit model is informative about the client selection process. Results suggest that participation in manufacturing extension is associated with between 3.4 and 16 percent higher labor productivity growth between 1987 and 1992. The article demonstrates the usefulness of longitudinal microdata sets, such as the LRD, for program evaluation.

Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms [with Comments and Discussion]

We study the variability of business growth rates in the U.S. private sector from 1976 onwards. To carry out our study, we exploit the recently developed Longitudinal Business Database (LBD), which contains annual observations on employment and payroll for all U.S. businesses. Our central finding is a large secular decline in the cross sectional dispersion of firm growth rates and in the average magnitude of firm level volatility. Measured the same way as in other recent research, the employment-weighted mean volatility of firm growth rates has declined by more than 40 percent since 1982. This result stands in sharp contrast to previous findings of rising volatility for publicly traded firms in COMPUSTAT data. We confirm the rise in volatility among publicly traded firms using the LBD, but we show that its impact is overwhelmed by declining volatility among privately held firms. This pattern holds in every major industry group. Employment shifts toward older businesses account for 27 percent or more of the volatility decline among privately held firms. Simple cohort effects that capture higher volatility among more recently listed firms account for most of the volatility rise among publicly traded firms.

The Impact of Hurricanes Katrina, Rita and Wilma on Business Establishments

We show that GIS based estimates of the economic impact of the 2005 hurricanes provide a more accurate characterization of affected businesses than widely reported estimates constructed from county level data. Our methodology relies on mapping business establishments into damage zones defined by remote sensing information provided by FEMA. Our methodology is based on pre-storm data, so estimates can be made available very quickly to inform the public as well as policy makers. Our GIS-based estimates indicate significantly smaller impacts on business payroll than previous estimates using county level data. Tests using post-storm data support our GIS methodology.